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This makes more sense economically. Physical products in general degrade in value over time. Cash by itself does not degrade in value over time. Using cash to r

This makes more sense economically. Physical products in general degrade in value over time. Cash by itself does not degrade in value over time. Using cash to represent products is a sort of mismatch. If the products' value degrades so should the value of the instrument representing said product. I don't know why they use negative savings interest rates when the government can provide the same service through QE or lowering loan interest rates.

cyrus9020 11y ago
Cash can "degrade", it's called inflation.
- crimsonalucard 11y ago
  That's different from value degradation. Additionally if you read further you'd see that I addressed inflation. Interest for loans and QE are all methods the government uses to inflate cash.
toomuchtodo 11y ago
QE causes asset bubbles. Negative interest rates promote (in theory) consumption over saving. Economically, these are uncharted waters.
- crimsonalucard 11y ago
  It is uncharted waters, but in terms of symbolic representation of value, it is more accurate and thus may be more effective in practice. A dollar does not degrade in value the same way a physical product does, and thus a dollar is an inaccurate representation of the value of the product. Inflation and deflation are side effects arising from this inaccurate representation. I will hold on to a dollar differently then I'd hold onto a physical product. Inaccurate representation therefore leads to unnatural behavior. Often the product a dollar represents can degrade to worthlessness while the dollar maintains value. By making the dollar degrade explicitly , it forces people to treat a dollar as one would treat the majority of physical products in the real world: as an object that degrades with time. Think about it. If my assets are represented by physical products with real value, what is inflation and deflation? The concepts becomes non-existent.
digitalengineer 11y ago
> Cash doesn't degrade in value Not YET. There are ideas floating around to let cash become less valuable. An ATM will print a datestamp and it will help degrade 'older' money… (Could not find the source, but it's not that complicated).

cyrus9020 11y ago

Cash can "degrade", it's called inflation.

crimsonalucard 11y ago
That's different from value degradation. Additionally if you read further you'd see that I addressed inflation. Interest for loans and QE are all methods the government uses to inflate cash.

toomuchtodo 11y ago

QE causes asset bubbles. Negative interest rates promote (in theory) consumption over saving. Economically, these are uncharted waters.

crimsonalucard 11y ago
It is uncharted waters, but in terms of symbolic representation of value, it is more accurate and thus may be more effective in practice. A dollar does not degrade in value the same way a physical product does, and thus a dollar is an inaccurate representation of the value of the product. Inflation and deflation are side effects arising from this inaccurate representation. I will hold on to a dollar differently then I'd hold onto a physical product. Inaccurate representation therefore leads to unnatural behavior. Often the product a dollar represents can degrade to worthlessness while the dollar maintains value. By making the dollar degrade explicitly , it forces people to treat a dollar as one would treat the majority of physical products in the real world: as an object that degrades with time. Think about it. If my assets are represented by physical products with real value, what is inflation and deflation? The concepts becomes non-existent.

digitalengineer 11y ago

> Cash doesn't degrade in value Not YET. There are ideas floating around to let cash become less valuable. An ATM will print a datestamp and it will help degrade 'older' money… (Could not find the source, but it's not that complicated).