tag:blogger.com,1999:blog-8897997766931633186.post1085546843932974061..comments2024-02-14T03:21:37.506-05:00Comments on Monetary Freedom: Happy 90th to Leland YeagerBill Woolseyhttp://www.blogger.com/profile/06330232724290161369noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-8897997766931633186.post-6152610315204930842014-10-05T15:20:41.670-04:002014-10-05T15:20:41.670-04:00I think there is a positive risk of default with b...I think there is a positive risk of default with bank issued currency. The interest rate on T-bills or central bank deposits could be more negative than a situation where with government currency.<br /><br />Bill Woolseyhttps://www.blogger.com/profile/06330232724290161369noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-77830562317549328152014-10-05T08:25:29.750-04:002014-10-05T08:25:29.750-04:00I think the call option would be the only credible...I think the call option would be the only credible way to manage it. The alternative is to have a positive risk of default, or else the option to redeem at less than face value (which creates a moral hazard problem).Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-52575916413322489292014-10-04T16:49:57.761-04:002014-10-04T16:49:57.761-04:00I think a call option would be wise, but with a pr...I think a call option would be wise, but with a privatized system, it is up to the issuers, right?<br /><br />Bill Woolseyhttps://www.blogger.com/profile/06330232724290161369noreply@blogger.comtag:blogger.com,1999:blog-8897997766931633186.post-68438733910555532492014-10-04T15:37:44.458-04:002014-10-04T15:37:44.458-04:00Very good post Bill.
"Of course, if banks fo...Very good post Bill.<br /><br />"Of course, if banks found it unprofitable to issue such currency, then there would be none and all payments would be made by some type of checkable account--deposit or mutual fund."<br /><br />Suppose that initially banks find it profitable to issue 0% interest convertible paper currency. And then something changes (e.g. market interest rates fall) and banks no longer find it profitable. Would they be able to insist that existing paper currency be brought in and converted into demand deposits?Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.com