
Harvard Economist Is Trying to Kill Cash - denzil_correa
http://www.bloomberg.com/news/articles/2016-09-07/harvard-economist-kenneth-rogoff-is-trying-to-kill-cash?utm_content=business&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social&cmpid%3D=socialflow-twitter-business
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pdkl95
> Law-abiding citizens rarely have need for $100 bills

That's a point of view of someone who has never lived near the poverty line or
other economically problematic situations. If you deal in cash without a bank
account, $100 bills, while not particularly common, are not rare either.
Accusing these people of being lawbreakers simply because they have crappy
jobs, are bankrupt, pay their rent in cash, etc is highly offensive (and
classist).

> That suggests the bills are circulating mainly in the underground economy.

So what? Underground does not mean illegal.

> If the biggest bill were worth $10, rather than $100, delivering someone a
> million bucks under the table would require a 220-pound chest rather than a
> 22-pound briefcase.

No, it would require something like a check or money order, creative
accounting, and possibly an offshore bank account or two. Bribery, laundering,
and other financial crimes are not generally done with cash; they happen on
the books, often through _legal_ means. Did this "Harvard economist" miss the
SCOTUS rulings that _de facto_ legalized bribery?

> Forcing people to use smaller bills, Rogoff argues, might make crime more
> conspicuous and less convenient.

No, it merely moves many types of petty crime into barter and alternative
economies. The higher-value crimes (usually) don't use cash.

~~~
tomrod
> No, it would require something like a check or money order, creative
> accounting, and possibly an offshore bank account or two. Bribery,
> laundering, and other financial crimes are not generally done with cash;
> they happen on the books, often through legal means.

Do you have a source for this? In the US, transactions over a certain limit
have a paper trail; many transactions adding up to over that limit raise tons
of red flags.

[0]
[https://en.wikipedia.org/wiki/Know_your_customer](https://en.wikipedia.org/wiki/Know_your_customer)

~~~
pdkl95
Red flags only happen if the transaction was _illegal_. We legalized all kinds
of creative accounting when we _deregulated_ entire industries over the last
several decades. Reporting requirement haven't stopped offshore accounts and
other havens, tricks, and tax avoidance schemes.

The point is that you don't need an anonymous transaction when you payment or
bribe is (technically) legal.

~~~
tomrod
I think we're going to disagree here. Red flags happen on individually legal
transactions as indications that could indicate larger patterns of illegal
behavior.

Deregulation of industries (say, electricity [0]) did not happen just to
introduce creative or legal accounting fraud. Do you have any sources for your
claims, or just hearsay/personal thoughts?

[0]
[https://en.m.wikipedia.org/wiki/Deregulation_of_the_Texas_el...](https://en.m.wikipedia.org/wiki/Deregulation_of_the_Texas_electricity_market)

~~~
pdkl95
You're still thinking about the wrong kind of transaction. Try "Super PAC" and
other forms of paying for access/influence, or the popular practice of giving
someone a $250,000 speaking fee or well-paying job they don't have to attend.
These are _obviously_ bribes, which would have been a scandal 50+ years ago,
but we legalized them.

I'll assume you're already familiar with the legal, quasi-legal, and illegal
ways money is moved into offshore accounts. The details change over time as
regulators catch up, and I believe there has been some progress in recent
years at stopping some of these practices.

> just to introduce

Of course not. There were many (profitable) reasons deregulation happened.

------
pmorici
For someone who is supposed to be intelligent this proposal sounds dangerously
inept. They start from the premise that only bad people use $100 bills w/o
providing any evidence the claim is true. Incredibly they then use that to
support their thesis that both $20, and $50 bills should be phased out as
well.

The assumption that a cashless society would give a central bank more control
by making negative interest rates viable is also totally nuts. People would
just end up buying things like precious metals, low inflation crypto
currencies or anything else that emerged as a defacto store of value. In
Baltimore for example there is a strong underground market for name brand
laundry detergent and as a result you can barter a jug of it for drugs.

[http://nymag.com/news/features/tide-detergent-
drugs-2013-1/](http://nymag.com/news/features/tide-detergent-drugs-2013-1/)

------
ismail
I remember back in the late 90's listened to a talk which I dismissed as
conspiracy. The key points were

1\. Moving people away from cash to credit so easier monitoring of society and
transactions

2\. Moving communications to the "information super highway" with constant
listening in

Our grand kids will live in a vastly different society. I fear we may be
heading to a reality covered in so many dystopian works of fiction.

The chilling effects of the constant surveillance we currently have.

This was previously posted on HN:

[http://www.zerohedge.com/news/2016-09-07/why-you-should-
be-p...](http://www.zerohedge.com/news/2016-09-07/why-you-should-be-paying-
attention-americas-quiet-war-cash)

~~~
PavlovsCat
Since the goal is total power, our grand kids will live in no society at all.
They will be automatons, live in pain/in fear/in despair/not at all, or be
Gestapo officers. But they'll be too regressed to even be able to hate their
ancestors for their cowardice and hybris, so that's good.

------
hal9000xp
If a government keeps monopoly on money creation and all banking system is
tightly regulated by the government but at the same time there is no cash in
the economy, then government have ultimate power on everybody (since they
can't burn cash in your pocket but they can freeze all your bank accounts
anytime) and therefore your freedom at mercy of government bureaucrats.

Hard cash (and now also cryptocurrencies) is only little freedom you (still)
have.

------
binarray2000
Is that the same Kenneth Rogoff who co-authored a study about "Growth in a
Time of Debt" which turned out to be full of faked data? And, curiously,
EU/ECB/MMF (the infamous "Troika") and, most prominently, Germany based their
"austerity" measures towards South European countries on that very study -
which practically and conveniently provided the alibi for their crimes.

"Curiously" only the first sight: This guy is a member of the "Group of
Thirty", a group "founded in 1978 by Geoffrey Bell at the initiative of the
Rockefeller Foundation" and supported
([http://group30.org/about/supporters](http://group30.org/about/supporters))
by the very profiteers of austerity.

And now he writes about "The Curse of Cash".

Should we believe him this time as well? Do we really know, who's interests
he's serving?

~~~
mafribe

       their crimes.
    

Which crimes have you got in mind? The crime of being outvoted on the ECB
board and having to bail out everybody?

~~~
jmnicolas
I guess you're not Greek then or you would know what crimes. I'm not Greek
either but I was shocked at what they did to this country.

------
SomeStupidPoint
The list of reasons he thinks it's a good idea reads like a list of reasons I
think it's a bad idea. Strange how differently people think we should organize
society, though I'm not surprised that someone so involved with the system
believes that the system should be given considerably more power.

~~~
fixxer
I've met a lot of academics that think like this. I find them terrifying in
their inability to recognize adverse feedback loops. I'll keep my paper, thank
you.

~~~
adevine
Reminds me of the Euro. Was blessed as such a grand simplifying project by
academics and technocrats in the late 90s, and critics were often dismissed
conspiracy theorists.

~~~
digi_owl
Various people still love the Euro. Mostly though it is those that can pack up
their laptop and credit card and work from anywhere with a internet
connection. Oh and the businesses trading across EU's internal borders.

The crazy part is how those nations with the biggest problems right now are
those that followed the Euro requirements most closely. While the biggest
offender is the one swinging the punishment stick...

------
HarryHirsch
On the other hand, the Byzantine Empire as all cash, but the _fiscus_ managed
to keep tax evasion at reasonable levels by taxing items where they cannot be
hid. The main points of taxation was real estate at village level and
wholesellers at merchant fairs.

Getting rid of cash would prevent tax evasion, but only for those that cannot
afford tax shelters like Panama or the Double Irish with Dutch Sandwich with
profit moved to the Cayman Islands.

~~~
Senji
Next step: destroy tax shelters like Panama either through embargoes or with
military action.

------
dade_
This sounds great if you are VISA or MasterCard charging a fee for every
transaction. The problem with cash is that it is too hard to get 100 and 50
dollar bills. This man clearly doesn't get out. Going for dinner for 80
dollars means carrying 5 $20 bills which is a serious PITA. Groceries, fuel,
lightning ear buds, all the same.

~~~
jmnicolas
What's wrong with carrying 5 bills ? I regularly do.

------
adamnemecek
> Law-abiding citizens rarely have need for $100 bills,

Law-abiding citizens rarely have need for Kenneth Rogoff.

------
madeofpalk
> Law-abiding citizens rarely have need for $100 bills

What a bizarre thing to say. While I don't use them frequently, whenever I
sell my stuff off, usually I'll receive $100 bills.

People generally don't carry $500+ in cash, so when they go to the bank to
withdraw, it'll come in $100 notes.

~~~
mcguire
The day before yesterday, an older gentleman in front of me at Tractor Supply
paid with a hundred. As far as I know, baling twine is perfectly legal.

------
Sir_Cmpwn
>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.

Wow, fuck that. I've already reduced my credit card usage to near zero for
privacy-related reasons, but I still use a bank to store my funds. I'll
definitely be among those switching exclusively to cash if this sort of thing
comes to pass.

~~~
4ad
Serious question: where do you store your cash?

I am privacy conscious myself, and I am evaluating a cash-only life, but where
do you keep all the cash? Still at the bank?

~~~
Sir_Cmpwn
I have $XXXX in my safe and $XX-XXX in my wallet most of the time. I
periodically top up at an ATM, gas stations near me have 0-fee ATMs.

------
skylan_q
_Kenneth Rogoff has an interesting résumé: international grandmaster of chess_

So is Gary Kasparov, who doesn't even write any of his propaganda in Russian.
So was Bobby Fischer, vicious anti-semite.

This shows that he's great at chess. It doesn't show much else.

~~~
mulle_nat
Or maybe it shows they are right, and you just don't get it, because your no
good at chess. :)

------
venomsnake
It ia happening in UK already. 50 GBP note is all but outlawed. You cannot get
it from ATM, some note machines do not accept it, if you need bigger
quantities of it it - you must fill paperwork weighting more than the notes
themselves.

I love the 500 eur note, and think we should move to a 1000 soon.

~~~
4ad
> I love the 500 eur note, and think we should move to a 1000 soon.

The 500 EUR note is being phased out: [http://www.wsj.com/articles/500-euro-
banknote-being-phased-o...](http://www.wsj.com/articles/500-euro-banknote-
being-phased-out-1462381987)

Personally, I have never seen one. I only saw a 200 EUR note once, the ATM
don't give then, which is a pity.

------
DanielBMarkham
We need to go the other way -- introduce larger-denomination bills. Assuming
there was a good reason to make the highest bill $100 in 1969, calculating for
inflation would allow us to have $500 bills. I'd argue for bringing back the
$1000 -- and then indexing it to inflation from here on out.

With negative interest rates on their way in, people and organizations are
going to start stockpiling big piles of cash. The least we can do is try to
make it more cost-efficient.

------
wslh
Suppressing cash means much less privacy and more state control. Full stop.

------
tomrod
Take cash away, people will just use something else for currency.
[https://en.wikipedia.org/wiki/Commodity_money#Aspects](https://en.wikipedia.org/wiki/Commodity_money#Aspects)

------
kozak
In some countries (like where I live) it's hard to come across US Dollar bills
other than 100.

~~~
umanwizard
What country is that?

It matches my experience in Lebanon, but I was only there briefly as a
tourist.

~~~
kozak
I'm in Ukraine, but I guess it applies to any country without a strong own
currency.

------
norea-armozel
Well the only reason why cash exists at all today is because banking is a
mess. Especially if you're poor. So banning cash isn't going to help the poor
at all as others have noted. Wake me up when the same Harvard economists get
off their butts and make a standard that will make banking for the poor as
easy as it is for the rich. Until then, I'm all for cash.

------
Kiro
I love living in a country where cash has already been killed. Haven't seen a
bill in many years.

~~~
sneak
Spoken like someone who has never had their accounts extrajudicially frozen.

How do you pay your lawyer when the state or bank decides to steal from you?

~~~
ddorian43
How much do you keep in cash? Enough to pay your lawyer ?

~~~
sneak
I have plenty of assets which I can sell for cash in a pinch - should cash
actually still exist.

When everything is a bank transfer, your very right to transact is at the
mercy of the government.

~~~
ddorian43
Agree that makes more sense.

------
thr0waway1239
Assuming this article is serious, exactly how do they plan to phase out the
higher denomination bills? Is it actually feasible?

"Rogoff says he doesn't want to get rid of cash all at once. First, he would
phase out 100s, then 50s, then 20s, leaving smaller bills in circulation for
the foreseeable future. "I want to have a less-cash society, not a cashless
society," he said."

~~~
zalepa
Phasing out bills is definitely feasible. Bills usually pass through a bank
fairly often, at which point they can be removed from circulation. In general
banknotes have their design changed every 10-20 years, and very old banknotes
are no longer legal tender (though they can sometimes be exchanged at the
central bank). A regular bank won't accept a deprecated banknote.

The ECB is currently phasing out 500s, first by removing those it can get its
hands on from circulation, and after a few years by declaring the rest no
longer legal tender.

~~~
nommm-nommm
I've never had problems spending very old banknotes in the US.

~~~
monkeyprojects
I don't believe US banknotes change design that frequently. In europe bank
notes change design every 5-10 years and quickly stop being legal tender a 3-5
years afterwards...

~~~
nommm-nommm
We had a major redesign in about... 2001ish. You still see the old notes
circling around sometimes and they are still legal tender. The $100 bill was
redesigned about two years ago. We have new paper notes coming out soon...
[https://modernmoney.treasury.gov](https://modernmoney.treasury.gov).

------
umanwizard
I have heard that the anti-corruption reasoning is why China's biggest note is
100 CNY (worth less than 20 USD)

~~~
dexterdog
That's the reason they give. The real reason is control of the masses, not the
corrupt few.

------
awt
This will go as well as the war on drugs, poverty, terrorism, et al.

------
digi_owl
Do wonder how long it will take for some "mafia bank" to sprout...

------
fithisux
And convert it to what? Cash?

