- WASHINGTON -
should include tracking devices that let the government tax
of dollar bills, a Federal Reserve official
longer you hold currency without depositing it in
a bank account, the
less that cash will be worth, according to a proposal
<http://www.rich.frb.org/monetarypol/marvin.htm Marvin Goodfriend,
senior vice president at the <http://www.rich.frb.org/ Federal Reserve
Bank of Richmond.
- In other words, greenbacks will get automatic expiration
- "The magnetic strip could visibly record when a
last withdrawn from the banking system. A carry tax could be deducted
from each bill upon deposit according to how long the bill was in
Goodfriend wrote in a recent presentation to a
Federal Reserve System conference
in Woodstock, Vermont.
- The 34-page paper
argues a carry tax will discourage
"hoarding" currency, deter
black market and criminal activities,
and boost economic stability
during deflationary periods when interest
rates hover near
says new technology finally makes such a scheme feasible.
would have to be put in place at banks and automatic teller
read bills, assess the carry tax, and stamp the bills 'current,'"
the report recommends.
- Goodfriend said in an interview that banks might place
a kind of visible "date issued" stamp on each note they
"The thing could actually stamp the date when the
bill comes out of
the ATM," he said.
- Congressional critics say they
would oppose any such
- "The whole idea is preposterous. The notion that
we're going to tax somebody because they decide to be frugal and hold a
couple of dollars is economic planning at its worst," said
Representative Ron Paul (R-Texas), a
free-market proponent who serves on
the House Banking
- "This idea that you can correct some of the evil
already created with another tax is just ridiculous," Paul
Other economists say a carry tax is not a wise plan.
- "This is going beyond
taxing banks for holding reserves.
It's taxing the public for holding
currency too long. That's even more
wild an idea," says
Selgin, a University of Georgia economics professor who specializes