It just seems wrong to call an economic idea dumb when it basically came from the guy that taught you economics. I agree the idea seems silly, but I think Mankiw is very intellegent, and wasn't seriously thinking of eliminating 10% of money as the answer. It certianly wasn't part of my macro or micro textbooks.
It is not about eliminating 10% of money because what Ben is doing will basically achieve the same thing. The problem here is the randomness of this 10%. This causes uncertainty. Given most people are risk-averse, the actual devaluation will be far greater than 10%. Mankiw might be very intelligent but that doesn't mean he can't have dumb ideas once in a while. One dumb idea won't kill the reputation he earned throughout his career however. Not sure why you feel the need to defend him on this one particular issue.
I'm not really trying to defend him. It is the idea of one his students. I just am wondering if he is thinking aloud through his writing. I agree that the idea is stupid and would cause more harm than good.
