Greg Mankiw's Advice for Negative Interest Rate

Greg Mankiw recommends the negative interest rate in his NY Times article. He acknowledges Gesell and Keynes, but it's odd that he tells nothing about Krugman's famous article in 1998. In the article, Krugman built a toy model to recommend the inflation targeting to make the real interest rate negative. However, he writes in a recent entry of his blog:

In fact, I wrote down my original liquidity trap model starting from a firm belief that the liquidity trap was nonsense: even if the interest rate is zero, I thought, increasing the money supply must raise demand. So I set out to write a model with all the i’s dotted and t’s crossed, so as to demonstrate that point - and found, to my shock, that the model actually said the reverse.

What comes down to is this: once you've pushed the short-term interest rate down to zero, money becomes a perfect substitute for short-term debt. And any further increase in the money supply therefore displaces an equal amount of debt, with no effect on anything. Period, end of story.

If Mankiw hadn't read the 1998 article, I strongly recommend him to read it. If he read it, I wonder how he overcome the difficulty to make people expect inflation when the Fed can't increase the monetary aggregate, which Krugman gave up at last.

On the other hand, Mitsuhiro Fukao proposed a more direct way to make the interest rate negative - to tax the cash. It sounds even more bizarre than artificial inflation, but Fukao insists that it's legitimate to tax the cash. Other economists propose to make interest rate negative by electronic money.

Indeed Japan's experience of the "lost decade" isn't shared by American economists...