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Why would anyone buy those bonds if they could just keep their money in cash with no tax?
by harryh 12y ago
Why would anyone buy those bonds if they could just keep their money in cash with no tax?
- pjc50 12y agoCash in large quantities has a carrying cost just like anything else. You have to have a warehouse with guards. You want to insure it. I think this works out at a few percent. Certainly there's a cost in trying to settle large transactions in cash. It's annoying enough if you're a supermarket or other note-and-coin handling business. Are Apple really going to construct a $164.5bn Scrooge McDuck money bin?
- harryh 12y agoOK yes, this is true. Which is why some people think that the zero lower bound really isn't exactly at zero. Doing this is a huge pain in the ass: http://static2.businessinsider.com/image/521246dbecad045f3b00001b-960/breaking-bad-money-pile-1.png http://static2.businessinsider.com/image/521246dbecad045f3b0... Estimates vary as to what the de-facto zero lower bound really is, but it's still there somewhere. You can see this in the data. The Fed REALLY DID have trouble drumming up inflation through monetary policy over the last several years.