Submission Number: EB-19-00629 There is no such thing as the zero lower bound Joshua R Hendrickson University of Mississippi Abstract Conventional discussion of the zero lower bound on nominal interest rates relies on static reasoning. According to the conventional argument, individuals holding interest-bearing assets should switch to currency the instant that the nominal interest rate falls below zero since currency has a fixed nominal rate of interest equal to zero. In this paper, I argue that the fixed costs associated with the storage of cash combined with uncertainty about the expected future path of the nominal interest, require a dynamic rather than a static analysis. Individuals holding an interest-bearing asset have the option, but not the obligation to switch to currency at any point in time. The decision of the individual is to determine at what point to exercise this option. I show that the lower bound on the nominal interest rate in this context is below zero. This is true even if storage costs are approximately zero. Submitted: July 10, 2019.