No Cash in Japan?

When we last talked about abolishing paper currency, we joked about it happening in 2012. In Japan, where the future comes early, they’re considering banning cash now, as a way to stave off deflation. [%comments]

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  1. jfe says:

    Hey guys,
    inflation != deflation

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  2. Eric M. Jones says:

    Honda, Toyota, Panasonic, Nikon and Sony already HAVE all our cash. So it is in our best interest to ban cash and keep their cameras, computers,TVs and cars.

    This makes sense to me. “All your base are belong to us!…” Hah!

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  3. Patrick says:

    Now panhandlers will have card readers to collect their money.

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  4. Andrew says:

    Hey guys,

    I think you missed the point here. This is about the liquidity trap Japan has been caught in for many years.

    The idea of removing cash from the economy is a way to actually implement Greg Mankiw’s idea of negative nominal interest rates.

    No cash = no cash hoarding during deflation. It is the only means to actually implement negative nominal interest rates.

    This is not a way to stave off inflation. It is a way to cause inflation.

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  5. John says:

    So by abolishing cash, and requiring everyone to store their wealth digitally, banks would have the capacity to charge an interest rate of -4%. So your account of 100,000 yen on 31 December, would be 960,000 yen on 1 Jan???

    So… Why on earth would anyone keep money in the bank other than for immediate spending requirements? This sounds more like a clarion call to Black Marketeers, rather than an end to inflation.

    (Buy Gold and Silver now, just in case this goes through)

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  6. neandrothal says:

    Would that make this “dismal science fiction”?

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  7. g says:

    I’m not an economist, so I can’t really weigh in on the merits of a nominal interest rate of -4% brought about by a cashless system. However, I am in my 20s and never use cash unless absolutely required by some vendor (usually small businesses). All of my transactions are digital. If tomorrow we were using credits instead of dollars, my life would not change one iota. All my money is just numbers on a screen anyway…

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  8. Shay Guy says:

    Eden of the East, anyone?

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