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An Old Tool to Fight a New Recession
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An Old Tool to Fight a New Recession

Perishable Money

Stephen Mihm
Bloomberg, 2019
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Editorial Rating

9

Qualities

  • Eye Opening
  • Overview
  • Visionary

Recommendation

Traditional monetary policy prescribes injecting money into a system in crisis. But with interest rates near zero, US policy makers will need a new trick to stimulate the economy the next time it buckles. In this intriguing Bloomberg column, history professor Stephen Mihm argues that central bankers should bone up on a idea proposed more than 100 years ago: that what an ailing economy needs isn’t more money but faster money. Executives, entrepreneurs and citizens interested in a creative response to the next recession will find this a thought-provoking article.

Take-Aways

  • Conventional monetary policy probably won’t work in the event of another economic downturn. 
  • In a financial crisis, people hoard money, which makes the downturn even worse.
  • In 1916, economist Silvio Gesell published his work arguing for depreciating currency.

About the Author

Stephen Mihm is an associate professor of history at the University of Georgia.

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