The newest appointment to the Board of Governors of the Federal
Reserve System does not like paper money.
Marvin Goodfriend, a professor of economics at Carnegie Mellon
University, was nominated to a 14-year term by President Donald Trump
on Nov. 29. Among the Federal Reserve’s responsibilities are deciding
how much paper money to print, placing orders for it, and distributing
it to the 12 Federal Reserve banks.
When we discuss the rare coin market in the
U.S., we are merely scratching the surface.
The larger market for rare coins in the United States is made up of
dozens of individual segments.
A Dec. 5 story in Bloomberg Business Week by Peter Coy, as well as in a few other online
financial journals, focused on Goodfriend’s belief that abolishing or
reducing the status of paper currency would make it easier for the Fed
to lower interest rates to less than zero. He thinks he existence of
cash makes this harder to do because, as soon as rates are lowered to
subzero levels, people would logically withdraw cash from their bank
accounts, which now would have become income-reducing, and keep it in
their mattresses and elsewhere. He therefore proposes that
high-denomination bills could be phased out, and if that is not
enough, he says paper money could be abolished. He has also written
that if negative interest rates on deposits were in force, the
incentive would be strong to spend whatever was in an individual’s
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Another of his proposed suggestions is currency cards, which are not
credit or debit cards, but ones linked to real money, straight from
the Fed, the value of which the Fed could control electronically.
Goodfriend’s ideas are well-known, are not a joke, and have not gone
without comment. The Mises Institute, a think tank espousing the
Austrian school of economics and libertarian political theory, asked
on Dec. 1, “Is Marvin Goodfriend the Worst Fed Nominee of All Time?”
Earlier Mises said, “Given his radical views on monetary policy,
it’s not hyperbole to suggest that Goodfriend’s nomination would
represent a genuine danger to the economic well being of every
American citizen — or at least those outside of the financial services industry.”
Goodfriend’s nomination requires Senate confirmation.