Can Bitcoin Survive

If bitcoin was going to be a reserve currency it would have by now.

From its’ peak of 20K in January of this year it has drop month after month and is poised to break below 4000 soon. If bitcoin was going to be a reserve currency and hit mainstream, used by everyone as money then it would have done so by now. At least the adoption would be on an upward slope.

The above graph clearly shows that adoption growth stopped in January and we have been on a downward trend ever since. In the world of the internet, if you are not growing then you are dying. That is the awful truth. Bitcoin is just too volatile to be used as money. For that we need a stable coin. As a reserve currency, there is just too much push back from central banks. They are unable to control the issuance of bitcoins and they certainly do not want to elevate Satoshi and all the early adopters to become the richest people in the world. Even richer than countries. No no most countries that have large holdings of gold will prefer that gold be the reserve currency. The problem is that real gold reserves are not held by countries like the UK, EU and USA. They play around with paper gold and so far they have managed to hold back the price of real gold. The new Shanghai gold exchange and the possibility of a gold backed Yuan may break this impasse. We shall see.

Is this the end of the road for Bitcoin?

Bitcoin weakness is also its’ perceived strength – mining. As the price tracked upwards and asic miners became more efficient, home miners were driven out of the market towards large scale industrial miners controlling a few mining pools. This huge waste of energy to secure the chain would be fine if there was not another way. As it is when the price starts tracking downwards, all marginal operators will have to shut operations. No miner can afford to mine at a loss for long. The last to holdout will be those with access to the cheapest electricity and even these will have to give up as bitcoin price track towards $3000.

With the sharp drop in difficulty, block time for BTC have started to lengthen. This drop in difficulty is caused both by the Bitcoin Cash wars as well as the drop in price. Bitcoin may yet get snared up in the dreaded “chain death spiral“. 11 more days to the next difficulty adjustment.

Proof of Work and Proof of Stake

If you really don’t need to spend millions of dollars in electricity to secure the chain then why should you? Proof of work proponents have always insisted that we have to and that proof of stake is inherently flawed as it favours those who hold the most coins.

The EOS chain is delegated proof of stake, and have been live since June. It has humm along effortlessly gathering adoption and users at measurable rate weekly. Refer to Blocktivity and Dapp Radar. Barely 6 months old and there is an increasing number of high volume dapps building on the chain. Proof of stake works. EOS works and continues to improve with every update and upgrade.

The way to become money is not to try to be money.

Money is what everyone accepts as money. Unlike Bitcoin and almost all other cryptos EOS does not try to become money. It is a platform for fast, secure and free transactions. Because of this central banks may issue their currency on the EOS mainnet or their own sister chain. Cross chain transactions will not be a problem when transacting across several national currencies. Being a platform token EOS will not be a stable coin.

A stable token will emerge and gain worldwide adoption to the extent that everything worldwide is priced in this stable unit. What this is will be is yet to be seen but it is likely that something will happen. Perhaps the Bancor algorithm could pave the way towards such a stable coin or an exchange unit.

If this is the future then Bitcoin will have no future. We shall see.

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Does the Floor System Discourage Bank Lending?

David Beckworth has a new post up suggesting that the Fed's floor system has discouraged bank lending by making interest-bearing reserves a relatively more attractive investment; see here. I've been hearing this story a lot lately, but I can't say it makes a whole lot of sense to me.

Here's how I think about it. Consider the pre-2008 "corridor" system where the Fed targeted the federal funds rate. The effective federal funds rate (FFR) traded between the upper and lower bounds of the corridor--the upper bound given by the discount rate and the lower bound given by the zero interest-on-reserves (IOR) rate. The Fed achieved its target FFR by managing the supply of reserves through open-market operations involving short-term treasury debt.

Consider a given target interest rate equal to (say) 4%. Since the Fed is financing its asset holdings (USTs yielding 4%) with 0% reserves, it is making a profit on the spread, which it remits to the treasury. Another way of looking at this is that the treasury has saved a 4% interest expense on that part of its debt purchased by the Fed (the treasury would have had to find some additional funds to pay for that interest expense had it not been purchased by the Fed).

Now, suppose that the Fed wants to achieve its target interest rate by paying 4% on reserves. The supply of reserves need not change. The yield on USTs need not change. Bank lending need not change. The only thing that changes is that the Fed now incurs an interest expense of 4% on reserves. The Fed's profit in this case go to zero and the remittances to the treasury are reduced accordingly. From the treasury's perspective, it may as well have sold the treasuries bought by the Fed to the private sector instead.

But the question here is why one would think that moving from a corridor system to a floor system with interest-bearing reserves inherently discourages bank lending. It is true that bank lending is discouraged by raising the IOR rate. But is it not discouraged in exactly the same way by an equivalent increase in the FFR? If I am reading the critics correctly (and I may not be), the complaint seems to be more with where the policy rate is set, as opposed to anything inherent in the operating system. If the complaint is that the IOR has been set too high, I'm willing to agree. But I would have had the same complaint had the FFR been set too high under the old corridor system.

Alright, now let's take a look at some of the data presented by David. Here, I replicate his Panel A depicting the evolution of the composition of bank assets.

David wants to direct our attention to the period after 2008 when the Fed flooded the banking system with reserves and started paying a positive IOR rate. The large rise in the orange line since 2008 was due almost entirely to reserves and not other safe assets. This suggests that banks were motivated to hold interest-bearing reserves instead of private-sector interest-bearing assets (loans). He writes:

Something big happened in 2008 that continues to the present that caused banks to allocate more of their portfolios to cash assets and less to loans. While the financial crisis surely was a part of the initial rebalancing, it is hard to attribute what appears to be 10-year structural change to the crisis alone. Instead, it seems more consistent with the critics view that the floor system itself has fundamentally changed bank portfolios allocation.

I think the diagram above is rather misleading since all it shows is portfolio composition and not the level of bank lending. Here's what the picture looks like when we take the same data and deflate it by the GDP instead of bank assets,

According to this picture, bank lending is close to 50% of GDP, not far off its historical average and considerably higher than in the decade following the S&L crisis (1986-1995). Here's what commercial and industrial loans as a ratio of GDP looks like:

It's no surprise that bank lending contracted during and shortly after the crisis. One could even make the argument that paying positive IOR contributed to the contraction. But as I mentioned above, one could have made the same argument had the FFR been kept at 25bp. Again, this criticism has less to do with the operating system than it does with where the policy rate was set. In any case, note that commercial and industrial loans are presently above their pre-crisis levels (as a ratio of GDP). 

To sum up, I do not believe that a floor system inherently discourages bank lending as some critics appear to be arguing. Now that the Fed is paying IOR, reserves are essentially viewed by banks as an alternative form of interest-bearing government debt. New regulations since the crisis have induced banks to load up on safe government assets. But as the following figure shows, this has not come at the expense of private lending.

Banks are lending about as much as they have over the past 50 years (relative to GDP). Bank lending as a ratio of bank assets may be low, but this is because banks are loaded up on safe assets--not because they've cut back on their lending activity.

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Yuk Kenali Sejarah Awal mula cryptocurrency di dunia

Meskipun Bitcoin adalah cryptocurrency pertama yang terdesntralisasi tetapi bukan cryptocurrency yang pertama dibuat karena sejarah cryptocurrency di mulai pada tahun 1990 setelah cryptographer asal Amerika David Cahuan yang menggagas sebuah ide yang dinamakan blind signature yang dituangkan dalam makalahnya yang berjuduk Blind Signature For Untraceable Payments“, ia menjelaskan blind signature merupakan suatu bentuk tanda tangan digital dimana isi pesan yang tercantum akan dienkripsi terlebih sebelum ditanda tangani. Dalam makalah tersebut juga Ia menyampaikan pandangannya terhadap hubungan antara uang dan privasi. Chaum percaya bahwa untuk menjalani perdagangan yang aman.

Pada tahun 1990 Chaum mendirikan DigiCah yang menjadi Cryptocurrency pertama di Amsterdam, ide yang dibawakan oleh digicash sangat luarbiasa hingga menarik perhatian pers saat itu. DigiCah dipercaya mampu untuk menjadi pengaman transaksi dari satu titik ke titik lain.

Pendiri DigiCash berprinsip bahwa produk hanya akan dijual ke sector bank dan hal ini pula lah yang membuat DigiCash runtuh karena tidak ada bank yang mau menggunakan produknya dan DigiCash pun tutup pada tahun 1998 karena kehabisan uang.

Pada tahun 1996 Dr. Douglas Jackson dan Barry K. Downey mendirikan E-Gold sebuah alat transaksi digital berbasis emas dan perak. Metodo E-Gold adalah dimana pengguna membuat akun E-Gold dan menyimpan emas mereka ke E-Gold, kemudian E-Gold akan melakukan kredit dia kaun pengguna dan kredit itu bias di kirim ke merchant atau ke sesame pengguna E-Gold. Sayangnya USA Partiot Act membuat regulasi yang ketat kepada badan usaha yang bergerak di moneytransfer untuk memiliki lisensi khusus yang membuat E-Gold merasa keberatan untuk memenuhinya dan akhirnya E-Gold berakhir pada tahun 2015

Tahun 1998 Beenz dan Flooz berdiri. Beenz didirikan oleh Charles Cohen, dan  Flooz didirikan oleh Robert Levitan, keduanya juga memiliki konsep bisnis yang sama yaitu, dimana pengguna dibayar untuk melakukan aktifitas internet seperti biasa di ISP tertentu, Setelah pengguna mengumpulkan sejumlah Beenz atau Flooz, mereka dapat menggunakannya untuk membeli barang dari online merchant yang sudah bekerja sama dengan merekah. kemudian pada tahun 1999 InternetCash.com berdiri salah satu perusahaan cryptocurrency lainnya yang bersaingan dengan visa dan MasterCaD, InternetCash.com dinyatakan melebihi standar aman transaksi online karena mampu menjaga keaslian mulai dari jumlah yang dipertukarkan sampai bagai mana transaksi terjadi.  Naman sayang mereka bangkrut pada tahun 2000 ketika Amerika dilanda dot-com bubble burst.

Era Blockchain
Pada tahun 2009 Cryptocurrency Bitcoin muncul, Bitcoin besutan satosinakamoto biasa dibilang  Cryptocurrency yang sangat sukses dan fenomenal bahkan harganyapun jauh melebihi haraga mata uang fiat hingga di dicintai dan dihujat oleh banyak kalangan, Bitcoin adalah implementasi dari Teknologi Blockchain sebuah teknologi yang terdesntralisasi dan tidak terpusat. Diera ini banyak cryptocurrency bermunculan dan bahkan orang membuat cryptocurrency diera ini begitu sangat mudah, tetapi cryptocurrency saat ini tidak mendapat restu dafi pihak regulator sehingga membuatnya sangat fluktuatif dan tidak ada otoritas yang menjamin hingga rentan dengan peretasan. 

Itulah sejarah cryptocurreny, sejarahnya ternyata sudah dimulai diera 90an. Meskipun cryptocurrency era blockchain sangat kontroversial akan tetapi banyak pihak yang menyukai dan mengadopsinya sehingga crypto urrency memiliki masadepan cerah. 

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Ikuti Buruan Hot Airdrop Legit DigitalBits.io (30 USD)

DigitalBits adalah platfom open-source yang berbasis blockchain sedang melakukan Event Airdrop

Tatacara mengikuti Airdrop

1. Buka laman digitalbits airdrop
2. Gabung Telegram Group
3. Kunjungi xdbportal.com, lalau klik keypait generator dan klik generet
4. Simpan Publik adress dan secret seed
5. Masukan Publik addres dan klik go.
6. Klik Vote di laman Airdrop digitalbits
7. 500 XDB masuk kewallet mu
8. Vote DigitalBits di axonomy.pro

Airdrop Detail

Tokens	60
Est. value	$30
Ends in	30/12/1018
Validation	100% REAL

Project

Token type	Own Blockchain
Total supply	100,000,000,000
Price/Token	$0.5

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Smart Contracts and Asset Tokenization

Book of Smart Contracts 1959

In his 1959 classic Theory of Value, Gerard Debreu takes a deep dive into general (Walrasian) equilibrium theory. (Yes, I know, but please try to stay awake for at least a few more paragraphs.)

He studies a very stark hypothetical scenario where people are imagined to gather at the beginning of time and formulate trading plans for a given vector of market prices (called out by some mysterious auctioneer). Commodities can take the form of different goods, like apples and oranges. But they can also be made time-contingent and state-contingent. An apple delivered tomorrow is different commodity than an apple delivered today. An orange delivered tomorrow in the event of rain is different commodity than an orange delivered tomorrow in the event of sunshine. And so on.

For any given vector of relative prices (there is no money), individuals offer to sell claims against the commodities they own to acquire claims against the commodities they wish to acquire. A market-clearing price vector is one that makes everyone's desired trades consistent with each other. How this equilibrium price-vector is achieved is not studied--he is mainly concerned with the less interesting, but still important, question of whether any such price vector might even be expected to exist in the first place.

The theory imagines all relevant trading activity to take place once-and-for-all at the beginning of time. Once trading positions are agreed to, all subsequent good and service flows across individuals over time and under different contingencies are dictated by the terms of promises made at the initial auction. Suppose I had earlier acquired the right for the delivery of oranges next month in the event of rain. Suppose it rains next month. Then the delivery of oranges is made by the orange producer who issued the promissory note now in my possession. In short, contracts look very "smart" in the sense that they can be tailored in any way we want and, moreover, they are assumed to be "self-executing." It's almost as if contractual terms have been spelled out mathematically and enforced by self-executing computer code. Indeed, this is essentially what Debreu assumes.

The Debreu model (also associated with Ken Arrow and Lionel MacKenzie) is often viewed as a sort of benchmark of what one might expect if auction markets are "complete" and worked perfectly (no financial market frictions like asymmetric information, limited commitment, limited communications, etc.) There is no role for money as a medium of exchange in such a frictionless world. As such, it should come as no surprise to learn that monetary theory is devoted to studying economies where these frictions play a prominent role. Financial institutions (governance structures in general, including "the government") can to a large extent be understood as collective arrangements that are designed (or have evolved) to mitigate these frictions for the economic benefit of a given set of constituents (either general or special interests, depending on the distribution of political power).

A recurring theme of the "blockchain" movement is how this new record-keeping technology may one day permit us to decentralize all economic activity. No more (government) money. No more banks. No more intermediaries of any sort. This seems to be, at least in part, what "asset tokenization" is about; see, for example, here: How Tokenization Is Putting Real-World Assets on Blockchains. According to this article,

Tokenization is the process of converting rights to an asset into a digital token on a blockchain. 

This sounds fancy, but as the article soon makes clear, it's basically a variation of an old theme,

There are many proposed methods for taking real-world assets and "putting them on a blockchain." The goal is to achieve the security, speed and ease of transfer of Bitcoin, combined with real-world assets. This is a new form of an old concept: "securitization" (turning a set of assets into a security), and in some cases the tokenization is of securitized assets.

Here's how the innovation is supposed to help small investors (source):

Imagine that you have some property — say an apartment. You need cash quickly. The apartment is valued at $150,000 but you just need $10,000. Can you do this quickly without much friction? To my best knowledge, this is next to impossible.

I often use a similar example in my monetary theory classes. How to liquidate a fraction of one's illiquid wealth? One way is to use a bank (say, to open up a credit line secured by your property). But what he means, I think, is that it's basically impossible to issue a personal IOU representing a claim against the property (and ultimately, against the income that is generated by that property). Well, it's possible, but any such security is not likely to be marketable at any reasonable price. The author has stumbled across the concept of an "illiquid" asset. We use institutions called banks to monetize illiquid assets (banks transform illiquid assets into liquid deposit liabilities). But why do we need banks? Why are most assets illiquid? Economic theory answers: because of the frictions associated with asymmetric information and limited commitment (or lack of trust). O.K., but is there any way to get around these frictions without the use of banks? The same article continues:

Enter tokenization. Tokenization is a method that converts rights to an asset into a digital token. Suppose there is a $200,000 apartment. Tokenization can transform this apartment into 200,000 tokens (the number is totally arbitrary, we could have issued 2 million tokens). Thus, each token represents a 0.0005% share of the underlying asset. Finally, we issue the token on some sort of a platform supporting smart contracts, for example on Ethereum, so that the tokens can be freely bought and sold on different exchanges. When you buy one token, you actually buy 0.0005% of the ownership in the asset. Buy 100,000 tokens and you own 50% of the assets. Buy all 200,000 tokens and you are 100% owner of the asset. Obviously, you are not becoming a legal owner of the property. However, because Blockchain is a public ledger that is immutable, it ensures that once you buy tokens, nobody can “erase” your ownership even if it is not registered in a government-run registry. It should be clear now why Blockchain enables this type of services.

Well, no, to be honest it is not at all clear how "blockchain" solves any of the fundamental problems associated with transforming an illiquid asset into a payment instrument.

We have to keep in mind that "blockchain" is nothing more than a consensus-based database management system (where the data is organized and secured in a particular way). Moreover, any useful innovation found in a blockchain-based database management system (recording data as a Merkle tree, for example) could likely be applied in a non-consensus-based database management system. It's one thing to transfer tokens (or information) across accounts in a database. It's quite another thing to exert your own effort to evict the non-compliant tenant of your 0.0005% share of the apartment you own, especially if other owners are not on board.

It may be that technology will one day eliminate financial market "frictions" and permit widespread asset tokenization (including our human capital), all of which will be traded using smart contracts on an Internet-based auction. If or when that day comes, the people of that world can refer to Debreu (1959) as an economic model applicable to that future world. 

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Are Negative Interest Rates Expansionary? A Review of Eggertsson et al. (2017)

My answer is yes they are.

I recently assigned my students to write a referee report of Eggertsson et al., "Are Negative Nominal Rates Expansionary?" I chose the paper because I'm a huge fan of Eggertsson's work, the paper is well done, it has a nice synthesis of data and theory, and the topic is of central policy importance. The authors find that negative nominal interest rates may not be expansionary, and also, that under certain conditions, quite surprisingly, they may be contractionary.

I like the paper and see a clear contribution. However, I wish the authors would have framed the paper slightly differently. My reading is that they show that negative reserve rates below the cost of hoarding cash can be potentially contractionary under some conditions, and need other policies (negative lending rates for banks/Gesell taxes) to make the policy more expansionary. This is still an important and useful point -- I learned something from them. Yet, since not all of the key modeling assumptions are true, and since "negative interest rates" can include 1. negative rates above the cost of hoarding cash, 2. negative borrowing rates for banks, or 3. Gesell taxes on banks (may seem far-fetched, but something in this spirit has, in fact, happened), I think the paper's actual result is in fact narrower than "negative rates aren't expansionary and may be contractionary", and does not apply to the negative interest rates that we have seen.

From where does the contractionary result come from? It comes from assuming banks profits can affect intermediation costs. Since negative interest rates are a tax on banks, they hurt profitability. But, how much did banks actually pay in taxes due to negative interest rates? Color me skeptical it hurt profitability enough to have materially damaged intermediation. We are talking a second or third-order type of effect. And, to the extent negative interest did increase loans, the impact on profitability would be uncertain. Lastly, the ECB had a tiered rate system, in which required reserves were still paid a positive interest rate, but only the marginal reserves over some threshold were taxed. 

One concern is that the ECB also had a program (dubbed TLRTO -- can't central banks print some money and hire better PR people?) where banks could borrow money at negative interest rates on the condition they lend it out. In that case, hundreds of billions of Euros in loans were taken out, likely many as a cause of the policy, and these "negative interest rates" would also add several billion Euros directly to bank profits over the last few years. The model in the paper does not consider this possibility. 

Two additional key assumptions of the model are that banks are taking out 100% financing from deposits (as many of my students noted) and all bank profits are paid to households. To their credit, the authors fully acknowledge that the first of these assumptions is important and not exactly true. In Sweden, for example, the deposit share is less than 50%. To the extent that financing comes from other sources, banks may actually care about the spread between the reserve rate and the loan rate, particularly if there is a cost of holding cash (say, 1-1.5%). In practice, after the financial crisis, banks like Bank of America cut their dividend payments to almost nothing. In this environment, banks will respond to negative interest rates by making more loans and lowering the interest rate on loans, and may even pay more dividends, boosting aggregate demand. Nothing in the paper contradicts this logic. 

My intuition before reading this paper is that a negative interest rate will be an effective tax on excess reserves, and thus it would make a bank want to lend out money instead of having more reserves. This appears not to happen in the model because banks would hoard physical cash instead of reserves (I think the authors could have been more explicit on what banks do with their mountain of excess reserves when negative rates happen -- the calibration exercise starts with few excess reserves).  There is an implicit assumption that because deposit rates didn't drop (much) below zero, that the cost of holding cash must also be close to zero, and also, in particular, lower than the .4-.7% negative interest rates that we've seen. My gut feeling is that the level is likely to be closer to 1-1.5%, since banks did not, in fact, hoard physical cash. One reason they did not, however, is that central banks aren't stupid -- it seems at least some central banks take into account changes in cash holdings of banks when setting the limits for negative-interest free reserves (see box 2 of this BIS document on negative rates). In addition, there is a paper arguing banks responded to negative interest rates by raising fees instead, effectively lowering deposit rates below zero -- a topic the authors do address (hat tip to a student).

Perhaps banks did not lower their deposit rates below zero, not because there is no cost to holding cash, but because they didn't know how depositors would react, or believed the policy was temporary, and were afraid of a hysteretic effect on depositors, or due to ongoing concerns with their quantities of bad long-term loans. It could also be the case that holding small amounts of cash is relatively costless, but once you have football fields of cash, suddenly you need to hire top-notch security, and buy insurance, so the cost could increase non-linearly. The authors, once again, should be commended for being explicit that this assumption would alter the conclusions of the paper. Yet, even I suspect there is a limit to the cost of hoarding cash. 

I could go on here with theory. This is a one period model. A negative headline rate probably sends a stronger signal about future low short-term rates (commitment to irresponsibility) than keeping a rate at zero, and thus could influence longer maturities (as evidence finds). They could also underscore a central bank's commitment to do "whatever it takes" to achieve inflation. It's also a closed economy -- negative interest rates could trigger capital outflows and a depreciated exchange rate, particularly if it had an impact on the yield curve.

It's also possible to introduce other factors which would imply negative nominal rates are expansionary. See this nice paper by Davide Porcellacchia (who we tried unsuccessfully to hire last year at NES), which argues that negative rates might still lead consumers to save less overall. 

Thus, theoretically, the result is ambiguous. (Isn't that always the case?) Thus, it comes down to empirics. 

I also had some minor quibbles with the empirics in the paper. At one point, they write, speaking of Denmark, that "the negative policy rate has not been transmitted to deposit rates." It actually looks to my eye like there were slight declines in the deposit rates each time the Danish central bank crossed into negative territory. The household deposit rate was cut roughly in half after the second cut in 2014. If you squint, it also looks like the corporate deposit rate dipped below zero at several points. 

Admittedly, in their evidence for Switzerland and Japan, going negative did appear to have, at best, a very minor impact on deposit rates (see below). However, for both Germany, and for the Euro Area as a whole, it looks to me like going negative might have had close to a 1-for-1 impact on deposit rates. Certainly, in at least several cases negative policy rates did translate into lower deposit rates. 

Even more important than deposit rates are lending rates (Figure below). Again, for lending rates, it does look like in at least a few cases, a lower deposit rate did translate into lower lending rates. In the Japanese case, this happened despite the fact that deposit rates did not fall. 

It would also have been nice to look at surprise announcements of ZLB episodes, and look at how the announcement of negative rates affect a variety of interest rates in the economy, including the rates that banks borrow from each other at, longer-term yields, and also of exchange rates and the stock market (admittedly, from what I've seen, this evidence looks mixed). The BIS found that negative interest rates passed through fully into money markets. Switzerland and Denmark did, after all, institute negative rates in part to stabilize the exchange rates. 

I think more work needs to be done on this topic, but from the theory and the data, I don't see much that suggests that negative interest rates can't or didn't stimulate the economy. I am persuaded that negative reserve rates are best complemented with other policies, and I credit this paper with making the point. I believe central banks should do more to boost lending during liquidity trap periods, such as through a full program of quantitative targeting of loan levels, regulation, fines, negative interest rates, or subsidies for loans made. China in fact was said to do quantitative targeting during the Great Recession, and France and Germany did things like this during the Bretton Woods period. (See this nice paper by Eric Monnet.)

Overall, I'm a big believer of much more aggressive monetary policy at the zero lower bound than what we've seen. While I think a healthy degree of skepticism about new policy tools during liquidity trap periods is prudent (probably, mistakes were made with the rollout and PR around QE, even if it does seem to have been stimulative), and while I also think papers like this one move the debate forward, I've also long been skeptical of the skepticism of the idea that monetary policy can't be effective at the ZLB. I worry that this paper may be misinterpreted to suggest that banks shouldn't try to use negative interest rates at the ZLB, and should opt to do nothing instead. This despite the correct conclusion being that central banks should use negative reserve rates in conjunction with other policies. Some like this happened with people who read Paul Krugman only occasionally, but not in the round. They walked away believing that monetary policy had "shot its wad" -- in the words of a former president. Had they read every word Krugman wrote, they would have believed instead that central banks needed to credibly commit to higher future levels of inflation to stimulate the economy, but only that traditional monetary policy was ineffective. I observed this when I worked in the Obama CEA, and some economists there too believed that nothing more could be done on monetary policy, leading them to not want to recommend to the President that he make his vacant FOMC picks. There's a case to be made that this was the single biggest policy mistake Obama made while in office. And that mistake, to a large extent, explains how we got to where we are. 

Note: I should mention that many of the points above were motivated, directly or indirectly, by the insightful referee reports of my students! 

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Ensidig riktig

Lærebøkene gir med god grunn bare én måte å beregne verdiskapning. Så når Rajee Sivam og Terje Strøm ved NyAnalyse i DN 8. oktober mener at min argumentasjon om verdiskapningen til Nordlys vindpark er ensidig, så har de på sett og vis rett. Den er ensidig riktig.

Verdiskapning er differansen mellom inntekter og kostnader. Samfunnsøkonomisk verdiskapning tar også med bidrag og kostnader som ikke fremkommer i det bedriftsøkonomiske regnskapet. Det kan for eksempel bety at lønnskostnadene må settes til null dersom arbeidstakerne ikke har noe annet å gjøre. Det er sannsynligvis ikke tilfelle når det gjelder Nordlys vindpark.

I følge NyAnalyse er kostnader brukt som mål på verdiskapning fordi det er en etablert metode i bransjen. Søk på internett tyder på at de kan ha rett. I så fall er det mer forståelig hva NyAnalyse har gjort, men problemet er da adskillig større.

Når kostnader er verdiskapning, så er alle tiltak samfunnsnyttige. De dyreste mest. Prioriteringen av ressurser blir meningsløs. Hverken lærebøker eller forskningsartikler anbefaler metoden, og den strider mot sunn fornuft.

En hypotese er at mange oppdragsgivere ikke selv er samfunnsøkonomer og dermed ikke forstår resonnementet om alternativ anvendelse. Konsulentene skjønner kanskje at metoden ikke er helt god, men har behov for oppdrag. Jeg oppfordrer bransjen til å tenke gjennom om det er etisk forsvarlig å bruke en metode som ikke er gangbar innen akademia.

At vindkraftverket ikke er ferdigstilt og ikke har inntekter er ikke noe godt argument. Vanlig framgangsmåte er da å beregne nåverdien til fremtidig overskudd, og trekke fra investeringskostnadene.

Og ja, en økning i eiendomsskatt på ti millioner vil bidra positivt, men Tromsø kommunes budsjett er altså på over fire milliarder kroner.

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