4 ms·
Unless, of course, physical cash no longer exists, and all you have is some sort of ephemeral digital cash in a financial institution that can be easily subject
by akgoel 11y ago
Unless, of course, physical cash no longer exists, and all you have is some sort of ephemeral digital cash in a financial institution that can be easily subject to a negative interest rate policy. A bank balance can lose nominal value with NIRP, but cash in-hand can't. Hence, the War on Cash.
- Swizec 11y agoPhysical cash CAN lose value. Very fast too. My parents lived through the hyperinflation in Yugoslavia in the 90's. The stories they tell are ... fun. Ideally you exchanged everything into deutsche marks as soon as you got it. New denominations were being printed every few weeks because the currency was losing value etc. Hell, even when we became Slovenia I remember that at first, the highest bill was 1,000. Just ten years later, the highest had to be 10,000 because the thousand one just wasn't cutting it anymore. It was too impractical for the prices. For a more drastic example: in pre-war Germany it was more common to get mugged for bread than for cash. Wads of cash just weren't worth enough to bother.
- CompelTechnic 11y agoNominal value was the important term in the parent, i.e. a 100 dollar bill can't become a 99 dollar bill.
- bbgtpm 11y agoSure it can, banks would just have to modify the exchange rate between physical cash and bank deposits.
- atom-morgan 11y agoThe number on the paper != purchasing power
- deleted 11y ago[deleted]
- Swizec 11y agoSure, but nominal value is not what you use to buy things. The nominal value in my bank account won't just go down on its own either. But what I can do with it will. Or is there a mechanism I don't know about that can lower nominal numbers in untouched bank accounts?
- dragonwriter 11y ago> The nominal value in my bank account won't just go down on its own either. It would with negative interest rates.
- gegtik 11y agopresumably to reduce the inflation of prices. 6 of one, right?
- atom-morgan 11y agoMeanwhile in my bag I have a crisp $100 trillion Zimbabwe dollar bill I use as a bookmark.
- dragonwriter 11y ago> A bank balance can lose nominal value with NIRP, but cash in-hand can't. If by "nominal value" you mean "printed face value", then perhaps not (though there are plenty of time or environment-sensitive printing technologies that would allow that to change, even if there might be all kinds of good arguments against using them on currency.) If, instead, by "nominal value" you mean "official exchange/redemption value in the units of account in which the cash is denominated", sure it can; in fact, cash that does that has been suggested and, IIRC, used in some cases -- this is done by making the nominal value (that is, the official value in current units of account) equal to the face value at the time of issue, but decreasing over time based on the duration between the issue date on the cash and the current date, so that cash held longer is worth less, even in nominal terms, as a tool to increase the velocity of money.