I suspect most of the seigniorage these days ain't in the paper notes, but in database entries. Ie reserves that banks hold at the central bank. (Though Interest on Excess Reserves makes this topic more complicated than it used to be in the past.)
The rest of your comment seems to be about what is logical for an individual or perhaps for society. And that's useful, but not at all where I wanted to go with my comment. I was purely speculating on how to get the maximum seigniorage for the central bank.
> Pension funds, 401k are all tight to various investments, indices, etc. that are all reflection of the total economy. And I see it as my participation in the broader economy as I spend money that creates jobs and creates new economic exchanges further, and as a shareholder I capture that value back anyway. People should keep their spending at their social level if they want to keep the economy going smoothly.
People keeping their money as cash under the mattress implicitly also lend it out to the economy. An inflation targeting central bank will notice that (statistically) less spending is going on when the money is under the mattress, and print more money to compensate. When you start spending the mattress money, the central bank will remove money from circulation to compensate.
The net effect on the economy is pretty much the same as if you had stuck it directly into a bank account. (The main practical difference is in who's doing the asset allocation. But the amount of total spending is about the same: it's whatever the central banks decides it should be. No need for you to help smooth it out.)
You are right that with an inflationary currency, keeping money under the mattress is a losing proposition for the individual. But with eg a deflating currency, cash might be a decent investment. (And you can get into these kinds of regimes without crashing the economy, by eg central bank that targets a constant nominal GDP, or with the historic gold standard.)
That's why I was bringing up the example of Japan: when they had deflation, people were keeping lots of cash around.
Just for clarity: I wasn't even thinking so much about money under the mattress, but mostly about 'cash in your wallet'.
If I were the state I wouldn't be targeting wins by removing the value from people's hands through small scale things like collectibles where there still production element involved. I'd try to push it further into completely virtual worlds. Bitcoin comes in mind as a perfect tool for long-term removal of value from potential materialization in the real world that would use resources of the planet.
I can see how the US state is involved in orchestrating bitcoin. Lots of value has been transferred into bits on the blockchain. The blockchain itself is slow which prevents people from moving coins around and pushing them further holding longer. It's also prone to mistakes which further destroys value. It was also a good way to teach people to check all details in the real world.
The US and others have full visibility into all movements of coins which is great for controlling money flows. Creation of new economic models allowed to capture bad elements of the society in the process. And the global construct of bitcoin pulled value out of the whole world creating another win for the US.
I would like for cryptocoins to keep increasing in prices so more people could lock the value they hold. As long as we maintain the idea that some control virtual worlds that value never has to materialize in the real world keeping the planet better for everyone. Of course, electricity was spent on it but relative to the $2T of value captured in a virtual world, it's amazing ROI. Plus we got infrastructure for AI just in time.
Bitcoin (and all other blockchain currencies together) are small fry compared to the regular financial system, and eg banks' reserve accounts at the Fed. At least at the moment.
I'm not sure the US would be so hostile to bitcoin and crypto in general, if they wanted to move people to it? Here in Singapore our regulations are much more crypto friendly.
Btw, there's some technology in the works to make blockchain currencies much, much harder to trace. But people haven't really taken it up so far.
Most Americans shouldn't keep their money in savings and should invest into the stock market because it's a reflection of our collective economical input. And if you just keep it in Savings then it'll keep up with the interest rate which doesn't change the stored value, so what's the point? While in big indices there always going to be winners because that's just the nature of the game, so by betting on winners you are going to outrun the interest rate by capturing this additional value that is being created. And people working for these winning companies and startups are very interested in beating the interest rate, they're mostly shareholder aligned as they themselves are equity holders. If you don't have equity you're working in, it still makes sense to bet on winning companies since those people are vey much equity aligned and just want to capture the market share.
Pension funds, 401k are all tight to various investments, indices, etc. that are all reflection of the total economy. And I see it as my participation in the broader economy as I spend money that creates jobs and creates new economic exchanges further, and as a shareholder I capture that value back anyway. People should keep their spending at their social level if they want to keep the economy going smoothly.