one more reason to keep some handy.
They also are worried that paper money inhibits the government’s ability to “stimulate” the economy with artificially low interest rates. Simply stated, they’ve already pushed interest rates close to zero and haven’t gotten the desired effect of more growth, so the thinking in official circles is that if you could implement negative interest rates, people could be pushed to be good little Keynesians because any money they have in their accounts would be losing value.
…authorities would do well to consider the arguments for phasing out
their use as another “barbarous relic”…even a little physical currency
can cause a lot of distortion to the economic system. The existence of
cash — a bearer instrument with a zero interest rate — limits central
banks’ ability to stimulate a depressed economy.
Control. Just like with guns, it's ALWAYS about control. Cash limits their control over you, so they'd like(VERY much) to get rid of it.
One of the winning quotes:
Citi’s Willem Buiter looks at this problem, which is known as the
effective lower bound (ELB) on nominal interest rates. …the ELB only
exists at all due to the existence of cash, which is a bearer instrument
that pays zero nominal rates. Why have your money on deposit at a
negative rate that reduces your wealth when you can have it in cash and
suffer no reduction? Cash therefore gives people an easy and effective
way of avoiding negative nominal rates. …Buiter’s solution to cash’s
ability to allow people to avoid negative deposit rates is to abolish
I'd say Buiter needs to be added to the list of future tree or lamppost ornaments.