04/24/2015 - Financial Repression is Leading to the Death of Money
“Destroying currency amounts to belittling or ending time value, which is a crucial part of gauging and setting risk parameters in the real economy. If there is no time value to money there is essentially no reason to engage in risky behavior. This is what Keynes described as a ‘liquidity preference’, though for different reasons. Instead of individuals holding too much cash, banks will do so because of that same repression. So at the very least, where the central bank is intent on ‘forcing’ spending through negatively manipulating the currency, they are at the same time destroying the financial basis to produce credit – all the while herding financial agents into holding even more ‘currency’ … How do central banks respond to this? … By deciding that currency isn’t dead enough.”
– Jeffrey Snider
