Harvard Professor Creates Blueprint for Ending Cash in US; Calls for Immediate Phasing Out of $20 Bills
By Robert Wenzel
The attack on cash has entered a new stage.
Kenneth Rogoff, the Thomas D. Cabot Professor of Public Policy at Harvard University and the former chief economist of the International Monetary Fund, is out with an essay this morning in the Wall Street Journal titled, The Sinister Side of Cash.
When I tell people that I have been doing research on why the government should drastically scale back the circulation of cash—paper currency—the most common initial reaction is bewilderment. Why should anyone care about such a mundane topic? But paper currency lies at the heart of some of today’s most intractable public-finance and monetary problems. Getting rid of most of it—that is, moving to a society where cash is used less frequently and mainly for small transactions—could be a big help...
In other words, cash is anti-state, It is about freedom. Rogoff by addressing the above state concerns lays out the true desires of the anti-cash promoters: More state control. It is a further move in the direction of totalitarianism.
How does Rogoff want to execute this anti-cash movement?
To be clear, I am proposing a “less-cash” society, not a cashless one, at least for the foreseeable future. The first stage of the transition would involve very gradually phasing out large denomination bills that constitute the bulk of the currency supply. Of the more than $4,200 in cash that is circulating outside financial institutions for every man, woman and child in the U.S., almost 80% of it is in $100 bills. In turn, $50 and $20 bills would also be phased out, though $10s, $5s and $1s would be kept indefinitely. Today these smaller bills constitute just 3% of the value of the currency supply...
He also explains how instruments like bitcoin will be thwarted in his statist non-cash world:
Won’t the private sector continually find new ways to make anonymous transfers that sidestep government restrictions? Certainly. But as long as the government keeps playing Whac-A-Mole and prevents these alternative vehicles from being easily used at retail stores or banks, they won’t be able fill the role that cash plays today.
Rogoff also knows that cash is a check against the Federal Reserve going seriously negative on interest rates:
In principle, cutting interest rates below zero ought to stimulate consumption and investment in the same way as normal monetary policy, by encouraging borrowing. Unfortunately, the existence of cash gums up the works. If you are a saver, you will simply withdraw your funds, turning them into cash, rather than watch them shrink too rapidly. Enormous sums might be withdrawn to avoid these loses, which could make it difficult for banks to make loans—thus defeating the whole purpose of the policy.
When does he want to launch his program to eliminate $20 bills and up?
" I believe the time has come," he writes.
The elimination of everything but very low denomination bills is one of the most significant statist power grabs in United States history. It provides the state with unheard of methods of tracking and control.
It is an evil plan that must be objected to loudly and forcefully. This is a battle that must be joined. The anti-cash advocates must be defeated.
This article was originally published at EconomicPolicyJournal.com
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