This Harvard Economist Is Trying to Kill Cash

[Independent voter]

Economist says getting rid of cash will get rid of a lot of crime and allow the government to boost the economy more easily.

Who uses hundred dollar bills? Mostly criminals. And there will be a record of every transaction of course.

Police are all for it.





http://www.bloomberg.com/news/articl...itter-business


Kenneth Rogoff has an interesting résumé: international grandmaster of chess, former chief economist of the International Monetary Fund, professor at Harvard University. And he is now—unofficially—the No. 1 enemy of cash.

"I'll admit, it's a very quirky topic," Rogoff said at a press lunch on Tuesday put together by the publisher of his new book, The Curse of Cash. But he insists that a country without most cash is an idea whose time has come.

Law-abiding citizens rarely have need for $100 bills, yet there are 34 of them in circulation for every woman, man, and child in the U.S. That suggests the bills are circulating mainly in the underground economy. If the biggest bill were worth $10, rather than $100, delivering someone a million bucks under the table would require a 220-pound chest rather than a 22-pound briefcase. Forcing people to use smaller bills, Rogoff argues, might make crime more conspicuous and less convenient.

Rogoff also contends that suppressing cash would make it easier for the Federal Reserve and other central banks to boost economic growth by pushing interest rates into negative territory. That's the strange world where you pay to keep money in the bank and get paid to borrow it. The theory is that negative rates will induce people to save less and spend more, which will revive growth. Savers won't tolerate negative interest rates on their savings as long as cash is an alternative. Why not simply withdraw stacks of $100 bills and keep the cash in a mattress or a safe?
Rogoff says he doesn't want to get rid of cash all at once. First, he would phase out 100s, then 50s, then 20s, leaving smaller bills in circulation for the foreseeable future. "I want to have a less-cash society, not a cashless society," he said.

Law enforcement officials are among Rogoff's biggest allies in the war on cash, he says, and some central bankers are also interested. The front of his book carries a blurb from former Fed Chairman Ben Bernanke, who calls the book "fascinating and important" and the argument "compelling and wide-ranging." Former Treasury Secretary Larry Summers and Citigroup Chief Economist Willem Buiter have also endorsed the idea, which Rogoff first broached in a scholarly paper in 1998.

Some conservatives, on the other hand, detest the idea, fearing that getting rid of cash will make it easier for government to monitor and control citizens' behavior. The anti-cash ideas of Rogoff and Buiter "are now the foundation for the new age of Economic Totalitarianism that confronts us," foreign-exchange analyst and blogger Martin Armstrong wrote last year.

Rogoff doesn't view totalitarianism as much of a threat. He does worry just a bit that getting rid of cash could make it harder for central banks to control prices because of an "extremely interesting and provocative conjecture" of economist Neil Wallace, who taught at the University of Minnesota and is now at Penn State. The details are complicated, but the concept is that monetary policy only works if bonds are different from cash, and if cash became electronic it would act just like bonds.

In his research, Rogoff decided that central banks can probably avoid the problem Wallace raised, but he admits to uncertainty on this point. He imagines someone telling him, "Oops! The Fed can't control prices anymore. That was a theory. Didn't you think about it?"

[Medusa Cascade]

Haven't used cash in years

[Venant]

Not surprising that somebody from Harvard doesn't consider totalitarianism much of a threat, he's probably pretty confident that the Harvard affiliation with the ruling class would put people like him in good standing if things ever came to that. Would be interesting to see how fearful Harvard economists would be of totalitarianism if it looked more like Mao's cultural revolution.

[Azadina]

Cash can dissappear. Then so does all the tax dodging people love it for.

[Caelia]

Haven't used cash in years

Same, last time I used an ATM must've been over 10 years ago, there's simply no reason to use cash today. Owe your friend some money? There's apps for that or if you live in a country that doesn't have them there's instant bank transfers.

[Project 501D13R]

If this happens my landlord is going to rage, he hated me paying in 20's because that's what I get from an ATM, if I pay in 10's he's going to have a stroke.

[Macaquerie]

Not surprising that somebody from Harvard doesn't consider totalitarianism much of a threat, he's probably pretty confident that the Harvard affiliation with the ruling class would put people like him in good standing if things ever came to that. Would be interesting to see how fearful Harvard economists would be of totalitarianism if it looked more like Mao's cultural revolution.

Yes, how indeed would we fight back against economic totalitarianism without ample quantities of government issued fiat currency.

[Deleted]

While I dont really use cash myself, I think it should stick around for several reasons. First, government shouldn't be able to control and know every aspect of the lives of private citizens. Then cash is safer.. a system error or hack could mean your money is just gone and cant be recovered. And lastly, the most important reason. Cash transactions dont rely on 3rd party services. You get your pay, put it under your pillow or hide it in an old sock and youre golden instead of being forced to trust banks who can just arrest your money at will and use it to earn profit for themselves and if thats not enough, charge you for transactions.

[Twoddle]

Haven't used cash in years

I used cash just now to buy lunch.

[Captain N]

Only time I use cash is when I go to the casino.

[Kapadons]

No thanks. Wife's weed dealer doesn't accept credit cards.

[dextersmith]

Endorsing negative interest? What a cunt! It's your money, and your prerogative to save it. As long as any denominations exists, people will stop using banks or buy gold and foreign currencies.

[Deleted]

Same, last time I used an ATM must've been over 10 years ago, there's simply no reason to use cash today. Owe your friend some money? There's apps for that or if you live in a country that doesn't have them there's instant bank transfers.

The reason is that you have control over your capital. I don't want to give over every last bit of control to bankers thank you.

[Templar 331]

Law-abiding citizens rarely have need for $100 bills, yet there are 34 of them in circulation for every woman, man, and child in the U.S.That suggests the bills are circulating mainly in the underground economy.

Meaning he has no freaking idea what he's talking about.

Not everyone has a debit card. Before I had mine I would cash my paycheck and pay the bills I didn't have to mail off in cash. And they would tend to be over $100. Any money I had left over I'd use to buy lunch off of the local food truck.

And before that when I was still living with my parents we raised quail. We'd sell them by the hundreds to in the thousands. Do you think they paid with card? Some paid with check but most paid with cash.

[Underverse]

Yeah I wouldn't mind this at all. I never use cash unless I absolutely have to. Which is generally at an establishment that's trying to evade taxation.

[Deleted]

Yes, how indeed would we fight back against economic totalitarianism without ample quantities of government issued fiat currency.

How would people fight back when they can't pay for anything? Any dissidents could simply have every penny frozen.

[lonely zergling]

Cash is freedom. Cash is privacy. Leave cash alone plx.

[Sunseeker]

The elite are always in favor of the poor having less control over their own money.

[Themius]

The elite are always in favor of the poor having less control over their own money.

How is having money in a bank not having control?

You know if a person steals your wallet with your cash that's it... me on the other hand I just freeze my cards and lose no money, even if i did it's insured anyway.

[Independent voter]

In very corrupt countries getting rid of cash would reduce a lot of corruption. How can you pay a bribe if you have no money? And why would there be a transaction from you to a cop?