'The War on Cash' a review of 'The Curse of Cash'

June 28, 2017 Share Source

A review of Kenneth S. Rogoff's trending book, 'The Curse of Cash' was published in May 2017 by a fellow economics professor, Dr Jeffrey Rogers Hummel. The author of the review provides an in-depth analysis of Rogoff's anti-cash book, encourages discussion and even sparks a response by Rogoff. Bottom line? Cash rocks... Haters gonna hate.

In his book, Rogoff proposes to stimulate the economy by imposing a monetary policy with negative interest rates. He argues that to do this in the United States of America, the Federal Reserve should work towards a less-cash state by banning $10 and $20 banknotes. Allegedly, Rogoff wants a less-cash society, not a cashless one... yet the vast majority of his arguments and comments on recent cashless movements seem geared towards ultimately banning all paper money thus enforcing a cashless society. Hmm.

Luckily, the first backlash comes from those with savings (however big or small). That's because accepting a drop to negative interest rates would mean paying interest for keeping your hard-earned money in the bank rather than earning interest. Last time we checked, banks are meant to pay you for the privilege of lending out your money. Why would anyone agree to such a brutal double standard?! 

Dr Hummel was not the only one to disagree with Rogoff. Various economists voiced their own dejection of Rogoff's proposal, including Forbes contributor, Tim Worstall who argues that the 'ludicrous' proposal will ultimately fail because banning cash would do nothing but leave a vacuum for informal cash alternatives, not to mention that...

"...anonymity of cash allows the trade of things that government does ban the trade of, and that's a good thing."
"

Beyond the possibly-paid econ-journalist pools of opinion is a sea of everyday readers who also made it their goal to voice their own pro-cash opinions. Hurrah! 

In spite of the book's relevance in the now popular debate, the Amazon reader average is a miserable 2.3 stars and consists of 63% one-star ratings (correct as of 4th July 2017). The titles of the most recent reviews are titled as follows:  'Orwell is laughing', 'The final nail in the coffin of freedom', 'If one is not already deathly afraid of central bankers...' and 'Ken's Mark of the Beast'. 'Nuff said. 

So how did Kenny Rogoff, an economics professor at Harvard University and once Chief Economist at the International Monetary Fund 2001-2003 publish such a highly contested book on one of his areas of expertise? We found the answer in an article from Bloomberg which acknowledged that 'Rogoff doesn't view totalitarianism as much of a threat'. 

Annoyed? Why stop here? Read more about economic totalitarianism

In short, Rogoff’s case for confining currency to small denominations is, when not entirely mistaken, extremely weak.
" Dr Jeffrey Rogers Hummel Author Econ Journal Watch

Excerpt of Abstract

'Central bankers and mainstream monetary economists have recently become intrigued with the idea of reducing or eliminating hand-to-hand currency. The most comprehensive defence of this proposal is Kenneth S. Rogoff’s recent book, The Curse of Cash (2016). Because cash is widely used in underground economic activity, Rogoff believes that the elimination of large-denomination notes would help to significantly curtail crime and tax evasion. Suppressing such activities would have the additional advantage of increasing government tax revenue...

'...With respect to negative interest rates, Rogoff is unable to make a strong case that the policy is even needed, much less that it would work. Moreover, his analysis entirely ignores the public-choice implications of his proposal and exhibits naïve reliance upon the benevolence and foresightedness of policymakers.' 

Last Updated: July 27, 2017