The desert dollar industry (2021) | Hacker News Reader

The desert dollar industry (2021)

jpkoning.blogspot.com

49 pointsivank35 comments

Can we get a (2021) tag on this? I mean, sure, it was written a couple weeks ago, but it's written from the viewpoint of a hypothetical future, and it's confusing if you miss the date at the top.

Yes, please. I thought you were joking at first, before I realized this piece is literally speculative fiction.

If someone doesn't recognise it as fiction in the third paragraph - a decade of deflation and hyper-deflation? - they're unlikely to be able to take much away from the article anyway.

(And that's before the end of the paragraph, which talks about negative interest rates since 2019).

On first reading that statement, I just assumed the author was some sort of right-wing lunatic.

That's more like a numeric pun than strictly correct, but what the hell.

They've since updated the title, and it had me wondering if it was a typo, so I came to the comments first.

While it sounds like fantasy, there is a strong movement at many levels to get rid of cash entirely in the name of safety and security. I'm not sure about burying cash in the desert versus harder assets but when they start charging the consumer to keep cash in an account, people will find other stores of value.

http://willembuiter.com/ELB.pdf

Try selling something on Craigslist without requiring cash-up-front as payment and tell me how safe and secure it is. Fake money orders and cashier's checks are a lot easier to manufacture than fake cash.

Money orders and checks? Oh, US, so far ahead and yet so behind.

In a future world of no cash, Craigslist will probably be black market underground bartering more than it will be about the sale of items. Probably isn't high on the priority list of people like William Buiter who would like to see cash outlawed. Hard to collect tax on people selling on Craigslist.

One problem is that they're trying to use a single parameter (interest rates) to control many things. First it was inflation, then they added economic growth, employment, and now there is competition/interaction with other economies. You can't control all those things independently by pulling one lever. There used to be other levers, but tariffs (which were another know) have been disallowed in the name of free trade (that's actually fixing the lever in a certain position). War is off the table with first world countries (we've gotten too good at it). So what levers are left?

Because we've got to have someone pulling levers to manipulate the economy...

Unless you've got a way to stop people from having economic power, that is an inevitability.

I wouldn't count ordinary participation in markets as lever pulling manipulation. And my point wasn't that the fed isn't useful in practice, but rather that its presence is a sign of broken fundamentals.

Are you living in the USA? Most people would think that fiscal policy is on the list. I do understand the perspective in the USA: paralysis in Congress means that fiscal policy is off the table. And in countries like Greece, fiscal policy is now limited by the deals that Greece can work out with its creditors. But in most countries, fiscal policy is the biggest lever. Look at Japan. Look at China. They engaged in huge investment schemes. Or, on the opposite side, look at France, or Sweden, or Spain.

US fiscal policy, depending on how you define that, is mostly executed by the Federal Reserve, which is a quasi governmental entity not directly managed by congress.

You are thinking of monetary policy. Fiscal policy is when Congress passes a spending bill and the President signs it into law.

European central banks are looking into moving to electronic cash that can be programmed to gradually lose value. This could solve the problem of cash hoarding at negative interest rates.

A similar system is already available at the Wir bank [1].

For a short analysis, see [2].

[0] http://wir.ch/ (Their website is not available in english)

[1] https://en.wikipedia.org/wiki/WIR_Bank

[2] https://www.quora.com/How-does-the-WIR-Bank-work

Once upon a time, cash hoarding was called "saving". But the central banks of the world have declared war on savers so I guess we need a new term for it.

If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again… the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.

from:

http://ebooks.adelaide.edu.au/k/keynes/john_maynard/k44g/cha...

Also full of gems such as "earthquakes, even wars may serve to increase wealth." It reads a bit like a satire similar to the parent article.

That sounds wholy unproductive to society though. It achieves the goal, but only at a cost to the opportunity for those people doing something more productive. Like building houses, as you have mentioned.

I know this is supposed to be fictional, but whenever someone writes a "fiction" like this, it's always intended as a "this is what can really happen if you aren't careful" kind of fiction. Which is why I have to take issue with the following premise of the entire article:

"central bankers around the world simultaneously increased their inflation targets from 2% to 4% and fully re-loaded their quantitative easing programs. To their embarrassment, consumer prices only continued to decline"

To quote an economist that I heard: In the history of civilization, there has never been a case of a central bank operating using fiat currency that has tried to create inflation and failed.

If the government of any country wanted to create inflation, it's extremely simple to do so. Just print $10,000 for every citizen in the country and hand it out to them as a christmas gift. If $10,000 isn't enough to do the trick, try a hundred grand. Or a million. At some point, the economy will be swimming in so much cheap money, and a roughly fixed amount of real goods, that the price of each good is bound to increase. Weimar Germany is a classic example of this. The entire premise of this "fiction" is so flawed, that it can only be described as fantasy.

Maybe you all missed what jumped out at me!

"As of July 2020, any member of the public caught holding more than $1000 in bills risks having their stash confiscated, with corporations and financial institutions facing cash limits of their own."

Edit: Or perhaps the article is a work of fiction?

Not strictly related or necessarily unbiased, but Ray Dalio (Bridgwater) provides a concise explanation of the levers that control the economy: https://www.youtube.com/watch?v=PHe0bXAIuk0

My understanding is that April Fools started as a way to make fun of people who still celebrated New Year at the end of March. So maybe the timing of the article is appropriate. It got me.

I don't think that anyone soon this would bury paper. If you want to hoard value, gold, silver and copper are far more effective.

lol >>> smugglers have been diverting their hoardes across the border into Mexico or Canada.

Yup. With a literal bucket full of cash, the safest place in the world is an international boarder crossing.

If you are smuggling you don't go through border crossing stations. You go the illegal route.

Well, it depends. Canada and Mexico may not give a damn about the hypothetical U.S. currency export limits.

They do re their own rules on importing cash. Canada has a similar 10,000$ limit on unreported cash, a number which trips up many an american tourist. With today's exchange rate, that's only 7-8000$ US. Normally they end up filling out some forms and paying a penalty, but someone caught crossing illegally with a pile of cash won't be keeping it.

If you are smuggling stuff to Canada, you typically don't drive over the bridge or border point.

In the northeast, you get yourself acquainted with the St. Regis Mohawks. http://m.timesunion.com/news/article/Lawlessness-on-the-bord...

How many tourists cross the border with that much in cash?

Yes, I'm well aware of that, but the article talks about some hypothetical future. It may be that the limits get increased. It may be that they won't care if you bring in cash far in excess of those limits as long as you declare it. Et cetera, et cetera, et cetera. The point is that there is no reason to believe Canada or Mexico will necessarily stop you from moving the cash even if the US doesn't want you to.

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