““Some grappled with the mind-bending question of why rates _can't_ go below zero. What if the Fed tried to set a negative interest rate--that is, effectively levying a tax on savings? Said Greg Mankiw, a Harvard economist and former White House adviser, at the Boston conference, "What a depositor is going to do is say, 'Well, if they're going to charge me money to keep my money at the bank, I'm just going to keep my money at home,' and the only thing you'll generate is a demand for safe assets--and by that I mean assets that are safes because they're going to be buying a bunch of safes so that people can put their money in their safes rather than in the bank." He added that one way around that problem suggested by a student, would be to declare currency with certain serial numbers invalid. "I won't say who he was," Mankiw said. "Because he may want to be a central banker one day.””
