Princeton University Press, 2016
Review by Robert Wenzel
Harvard professor and former chief economist at the International Monetary Fund, Kenneth S. Rogoff, is out with a new book. The Curse of Cash.
In the book, he attempts to make the case for banning paper money.
His justification for banning cash is two-fold: It will hamper criminal activity and it will allow central banks to take rates, when necessary, deep into negative territory.
As far as criminal activity, which he wants to make more difficult, he paints a broad brush that includes many activities that not all would consider offensive or a threat. He says it would make drug dealing more difficult, that it would make it more difficult for businesses to pay illegal workers.
He raises the "horror" that in the Eurozone a ban on cash would make it more difficult for the many who use cash to escape oppressive value added taxes and he tells us it would hamper the black market in organs.
In other words, Rogoff is no libertarian, he is a technocrat for the state---designing and proposing methods by which the state can control people more aggressively and efficiently.
But there is more. His hate of cash seems to go beyond that of just a technocrat, he is almost obsessive.
Early on in the book, he writes with great alarm:
What is remarkable about the huge demand for cash is that it persits and grows despite the proliferation of alternative payment mechanisims.And he is completely at wits end with the reported fact that there is some $4,200 in cash for every person in the United States. He mentions this fact, probably, a half-dozen times in the book as if it indicates some great evil---though he admits that there is no hard data on where this money is.
As for his second justification for wanting cash banned, that it would allow central bankers to push interest rates far into negative territory when warranted, it must be noted that this view that central banks should be manipulating interest rates in the first place is not a universal one. The track record of the Federal Reserve interest rate manipulations has been horrific.
Indeed, the history of central bank money and interest rate manipulations is one of steadily declining values of central bank controlled monies and occasionally hyperinflations--the history of some of the hyperinflations, Rogoff even recounts in his book. But, yet, he is unconcerned about the dangers of even further extending central bank money control.
Nor is he concerned about the additional privacy invasions that a ban on cash would necessarily create. Rogoff has been warned about the tracking evils of his cash ban advocacy, He writes in the book:
Most of the people who want to protect paper currency have perfectly legitimate reasons for hoping to preserve the status quo. After a lecture I gave it Munich University in 2014, former European Central Bank board member and chief economist Otmar Issing strongly took issue with my views and commented that paper currency is "coined liberty" (a nod to Dostoyevsky's House of the Dead) that must never in any way be compromised or surrendered.But the government mechanic just dismisses these type warnings and continues his plotting to bring to fruition economies that ban cash and thus enhance government tracking and control of individuals.
But is not only on a theoretical level that we must be concerned about what Rogoff tells us in this book. The statist mechanic is pushing for the first steps in a cashless society to be adopted now and he fills us in on new sophisticated methods of even tracking cash as an interim step.
He is promoting his cash ban madness at global government monetary conferences. He writes:
I received feedback from colleagues at the Group of 30 meeting in June 2015 in Rio de Janireo, during an extensive discussion after a presentation I gave.And he has a section in the book specifically aimed at cryptocurrencies:
At the end of the day, governments will not lightly tolerate financial transactions that protect the anonymity of criminals and terrorists...To the extent that new approaches to financial tranactions are developed that evade government efforts, they will be met with a stiff hand.And don't think if you use cash, it won't be completely untraceable in the future, even if magnetic strips are not present in the money. He reports:
Embedded chips (or magnetic strips) may prove unnecessary in any event, given the development of increasingly low-cost cash processors that can scan serial numbers at extremely high speeds. The technology already exists in the high-end currency-sorting machines that many banks and law enforcement agencies have access to...
The scanners work particularly well with high-polymer plaste currencies that don't crinkle and bend as easily as paper. As costs fall sufficiently, serial number scanners can in principle be embedded in standard retail cash registers.Bottom line: There are government technocrats out there plotting seriously on a short-term and longer-term basis how to better track us and control us and our money. Rogoff is one of them, if not the most significant current cash banning plotter.
This is a scary book in that it informs on the thinking and plotting that is going on. It is thorough, though, in recounting the theories of every lunatic that has ever advocated negative interest rates or the banning of cash.
If you need an encyclopedic summary of this lunacy, this is the book. If you are interested in learning the high-level changes in technology and cash that are in our future, this is the book.
Rogoff writes that he once participated in a Federal Reserve mock nuclear attack drill. The peons he said were left behind as part of the drill but "helicopters were whisking away the Fed's officials to deep caves in West Virginia..."
He said the "lowly peons were supposed to follow the instructions on the back of phone books, which I recall, said something along the lines of 'hide under your desk and avert your eyes from flashes of bright lights.'"
The anti-cash attack needs to be stopped, that can only be done when a significant portion of the general public understands how dangerous the elitist anti-cash movement is. In an odd way, for the thinking person, Rogoff's book paints the picture that should make it easier to understand the attack.
Robert Wenzel is Editor & Publisher of EconomicPolicyJournal.com and Target Liberty. He also writes EPJ Daily Alert and is author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics and on LinkedIn.