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"The rebels were not happy with the new notes. It's easy to guess why. Fresh money could be used to pay government fighters, not rebel fighters. This "blood mon
by ubac 6y ago
"The rebels were not happy with the new notes. It's easy to guess why. Fresh money could be used to pay government fighters, not rebel fighters. This "blood money" would then cheekily flow north via trade. Since anyone who holds a banknote is by definition funding the government that issues it with a no-interest loan, the rebel north was financing its own enemies. (The technical term for this sort of financing is seigniorage)."
- adtac 6y agoIs it really a no-interest loan? Or is it a negative interest loan? The value of the bank notes the government gave you, presumably by printing it, is less than it was than a few moments ago by the sheer presence of more of it. And it's probably safe to assume that they'll print even more, furthering decreasing your payment's value.
- lopmotr 6y agoIf you measure interest in the currency you're lending, like everyone else does, then it's exactly 0% interest. Interest rates advertised by banks aren't adjusted for inflation either.