rogoff145_Martin Barraud_Getty Images_credit cards

La malédiction de l'argent liquide

Sep 5, 2016 Kenneth Rogoff

CAMBRIDGE – Le monde est inondé de billets de banque, car les grandes banques centrales produisent des centaines de milliards de dollars chaque année, essentiellement sous la forme de grosses coupures, notamment de 100 dollars. Ces dernières constituent presque 80% de la somme étonnante de 4 200 dollars en liquide détenue en moyenne par chaque citoyen américain. Au Japon, 90% de la monnaie existe sous la forme de billets de 10 000 yens (environ 100 dollars) et chaque Japonais détient en moyenne presque 7 000 dollars en liquide. Comme je le répète depuis 20 ans, ces liquidités stimulent la croissance de l'économie souterraine plutôt que celle de l'économie officielle.

Je ne suis pas partisan d'une société sans liquidités, qui ne serait ni réalisable ni souhaitable actuellement. Pourtant une société sans argent liquide serait plus équitable et plus sûre.

Avec la montée en puissance des cartes bancaires, des transferts électroniques et des payements par téléphone portable, on utilise de moins en moins d'argent liquide dans l'économie officielle, notamment pour les transactions d'une certaine importance. Les enquêtes réalisées par les banques centrales montrent que les gens ordinaires et les entreprises ne détiennent qu'une petite partie des grosses coupures.

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Kenneth Rogoff

Writing for PS since 2002
206 Commentaries

Kenneth Rogoff, Professor of Economics and Public Policy at Harvard University and recipient of the 2011 Deutsche Bank Prize in Financial Economics, was the chief economist of the International Monetary Fund from 2001 to 2003. He is co-author of This Time is Different: Eight Centuries of Financial Folly and author of The Curse of Cash.

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0 Comments on this paragraph, 96 Comments on this article

Mauricio Duran-Loriga Mar 21, 2017

Imagine (minus) -5% interest rate. People will cut spending by far more than 5%, igniting an instant collapse in aggregate demand. Make sure you understand the concept of elasticity by then. Credit creation will halt, courtesy of negative monetary velocity. Fractional reserve banking can not exist in that environment. That bad.

Then ensuing deflationary depression will be far worse than any past inflationary depression, as debts will stand due even after everything collapses.
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Mauricio Duran-Loriga Mar 21, 2017

Ken, all along through history, before paper money ever existed, in all countries, there was corruption, terrorism, tax fraud, et al. Ignorance is a serious threat to global security.

In-mates are not allowed to have cash in their posession in US prisons. They use mackerel as "legal tender".

Ken, take all our paper cash and burn it. We the people will adopt a new legal tender, despite both dictators and elitists.

Nothing to do with tax evasion, corruption, privacy or terrorism.

It's just about the freedom to choose.
A new reply to this comment has been posted.
Roger Lewis Mar 11, 2017

If governments were not so hung over on the Money they borrow from ´´Markets´at interest, the world would be a much better place.
A focus on Cash in an age of debt deflation seem par for the course for Mr Rogoff. Policy Makers should really look to the likes of Professor Steve Keen for some Evidence-based economics analysis.In such, an analysis the Huge cost of Government Borrowing over being the originator of money creation would reveal itself.https://letthemconfectsweeterlies.blogspot.se/2016/08/tides-of-dollar-moon-poem.html
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Michael Vielhaber Oct 3, 2016

Certainly, Mr. Rogoff is aware of the *huge* difference in size between actual circulating cash and electronic (QE etc.) money. Cash is freedom (from the state spying on our spending patterns) and electronic cards imply surveillance. That's all there is to say about people wanting to abolish (oh, first step is of course only to diminish) cash.

To fight organized crime, just close Cayman Isl. (a US subsidiary) or Channel Isl. (UK) or LUX. as finance hubs.
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Mario Mario8282 Oct 2, 2016

Rogoff must be an oxymoron who never looked at how the human beings interact. Reducing the denomination value of the bank notes will increase the public anger against the corrupt elite. The corruption today is already cashless: lavish sponsored "conventions", fat jobs and "speaker's" fees. Everybody knows how it goes (except this inept plutocrat). Corruption today is called "networking" and registered lobbyists... Less cash is more financial repression and this will make the 99% hate even more the ones who take away their privacy.
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Jon W Sep 25, 2016

Mr Rogoff has already campaigned against cash in the Wall Street Journal in an article with the title “The Sinister Side of Cash” (http://www.wsj.com/articles/the-sinister-side-of-cash-1472137692). But here the references to negative interest rates have all been removed, perhaps to make the case against cash appear more palatable?

In the WSJ article, Mr Rogoff says, “In principle, cutting interest rates below zero ought to stimulate consumption and investment in the same way as normal monetary policy, by encouraging borrowing. “. That may be the principle but there is no evidence that it will work in practice.

First, it shows a level of ignorance of human psychology that is somewhat surprising. In uncertain times, the instinct is not to spend more but to hunker down and protect what one already has. There can be no more uncertain a time than the moment when banks start levying negative interest rates. And it’s a strange logic that says money (interest) has to be taken away from people to make them spend. How can they spend when their resources are being depleted? How can they spend when they have no idea what the future will bring?

Second, interest rates have been close to zero for eight years and the increase in consumption, investment and borrowing hasn’t happened. Eight years! Where is the evidence that lowering them even further will have any effect at all? One issue that the article absolutely ignores is the way technology is affecting the way the world economy is developing. Reducing transport costs and increasing automation mean that the days when growth could be assumed are long gone. Changing interest rates can have no effect on demand when the forces of cost reduction and job automation are so much stronger. Already Hanjin is a victim of this process. Interest rates are irrelevant if people don’t have jobs.

Third, low or negative interest rates may encourage borrowing, but who wants to lend when there’s no return? The article appears to worry that “negative rates will push banks, if not the entire financial sector, to engage in reckless risk-taking, which is threat enough with interest rates at zero.”. Wouldn’t negative rates reduce lending, especially risky lending, because there’s no profit?

The article goes on, “Not everyone likes negative rates. “ Really? Some weasel words there!! Surely almost no-one does? And then “But if a strong dose of negative rates can power an economy out of a downturn, it could bring inflation and interest rates back to positive levels relatively quickly, arguably reducing vulnerability to bubbles rather than increasing it.” Again, this is just pie-in-the-sky dreaming with no supporting evidence. Already we are in a position where interest rates cannot rise because the markets panic whenever a rise is forecast. With negative interest rates, this problem will get much worse. If negative interest rates are introduced, they will be extremely difficult to reverse. Remember, income tax was originally introduced as a temporary measure as well! Banks will not easily give up the new income stream easily. And what about those loans that were apparently so easy to obtain a few paragraphs back? How will they be repayable when rates return to the positive?

It’s strange how all attempts to engineer a recovery from the 2008 crash appear to involve giving money to banks. The only result of massive QE have been huge inflation in asset classes such as town houses and classic cars. There has been no trickle-down effect to ordinary people, so no real increase in demand. Now negative interest rates are being proposed as a panacea, which will see funds flowing from ordinary people to, surprise surprise, banks! This flow should be reversed. In the UK, this has already, unofficially, happened: the refunds of mis-sold payment protection insurance caused an increase in demand in the late 2000s and early 2010s. Giving more money to the banks cannot increase demand, money flowing from the banks to ordinary people can.

As soon as negative interest rates are introduced, society must immediately say goodbye to any pretensions it may have to social mobility. How will it be possible to save for a deposit on a first house? How will it be possible to save to invest in one’s own business? How will it be possible to save for retirement? This is already a time-bomb waiting to go off, negative interest rates will make it go thermo-nuclear.

Mr Rogoff sees cash as an unfortunate impediment in the way of negative interest rates. Quite the contrary, it is a necessary check and balance against such a mad and untested policy. I’m sure Mr Rogoff understands all the points I have mad above, but still he advocates an end to cash. There must be another, unspoken, reason for this. If there is a sinister side of cash, I would say it is miniscule compared to the effects of negative interest rates and compared to the real reason whatever that is for advocating the end to cash.
A new reply to this comment has been posted.
Jon W Sep 25, 2016

Mr Rogoff has already campaigned against cash in the Wall Street Journal in an article with the title “The Sinister Side of Cash” (http://www.wsj.com/articles/the-sinister-side-of-cash-1472137692). But here the references to negative interest rates have all been removed, perhaps to make the case against cash appear more palatable?

In the WSJ article, Mr Rogoff says, “In principle, cutting interest rates below zero ought to stimulate consumption and investment in the same way as normal monetary policy, by encouraging borrowing. “. That may be the principle but there is no evidence that it will work in practice.

First, it shows a level of ignorance of human psychology that is somewhat surprising. In uncertain times, the instinct is not to spend more but to hunker down and protect what one already has. There can be no more uncertain a time than the moment when banks start levying negative interest rates. And it’s a strange logic that says money (interest) has to be taken away from people to make them spend. How can they spend when their resources are being depleted? How can they spend when they have no idea what the future will bring?

Second, interest rates have been close to zero for eight years and the increase in consumption, investment and borrowing hasn’t happened. Eight years! Where is the evidence that lowering them even further will have any effect at all? One issue that the article absolutely ignores is the way technology is affecting the way the world economy is developing. Reducing transport costs and increasing automation mean that the days when growth could be assumed are long gone. Changing interest rates can have no effect on demand when the forces of cost reduction and job automation are so much stronger. Already Hanjin is a victim of this process. Interest rates are irrelevant if people don’t have jobs.

Third, low or negative interest rates may encourage borrowing, but who wants to lend when there’s no return? The article appears to worry that “negative rates will push banks, if not the entire financial sector, to engage in reckless risk-taking, which is threat enough with interest rates at zero.”. Wouldn’t negative rates reduce lending, especially risky lending, because there’s no profit?

The article goes on, “Not everyone likes negative rates. “ Really? Some weasel words there!! Surely almost no-one does? And then “But if a strong dose of negative rates can power an economy out of a downturn, it could bring inflation and interest rates back to positive levels relatively quickly, arguably reducing vulnerability to bubbles rather than increasing it.” Again, this is just pie-in-the-sky dreaming with no supporting evidence. Already we are in a position where interest rates cannot rise because the markets panic whenever a rise is forecast. With negative interest rates, this problem will get much worse. If negative interest rates are introduced, they will be extremely difficult to reverse. Remember, income tax was originally introduced as a temporary measure as well! Banks will not easily give up the new income stream easily. And what about those loans that were apparently so easy to obtain a few paragraphs back? How will they be repayable when rates return to the positive?

It’s strange how all attempts to engineer a recovery from the 2008 crash appear to involve giving money to banks. The only result of massive QE have been huge inflation in asset classes such as town houses and classic cars. There has been no trickle-down effect to ordinary people, so no real increase in demand. Now negative interest rates are being proposed as a panacea, which will see funds flowing from ordinary people to, surprise surprise, banks! This flow should be reversed. In the UK, this has already, unofficially, happened: the refunds of mis-sold payment protection insurance caused an increase in demand in the late 2000s and early 2010s. Giving more money to the banks cannot increase demand, money flowing from the banks to ordinary people can.

As soon as negative interest rates are introduced, society must immediately say goodbye to any pretensions it may have to social mobility. How will it be possible to save for a deposit on a first house? How will it be possible to save to invest in one’s own business? How will it be possible to save for retirement? This is already a time-bomb waiting to go off, negative interest rates will make it go thermo-nuclear.

Mr Rogoff sees cash as an unfortunate impediment in the way of negative interest rates. Quite the contrary, it is a necessary check and balance against such a mad and untested policy. I’m sure Mr Rogoff understands all the points I have mad above, but still he advocates an end to cash. There must be another, unspoken, reason for this. If there is a sinister side of cash, I would say it is miniscule compared to the effects of negative interest rates and compared to the real reason whatever that is for advocating the end to cash.
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david b Sep 19, 2016

http://evonomics.com/joseph-stiglitz-inequality-unearned-income/

this wonderful article by stiglitz shows how deeply the ban of cash idea is flawed. it preserves bad economic and a deeply dysfunctional financial system
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david b Sep 19, 2016

So contrast the bad economics evidenced here with this tiglitz article

Joseph Stiglitz Says Standard Economics Is Wrong.
http://evonomics.com/joseph-stiglitz-inequality-unearned-income/

rogoff uses flawed economics in order to justify banning cash instead of realizing that negative interest rates, and even considering the ban of cash is proof of the flawed economics he endorses. it doesn't aeven begin to address the many other more mportant issues, it fact it preserves a deeply dysfunctional system
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Gabriel Atega Sep 15, 2016

Cash is freedom. I like large bills on my wallet so it can carry more without being bulky. Economists like to control and manipulate the economy with government. That means less freedom.
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john werneken Sep 12, 2016

Taxes are twice what they should be; tax evaders are HEROES.

When legal vs illegal is only what a corrupt tyrannical government says that they are, people need cash to evade government oppression.

You have missed the whole point (of cash).
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D. V. Gendre Sep 12, 2016

BTW Mr. Rogoff seems to have missed the news about rubbing the central bank of Bangladesh! I'm pretty sure such a hack will one day lead to the biggest heist in mankind. What a wonderful world for all criminals if money is stored on an electronic powered devise! Or a simple earthquake, lets say in San Francisco - no power for three weeks and people will turn to cash hungry zombies.
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D. V. Gendre Sep 12, 2016

Shocking how naive some scholars can be. I'm sure all dictators and despots on this planet rub their hands and can't wait until Mr. Rogoff's dream comes true! They will eliminate the opposition by one simple click on a keybord to put them to silence. And who knows what the future will bring one day to us in a so called "free society".
Not to mention that one day all citizens will be enslaved by the economy. Mr. Rogoff still hasn't grasped that the economy should serve mankind and not vice versa that mankind should serve the economy. And the freedom not to consume, not to invest, not to lend out money (to minimize risk) is part of this economic freedom! That should be understood.
We should never sacrifice our economic freedom because some scholars thinks they could save the world with some naive ideas. History of mankind is full of people that would do good but it ended mostly in the greatest desasters of our history.
Having said that, it might be that people will start again to use gold and silver for trade. So Mr. Rogoff will then of course confiscate all gold and silver and prohibit any any trade with those metals. How much more should we sacrifice to satisfy one man's ego!
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Douglas Evans Sep 12, 2016

One more thing: Project Syndicate is an excellent site to get the opinions of real experts. The subjects are interesting and informative for me, and I would hope for everyone who reads them. Yes, sometimes some articles become redundant, but that's a small price to pay for all the really good stuff.
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Douglas Evans Sep 12, 2016

First: Galileo was not burned at the stake. This is the basic problem with the internet these days. People post all sorts of things they know nothing about, and get things wrong. They don't get lots of facts right, and then others read them and low and behold, more people believe what was incorrect. Check your work, please.
Second: Cash money vs. debit and credit cards. I tell my students all the time to use these cards very carefully. Everytime you use either type of cards you pay a fee, and often the seller, or store, also pays a fee. How many transactions do you make in a month? Probably several hundred if you buy groceries, gas, lunch, gifts, etc. Let's assume that you make 200 purchases in a month. Every time you use your debit card you pay $1.00. That could run into 100's of dollars. Take a month of your purchases and add it up. Now guess how many of these transactions take place in a day, or month,or year. How much of your money are the banks earning from You, the public? Now think about this, are you using a credit card or a debit, the bank gets a little more on credit cards. Check it out. If you buy on credit, as I tell all my students, they are engaging in a loan transaction. Just as they do when they buy a house or a car, or groceries. Check out your interest rates. Of course banks are important, but does that mean you have to be used like a fool by them. Personally I will get my paycheck via direct deposit, then I'll take $500.00 out of the account in cash, and spend it on gas, groceries, etc. I can save several of these fees. What does it amount of in the aggregate? Lots of dough for the banks, and why? If it's a loan the payments go on and on, seemingly forever. Credit card debt is a real problem for the macro economy. I instruct my students to "be careful" and don't fall into the debt trap like this.
Third: Negtive interest, well that simply means that you pay the bank to manage your money. Good deal eh? No, bad deal, real bad. In that case you pay and you've probably already paid a fee just to have an account.
So sorry guys, credit is a bad deal. And not only for the individual, but for the country as a whole. Want to increase the demand for goods and services, then skip the fees, and count you money. Money is the grease that makes the economy going. Without aggreate demand nothing happens.
Good luck and be careful. As my dad used to say, "kid, money don't grow on trees".
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Robert Lunn Sep 12, 2016

Yes it's and old story and he's not talking about how much money the carry trade puts back to Treasury. My guess the Fed has returned close 700 billion since qe began. The hangers will be tough but until someone can define the manifestation it wil continue to evade most of us.
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Sheila Driver Sep 11, 2016

How many times do we need to see this article. If we use Project Syndicate it is to read new postings. Not something that has been circulating for a few years and in the Wall Street Journal a few weeks ago.
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Greg Hall Sep 11, 2016

Sorry Professor Rogoff. It's clear you're half-baked on this stream of thought. Makes very little sense at all.
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otto ruthenberg Sep 11, 2016

only cash allows citizens to deal person to person without big brother watching. it is an essential measure of respect for the citizen in a world of mistrust and abuse of power. yes, it condones crime and tax evasion also, but so be it. Taxmen can demand from rich individuals that they prove their cash to be legal which will limit the worst abuse.
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david b Sep 11, 2016

Negative rates? You rub your eyes and search your memory. You can recall no precedent. And if you consult the latest edition of “A History of Interest Rates” (2005) by Sidney Homer and Richard Sylla, you will find none. A recent check with Mr. Sylla confirms the impression. Today’s negative bond yields, he says, are the first in at least 5,000 years

http://www.zerohedge.com/news/2016-09-11/case-2-rates-banning-cash-jim-grant-blasts-lunatic-proposals

Please note, this is the difference between being a real scientist and a pseudo discipline like economics. it should be self evident to anyone with an IQ over 95 that getting rid of cash means they screwed up big time. But they don't go back and start to question their screw ups. it's insanity

"Insanity: doing the same thing over and over again and expecting different results." - Albert Einstein

This means that by how albert einstein defines insanity rogoff is insane. I agree. to try and push on a string and work the interest rate channel when clearly the transmission mechanism if screwed up and it results in asset bubbles is beyond insane. it is beyond insane because frankly it's orwellian/ totalitarian and it's because in helps maintain a corrupt status quo of which rogoff is a member.
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Douglas Leyendecker Sep 11, 2016

Everyone talks their book and in this case quite literally.

It's pretty surprising to see all the negative comments here. Sure seems like political and economic elites are losing control. George Friedman's recent post "Merkel Doesn't Blame the Voter" pretty much tells the story...

https://us-mg6.mail.yahoo.com/neo/launch?action=calendar#mail
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kevin parcell Sep 11, 2016

Take away the large notes and criminals will use small notes, which is why there are so many large notes. Other than that, Kenneth, very good, imho.
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Hazel Henderson Sep 11, 2016

Once again, Ken Rogoff displays his ignorance of the actual politics of money-creation . As always, economics is simply politics in disguise.
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Derek Louden Sep 11, 2016

Money is a Store of Value, a Unit of Account, a Medium of Exchange and a Standard ofDeferred Payment. What has Prof. Rogoff got against it? His problem appears to be with people not spending it. He argues that negative interest rates will encourage dis-saving, people will get out and spend. This reveals an almost total detatchment from reality. When the economy crashed it did so in part because sub-prime borrowers had hit the lending buffers. People with no income could no longer buy a house on the strength of its inevitable rise in price. They were borrowed to the max. They remain so. Unless their income were to rise they won't spend. They can't. There are a large number of people who do have money in the bank and are now subject to near zero and soon to be negative interest rates. It would make sense for them to withdraw their cash as banks are unable to lend it. They have free cash from governments who have attempted to push on a string. There is no demand from firms wishing to borrow. Quantitative easing isn't sorting this. Firms will borrow or use their gigantic cash pile to invest only if people will buy what they intend to produce. But the vast majority of people can contribute nothing more to effective demand, they have no cash and they can't borrow. How then can the elite screw more money out of them? Well, this would work - prevent them from holding money in cash and then steal it from them if they pay it into the bank! Banks will return to profit and pay the dividends out to shareholding elites. Is there any alternative? Perhaps we need to consider a freeze on QE which creates cash for lending which no-one will borrow (firms) or can borrow (most people) and has made borrowing almost free (for governments). To boost the economy requires the vast majority of the people to have a bit more income. Aggregate Demand can't expand if the only people getting richer have no "wants" they haven't already satisfied. Along side them are large numbers of people, particularly those with disabilities and medical conditions with wants and no means to satisfy them. If each of these people were given Rogoff's $4,200 not much of it would remain unspent on food, on clothing and on rent arrears and medical bills. Until that happens demand won't increase, profits won't rise, firms won't invest and the global economy will continue to stagnate.
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Albert Aftoora Sep 11, 2016

Exactly what we need: more government control and interference.
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Frank Field Sep 11, 2016

And then, of course, the banks get their transaction fees for each swipe of a debit card, something absent when cash is used. We all recognize the wizards running banks need their mega-bonuses so why not insure those bonuses are adequately funded.
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Oeufs Bruns Sep 11, 2016

This reads like another cry for relevance after the 90% debt to GDP tipping point debacle.
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Viktor Vahn Sep 11, 2016

}}} all this cash is facilitating growth mainly in the underground economy, not the legal one.

And this is bad, how? Considering the regulatory stifling of the existing legal economy, this is an outlet for the growth pressures inherent in all societies.

There's a reason why the USSR was known for public drunkenness.
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david b Sep 10, 2016

Look,I'm sure most of you now about Galileo. he was burned at the stake for challenging the dogma of the time. Well rogoff is doing the same thing. instead of being able to admit the screw up of his profession and look back on established dogma he'd ban cash. these are profundity dysfunctional people who can't admit their mistakes and instead would punish everyone else instead of having to confront they screw up . Or they are being handsomely paid to promote this nonsense
- Joseph Sobry Sep 11, 2016
  
  Galileo burned at the stake ????
  A new reply to this comment has been posted.
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david b Sep 9, 2016

This is part 3 of a 4-part series by Nicole Foss entitled “Negative Interest Rates and the War on Cash”.

Part 1 is here: Negative Interest Rates and the War on Cash (1)

Part 2 is here: Negative Interest Rates and the War on Cash (2)

Part 4 will follow soon, and at the end we will publish the entire piece in one post.

The point would be to forced everyone into the system by depriving them of the choice to opt out. Once all were captured, many forms of central control would be possible,

The main promoters of cash elimination in favour of electronic currency are Willem Buiter, Kenneth Rogoff, and Miles Kimball.

Economist Willem Buiter has been pushing for the relegation of cash, at least the removal of its status as official unit of account, since the financial crisis of 2008. He suggests a number of mechanisms for achieving the transition to electronic money, emphasising the need for the electronic currency to become the definitive unit of account in order to implement substantially negative interest rates:

In justifying his proposals, he emphasises the importance of combatting criminal activity…

https://www.theautomaticearth.com/2016/09/negative-interest-rates-and-the-war-on-cash-3/

point one, the author knows what he's writing about is deceptive and in fact what I'd call a lie regarding the true motives

Taxing savings does not necessarily lead to increased consumption, in fact it is far more likely to have the opposite effect.

I have detailed some of the ample evidence against the bad economics here, the article goes further

the article mentions bank runs, privacy, etc. I don't like that an idea as faulty and dangerous as the one being presented here isn't being presented by a dangerous man

they did that with derivatives, dergulation, financialization derivatives. each time the thse folks find some lack and con us. Larry summers for example. Well, rogoff is nothing more than a con man here for special interests. what sickens me is that these people remain in positions of respect and authority in our system. there is no accountability. this idea is bad on every single level, it's good for the davos crowd, and they will stiill find ways to avoid and hide their money. they will buy favorable taxation etc.

I don't believe even the author thinks it's a good idea, he knows he will get paid off in some manner if it gets adopted though. consulting contracts perhaps. No different that Larry Summers.
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Mario Mario8282 Sep 8, 2016

Reducing the denomination value of the bank notes will increase the public anger against the corrupt elite. The corruption today is cashless: lavish sponsored "conventions", fat jobs and "speaker's" fees. Everybody knows how it goes, it is called "networking" and registered lobbyists... Less cash is more financial repression and this will make the 99% hate even more the ones who take away their privacy.
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Paul Daley Sep 7, 2016

Good article. Any loss of privacy from restricting cash transactions is more than offset by gains in accountability.
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david b Sep 7, 2016

Once Snowden confirmed his identity, he ordered his host to unplug the old Dell computer because he was worried about it being traced. He also asked Supun to purchase specialized software at a local computer shop that would have allowed Snowden to communicate through sophisticated encryption. Everything was paid in cash so there would be no trace. - See more at: http://news.nationalpost.com/features/how-edward-snowden-escaped-hong-kong#sthash.IpIXXMDZ.dpuf

So, it's pretty easy to see how political dissidents require cash in order to operate
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david b Sep 7, 2016

1) John Plender writes in the ft 9/7/16 how some want to push further negative interest rates. Well, we know that is rather cash constrained. Hence rogoff. trust me it's not about crime at all. We know all thse monetary gimmicks haven't done much for the real economy, but they have sure helped asset prices and the wealthy. rogoff just want to be able to push on that threat further. But as I've already proven (and it should be obvious to anyone with common sense by now) such pushing on a thread is based upon faulty spending assumptions of homo economicus
2) If rogoff was actually concerned about crime, he'd be writing a lot about the topic, he's written a lot about financial repression. hence this is a boondoggle for that.
examples of things he ignores:
Dishonest bankers threaten new financial crisis says Bank of England Governor Mark Carney
http://www.independent.co.uk/news/business/news/dishonest-bankers-threaten-new-financial-crisis-says-mark-carney-a7218156.html

Law Enforcement Losing War on White Collar Crime
http://www.nakedcapitalism.com/2016/09/law-enforcement-not-winning-war-on-white-collar-crime.html

he states he wants to raise taxes, but desires the extreme case of banning cash instead of closing loopholes like tax havens, a tobin tax, rqaising taxes on capital gains to the same as working income. All steps that should be done but the davos crowd doesn't want it. How about ending tax inventions, or other such tax schemes. All of these are things to tackle first

If one thinks through the issue you show deceitful and regressive rogoff's position is. frankly the reason he states is not even the real reason he advocates for the cash ban

Note, while I don't think trump is adolf hitler, what happens if a real facist type happens to get elected and consolidate power. turkey perhaps. What about the use of cash in repressive governments (Saudi arabia) . We see the rise of the "right wing populists and people warning about the dangers of facism. Do we really want those people to be able to follow all our transactions?

This article shows why many economists are in fact a danger. they lack the ability to see the consequences of their positions and often think in too narrow a silo.
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david b Sep 7, 2016

Bloomberg
Cash in a Box Catches On as Swiss Negative Rates Bite
http://www.bloomberg.com/news/articles/2016-09-06/cash-in-a-box-catches-on-in-switzerland-as-negative-rates-bite

Rogoff is selling the prospect of more and better financial repression under the guise of a crime issue. it helps banks, who makes money processing these transactions, etc. they don't want to fix their faulty monetary policy. this op ed amounts to a lie of omission because he's not telling the real story only making the case on a side issue that the 1% an back all the while knowing what they really are backing. Anyone who thinks differently is fooling themselves. Plus. the privacy issue. It's sad that this debate is known to so little of the population, and I've gone around and asked a lot of people. All are against, this is just another subsidy for the financial sector and to allow bad central banking polices to go further down the rabbit hole
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rakesh goel Sep 7, 2016

By controlling cash, society has put the financial control in the hands of the few - who are no more ethical than the criminals who dealt with cash. Attempting to control crime by controlling cash has been and is a very ineffective way. This attempt to control cash has made the rich richer, and the middle class poorer. The social imbalance created by financial control has caused several other social problems which are perhaps going to be more harder to fix.
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michael mittel Sep 6, 2016

What can we really expect to get from a person who once ran the IMF, and who won a prize from Deutschebank, the latter being a criminal organization who has illegally rigged interest rates, defaulted on gold deliveries, and laundered billions in criminal funds. A prize from DB is truly something to brag about. Yet economists like Mr Rogoff want to talk about illegal immigrants who pick lettuce. Like those people are really the problem...
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Francesco D'Allessandro Sep 6, 2016

To abolish cash means to curtail the freedoms we all enjoy routinely; it also means adding more financial burdens that no one needs. In many situations, currency transactions help reduce costs; one can get certain items much cheaper when buying at wholesale or retail businesses.

Take a car washers, lap dancer, busboy, waiter, waitress, bartender, maître d' or lawn maintenance specialist among many other jobs; they get cash tips because when they are left in a credit card it takes time to collect them. In an all card credit society it would surely hurt their livelihood as well as for the barber, the newspaper hawker or the kids selling lemonade juice on a street corner. Also, when one doesn’t pay with a dollar, a euro or a ruble you purchase with a credit card that gets you in debt because of interests accrued. Who does this benefit? It is certainly not the consumer Mr. Rogoff!

To extirpate cash from any community will not curtail crime for those in that profession will always find a way for their illegal markets to continue unabated; one can read daily the millions that are siphoned in credit card scams so that won't put hardly a dent of felonious behavior…but definitely it will hurt millions across the planet who rely on paper to survive.
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G. A. Pakela Sep 6, 2016

The case for cash is that it provides an arbitrage opportunity against negative interest rates imposed on the population by unelected central bank authorities that live in a world guided by theory.
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M M Sep 6, 2016

Kenneth, in view of the adverse comments made on this article in the mass media and on PS, I felt compelled to add the following: As long as the banks are no longer banks, and as long as governments are no longer governments and in view of the Greek and Cypriot episodes, among others, where the citizens saw their bank savings either wiped out or confiscated or collateralised, cash is and shall remain "King, Queen and Country"...
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michael mittel Sep 6, 2016

The real problem is that the "legal" economy primarily exists at this point in order to siphon the wealth of working people into the clutches of the .1% And who are we kidding here -- characterizing the $100 bill as a "very large denomination" is a total joke -- today's $100 buys about what $20 did in 1970 - four or five bags of groceries. But I see the propaganda campaign is full on these day.
- M M Sep 6, 2016
  
  Back in the 80s' banks in the US would not accept US$100 notes! It was alien to them...
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Avraam Dectis Sep 6, 2016

.
Governments worldwide have failed to maintain financial technology leadership - the result is discussions such as this.

Money itself, at one time, was a cutting edge technology, and remained that way for millennia.

Today, there is no state supported electronic method for two people to exchange funds, thus ceding that vital responsibility to profit driven third parties.

This is a great governing oversight of the financial and governing authorities.

Small incompetent government is not a blessing.
.
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david b Sep 6, 2016

More importantly, cash is about freedom. There are surely limits to the control over society we wish to hand over to governments and central banks? You don’t need to be a fully paid-up libertarian to question whether, in a world where we already worry about the amount of data that Facebook and Google can gather about us, we really want the banks and the state to know every single detail of what we are spending our money on and where. It is easy to surrender that freedom – but it will be a lot harder to get back.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11835603/Abolish-cash-Youd-be-losing-a-crucial-part-of-free-society.html
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david b Sep 6, 2016

Let us not forget how the author advocated financial repression in the past. Well the cash ban is key to that being imposed upon the populace.

To put "lipstick on a pig" is a rhetorical expression, used to convey the message that making superficial or cosmetic changes is a futile attempt to disguise the true nature of a product.
https://en.wikipedia.org/wiki/Lipstick_on_a_pig
Rogoff is attempting to put lipstick on a pig
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david b Sep 6, 2016

movement has been growing within academic circles for a widespread ban on cash. It has been pushed by Kenneth Rogoff, the Harvard economics professor and influential author of This Time Is Different, who wants to start with high denomination notes.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11835603/Abolish-cash-Youd-be-losing-a-crucial-part-of-free-society.html

The Hubris of Trying to Eliminate Cash - The Atlantic
www.theatlantic.com/business/archive/...cash.../372322/
The Atlantic
Jun 6, 2014 - The first country to impose that ban will find there's an appealing hidden benefit: ... To eliminate cash is to say to hell with financial privacy.

Look, I've been around the to know how this works. you sell and idea by presenting it's to help the majority, when in fact the real goal is to help the davos crowd. financial deregulation and derivatives for example . The author has come out against taxes like a tobin tax, he's not obsessed with getting rid of corporate tax havens, the panama papers. if you understand cash and negative interest rates and how cashless societies force people to keep cash in an unstable financial system (bank runs) you know that a cashless society has nothing to do with helping the populace. it's all about making sure a certain segment of the populations (the davos banker crowd) can avoid reforming in manners that hurt their bottom line and transfer costs to the rest of the population. Iit's a scam. Everyone knows it's a scam (even rogoff) but as gilens has proven we live in an oligarchy and they will try and impose this scam on the population in order to preserve their own wealth and avoid reforming a broken system. to advocate something that has existed for thousands of years. Look we had tamed the business cycle and financial crisis could not happen, Qe was theoretical, negative interest rates were an impossibility. Well those are all reality. they haven't worked very well. so instead of fixing faulty economics and instead of making sure stimulus efforts help the majority this is just the next step where an enriched elite imposes policy on everyone else in order to preserve their status.This isn't just esoteric theory. It' the economic wisdom of Mancur Olsen and others have written about this and documented it extensively
The Self-Destruction of the 1 Percent.
Under the control of the oligarchs, Venice gradually cut off commercial opportunities for new entrants. Eventually, the colleganza was banned. The reigning elites were acting in their immediate self-interest, but in the longer term, La Serrata was the beginning of the end for them, and for Venetian prosperity
http://www.nytimes.com/2012/10/14/opinion/sunday/the-self-destruction-of-the-1-percent.html?_r=0
Anyone who thinks the cash ban isn't a self serving 1% oligarch policy is just kidding themselves
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david b Sep 6, 2016

Abolishing cash would also abolish privacy, which would infuriate many.
http://www.telegraph.co.uk/business/2016/02/18/dont-use-this-crisis-to-ban-cash-and-banknotes/
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Fernando Rueda Sep 6, 2016

"Cash is coined liberty" eliminating cash is absolutely functional to totalitarian systems like Stalinism. The land of liberty should not degrade itself to crazy and distopic ideas, like the one exposed in this article.
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david b Sep 6, 2016

if you want to understand why rogoff is so wrong read some comments in the ft posted in the past.

In cash we trust — abolish it and you invite tyranny
http://www.ft.com/cms/s/0/ffdb3034-610e-11e5-9846-de406ccb37f2.html?siteedition=intl#axzz4JTOmlXDm

I am not calm when someone advocates this quackery that is in fact dangerous over and over. Because refuting it step by step with citations takes a huge amount of work, but rogoff can write things that have never been proven and the3 editors at the site don't prevent it. How about assumptions of spending behavior and inflation that are wrong
http://www.bostonfed.org/economic/wp/wp2013/wp1325.pdf
I have a virtual library of sources showing how this economic truth is in fact mainly untrue.

Economists Mystified that Negative Interest Rates Aren’t Leading Consumers to Run Out and Spend.
http://www.nakedcapitalism.com/2016/08/economists-mystified-that-negative-interest-rates-arent-leading-consumers-to-run-out-and-spend.html

Meanwhile, in Japan, Household Consumption Continues to Fall

by Brad Setser
July 7, 2016
http://blogs.cfr.org/setser/2016/07/07/meanwhile-in-japan-household-consumption-continues-to-fall/

it isn't hysterical when people advocate truly dangerous ideas and try to pass them of as beneficial, ideas that are premised on faulty economics, and bad analysis.
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david b Sep 6, 2016

Deutsche Bank and a $10Bn Money Laundering Nightmare: More Context Than You Can Shake a Stick at
Posted on September 6, 2016 by Richard Smith

Philip Burwell…set up many offshore companies for a customer called International Offshore Services Group (IOS)…

Irish Times

There is no Sandford Road in Dublin, Virginia.

The Organised Crime and Corruption Reporting Project

By Richard Smith, who cautions that this is a long and demanding read, but offers something for anyone with a spare hour and a bit of stamina.

In its recent long read, The New Yorker chronicles the management failures behind Deutsche Bank’s money laundering of around $10Bn via its Moscow office. This wheeze operated via so-called mirror trades: buy stock in DB Moscow for roubles; sell the same stock in London for dollars. One result is lots of nice dollars, not in Russia any more, but in London.
http://www.nakedcapitalism.com/2016/09/deutsche-bank-and-a-10bn-money-laundering-nightmare-more-context-than-you-can-shake-a-stick-at.html
LMAO, yeah caring ken rogoff wants to get rid of cash and make a world the better place for him and the 1%. Of course his proposals won't do a single thing to prevent the above. But that isn't the real aim here at all.

/deutsche-bank-and-a-10bn-money-laundering-nightmare-more-context-than-you-can-shake-a-stick-at.html

In cash we trust — abolish it and you invite tyranny - FT.

The anonymity of cash helps to free people from their governments and some criminality is a price worth paying for liberty, as professors Stephen Cecchetti and Kermit Schoenholtz observe. It is better if the government creates trusted, anonymous notes and coins rather than some private agent.

Mr Haldane’s proposal to ban cash has all the hallmarks of a public official confusing what is convenient for the central bank with what is in the public interest. Cash is unlikely to die a natural death — and, until it does, long may it live.

chris.giles@ft.com
http://www.ft.com/cms/s/0/ffdb3034-610e-11e5-9846-de406ccb37f2.html?siteedition=intl

Even establishment papers such as the financial times understand how bad thi idea is, how anti democratic it is, how surveillance state it is, how orwellian it is. Only an economist with their blinders could advocate such policies. and yes it's this kind of nonsense that causes the rise of populists. this won't do anything to stop the elites from engaging in criminal activity. But it will actively work against democratic values. It's the sort of policy I'd expect N. Korea to advocate
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