Former IMF Economist Declares War on Cash
The War on Cash continues to gain momentum within the circles of the politically influential.
Bloomberg yesterday posted an article on a new book titled The Curse of Cash, written by Kenneth Rogoff former chief economist of the International Monetary Fund and current Harvard University economist.
Though the Bloomberg piece unfortunately accepts at face value the weak argument that eliminating cash will make it harder for criminals to operate, it does focus on the real goal of people like Rogoff, to give more power to central bankers:
Rogoff … 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?
Of course, one of the blessings of cash is the very fact that it allows normal people protection from some of the consequences of bad monetary policy. As Dr. Joseph Salerno wrote last month:
Cash is a unambiguously a blessing to productive workers, savers, and entrepreneurs who wish to protect their hard earned money from the crazed theories and swindling schemes promoted by statists like Rogoff and the central bankers he advises.
So while Rogoff describes the subject as “a very quirky topic,” in reality the issue isn’t “quirky” at all — as Salerno has noted multiples times, the War on Cash is nothing more than a lust for more power by central bankers and their advocates in academia. It is the consequence of central bankers around the world being frustrated that real people aren’t acting the way they want them to act, and therefore want to eliminate one of the last remaining forms of protection against their antics.
This is what we’ve seen in England, where people have been hoarding cash as the Bank of England cuts interest rates to historical lows.
We’ve seen it in Germany, where the ECB’s negative interest rate policy has Germans putting their money in safety deposit boxes.
We’ve seen it in Japan, where their own negative interest rates has resulted in a boom in personal safes.
Time and time again, the desires of central planners have been resisted by the market, and instead of re-evaluating the wisdom of their actions they are trying to give themselves more control.
Of course, as Bloomberg notes, “Rogoff doesn't view totalitarianism as much of a threat.”
And why would he? Considering his past position with the IMF, and his current position in academia, he is among the privileged class of the elite. The friends of tyrants rarely have much to fear from tyranny.