The Curse of Cash


The Curse of Cash
By Kenneth S. Rogoff
Princeton University Press – £22.95

Has the time come for advanced-country governments to start phasing out paper currency (cash), except perhaps for small denomination notes, coins, or both? A huge number of economic, financial, philosophical, and even moral issues are buried in this relatively simple question. In this book, I argue that, on balance,, the answer is ‘yes.” First, in making it more difficult to engage in recurrent, large, and anonymous payments would likely have a significant impact on discouraging tax evasion and crime; even a relatively modest impact could potentially justify getting rid of most paper currency.

Try telling that to the countless old ladies around the (predominantly western) world, who stash cash under the mattress; AWAY from the countless greed riddled, money obsessed bankers, who’d sooner sell their own family members down the river than lose out on a lucrative deal.

There again, the author of The Curse of Cash, Kenneth S. Rogoff, is the Thomas D. Cabot Professor of Public Policy at Harvard University, and unsurprisingly, a former chief economist of the International Monetary Fund. So it could be argued that he is bound to want to do away with the filthy odour of cash – as his continuation makes clear: ”Second, as I have argued for some time, phasing out paper currency is arguably the simplest and most elegant approach to clearing the path for central banks to invoke unfettered negative interest rate policies should they bump up against the ”zero lower bound” on interest rates. Treasury bill rates cannot fall much below zero, precisely because people always have the option of holding paper currency, which at least pays zero interest.”

Divided into three parts (‘The Dark side of Paper Currency: Tax and Regulatory Evasion, Crime, and Security Issues, ‘Negative Interest Rates’ and ‘International Dimensions and Digital Currencies’), it does need to be said that most of this book’s fourteen chapters are clearly and concisely written. They also come replete with a viable under-current, wherein Rogoff is perhaps, more than prepared to listen to the flip-side of arguments that are counter to that of his own.

This may explain why Linda Yueh, who is the author of China’s Growth: The Making of an Economic Superpower has herself felt compelled to ask: ”Should we become a largely cashless society? Kenneth Rogoff makes a strong case that we should in this wide-ranging book, which touches on history, crime, technology, and monetary policy.”

The Curse of Cash does indeed touch on these varying robust, important issues:
”There is little question that cash plays a starring role in a broad range of criminal activities, including drug trafficking, racketeering, extortion, corruption of public officials, human trafficking, and, of course, money laundering. The fact that large notes are used far more for illegal services than legal ones long ago penetrated television, movies, and popular culture. Policymakers, however, have been far slower to acknowledge this reality.

Cash also plays a central role in the illegal immigration problem that bedevils countries like the United States. It is incredible that some politicians talk seriously about building huge border fences, yet no one seems to realise that a far more humane and effective approach would be to make it difficult for US employers to use cash to pay ineligible workers off the books and often below the minimum wage. Jobs are the big magnet that drives the whole process. More generally, cash is an enabler for employers who would skirt employment regulations and avoid making Social Security contributions.”

Hmm, the above two paragraphs alone, warrant an abundance of examination.

Surely the biggest illegal behaviour to have happened in recent years, took place within the actual financial world itself, who not only siphoned off trillions and trillions of dollars, but were ultimately responsible for the credit crunch crisis of 2008. So were it not for a few pathetic dollars hidden in cupboards and under beds, an array of overtly corrupt banker scum, could well have made life even more miserable for millions of people, the whole world over.

So personally, I’m not buying it.

Yes, there is a lot of wrong with cash; just like there is a lot wrong with religion. And a lot wrong with politics. But what are you going to do? Totally get rid of them too?

To be sure, there’s a lot to be said for getting rid of the odious likes of Donald Trump, not to mention the even more odious, fundamentalist organisation that calls itself ISIS – but at the end of the day, it’s all down to people.

People are ultimately responsible for fucking things up – especially when it comes to power, greed, corruption and money.

As Bob Dylan once said: ”Money doesn’t talk, it swears.”

David Marx


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