FC: Fed official wants expiration dates, tracking devices for bills

[Declan McCullagh <declan () well com>]

http://www.wired.com/news/politics/0,1283,32121,00.html

                     No Deposit, Less Return
                     by Declan McCullagh (declan () well com)

                     3:00 a.m. 27.Oct.99.PDT
                     WASHINGTON -- US currency should
                     include tracking devices that let the
                     government tax private possession of
                     dollar bills, a Federal Reserve official says.

                     The longer you hold currency without
                     depositing it in a bank account, the less
                     that cash will be worth, according to a
                     proposal from Marvin Goodfriend, a senior
                     vice president at the Federal Reserve
                     Bank of Richmond. 

                     In other words, greenbacks will get
                     automatic expiration dates. 

                     "The magnetic strip could visibly record
                     when a bill was last withdrawn from the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
                     circulation," 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 zero. 

                     It says new technology finally makes
                     such a scheme feasible. "Systems would
                     have to be put in place at banks and
                     automatic teller machines to 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 distributed.
                     "The thing could actually stamp the date
                     when the bill comes out of the ATM," he
                     said. 

                     [...]



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