From time to time you hear people argue we should abolish the penny, because they really are a nuisance, etc. But Abe hangs on. Today the emphasis seems to be going the other way: abolish the $100 bill!
You hear it said we should do this to retard “criminal activity,” but I think there’s another reason. One hints comes from this story today about how the circulation of 1,000 Franc notes are the hot thing in Switzerland:
ZURICH—Demand for Switzerland’s 1,000 franc note ($1,010), one of the largest denomination bills in the world, rose sharply last year after the country’s central bank cut interest rates deeply into negative territory.
The increased prevalence of the large bill comes amid recent calls for major central banks to restrict the circulation of big bank notes, which critics say make it easier for criminals to move around their ill-gotten gains. In addition, some economists argue that the large bills make it tougher for central bankers to influence the economy by steering interest rates to a negative mark.
Bingo! What’s the idea behind negative interest rates? A hidden subsidy for mattress manufacturers perhaps? Nope: given that the various monetary and fiscal stimuli haven’t generated much growth either here or in Europe, negative interest rates are intended to enlist everyone as involuntary Keynesians—spend your money or we’ll take it from you. So who wants to keep their money in a bank—even a Swiss bank. Another example of a liberal idea so good it has to be made mandatory.
No wonder the price of gold is rising again.