War On Cash Turns To $20, $50, And $100 Bills
Harvard professor and economist Ken Rogoff is once again leading the chorus of high-level academics and officials who declare cash is only for criminals. He made his case in a recent Wall Street Journal editorial called the “Sinister Side of Cash.” The solution, he declares, is to simply get rid of anything but the smallest bank notes.
In his vision, drug dealers, human traffickers, and tax cheats are everywhere, but they are reliant on cash. Our benevolent central planners can largely incapacitate them by ridding society of anything larger than a $10 bill.
Kingpins won’t know what to do when a single-engine Cessna full of cocaine requires a Boeing 747 full of $1s, $5s, and $10s to make payment.
Rogoff seems to blame cash, not bad people, for facilitating criminal activity. He writes:
“There is little debate among law-enforcement agencies that paper currency, especially large notes such as the U.S. $100 bill, facilitates crime: racketeering, extortion, money laundering, drug and human trafficking, the corruption of public officials, not to mention terrorism.”
People worried about meth dealers swapping dangerous drugs for "dirty" cash might get mad enough, and afraid enough, to put up with what Rogoff calls a “less cash” society. While elimination of most cash might make it harder for black marketeers who operate in the small dark corners of society, it will be a bonanza for the undesirables along Wall Street and in Washington DC who are planning to shake down literally everyone.
Getting rid of large bills is a terrific way for them to herd people down a blind alley and pick their pockets. Bankers will grab handfuls of fees and deposits they wouldn’t otherwise get because people can no longer hold or transact with cash. Fed officials can impose negative interest rates, robbing even more of the value from everyone’s savings. And bureaucrats in government can swipe everyone’s ability to transact privately using off-the-grid cash.
At least Rogoff is willing to admit the REAL REASON cash is a problem for central bankers who want to impose negative rates. You just have to read much further down, past the pictures of shady characters and contraband:
“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 Enormous sums might be withdrawn to avoid these losses, which could make it difficult for banks to make loans – thus defeating the whole purpose of the policy.”
Like all Keynesians, Rogoff doesn’t care much for savers. How dare they withdraw cash to avoid negative yields and other losses!
He wants savers to be treated more like livestock – ready to be milked, shorn, and butchered by smarter policy makers such as himself.
One thing is for sure – many people, criminals, and honest people alike aren’t going to let themselves be herded to financial slaughter.
Officials certainly have control over the supply of cash circulating in society. But they do not control the alternatives, the first and foremost being gold and silver rounds, coins, and bars.
It won’t take long for drug lords to figure out that while an airliner full of small bills is impractical, a briefcase full of small gold bars can work just fine. Nor will all savers stand for paying their bank to hold deposits when they can convert those savings to precious metal instead. It is easy to predict these sorts of unintended consequences – the very reasons why central planners such as Rogoff inevitably fail.
Clint Siegner is a Director at Money Metals Exchange, the national precious metals company named 2015 "Dealer of the ...
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Fascinating ideas here. But wouldn't criminals prefer more convenient, untraceable forms of currency over #cash or #gold? For example #bitcoin or other digital currency?
The excuse they give, Barry, is to blame their desire for cashlessness on the behavior of criminals, when they really don't want cash to be a tool for bank runs. Their real concern is the run on banks, and they are dishonest enough to continually hide that fact.
I like your reference to livestock. Herded is the appropriate word for that despotic thinking coming from Ken Rogoff. But it didn't start with him. Larry Summers took this from another Harvard prof, Peter Sands, who once was employed by Standard Charter. Summers made the argument for stopping crime without making the argument that he wanted NIRP, at all! He kept silent as the article appeared in your local TV spot. The masses all learned, incorrectly, that Summers wanted to stop crime when in truth he wants to implement NIRP! These people are despotic. So far they are just windbags. But, America may one day have to throw them out if they cause too much mischief! www.talkmarkets.com/.../larry-summers-100-dollar-bill-ban-and-westfalia-lost
Thanks for the share @[Gary Anderson](user:4798), interesting read.
This editorial was probably a trial balloon for the Fed, an academic stooge if you will. That such a guy who can sprout such inane ideas teaches at Harvard and nobody boycotts his classes is beyond belief. Who does he take people for? Fools? Probably yes we are, but not all the people all the time!
It is time to throw out the central bankers...
Why are those ideas so inane? While I don't agree with all, there's certainly some truth here.
The idea of banning cash is inane as it leaves you at the mercy of the entity that is controlling the digital currency (the only alternative you will be left). You will no longer be able to lay hands on your own money because you will be locked out (if you think this cannot happen you can think of Greece and Cypress), in effect we will all be Cypressed. The entity controlling the digital currency will be fully capable of imposing 20% negative rates should they feel like it and will be fully in control of your money. I for one do not like idea much. Essentially it is all a devious theory (criminals et.al) to ensure that people do not store money under the mattress.
I agree with you.
While a bit too "big brother" for me, I admit that extreme scenario makes sense. However, though I could see that happening in many countries, I don't see how it could happen in the US any time soon. Even so, you freaked me out enough to hold onto some of my cash :)
Who is suggesting banning cash? Rogoff suggested only banning high denomination bills. What's wrong with that?
@Bruce, it will lead to that. This is just an appetizer. And what is wrong if I want to do cash business with $100 bills (as long as it is legally mine and I have paid my taxes). If I want to stash $100 bills in my safe I see no reason why I should not be allowed to store it in high denomination bills.
The basic idea is to move you to digital currency so that they can impose negative rates and lock you out of your money should the need arise. The criminal pitch is a decoy. It is obvious that they cannot come straight up and tell you that they are after your money plain and simple, in order to avoid a bank run. Think what happens when you have a crisis like 2008 and you want to pull your money out of the bank. You just cannot as you will allowed to draw $20 per day. They will set the limit. Imagine it is your money and you have no access to it. I do not want to be in that position. I rather like the thought that I can lay my grubby hands on my money whenever I want.
BTW Switzerland has high denomination notes and it is not exactly teaming with criminals. In fact all the terrorist acts seem to be taking place in other countries.
Lakshmi, you sound very paranoid. I don't believe the government is out to steal our money. If you've seen my tax returns, you know they are already getting it all anyway. It may not happen this generation, but a cashless society is inevitable. And as long as that money is FDIC insured, it will be as safe as my money in the bank (which isn't physically sitting there either).
Agreed, banning cash sounds like a simple solution, but it's a more complex issue than simply saying no cash = no criminals. And criminals are very industrious. They'll always find a way. Digital is too easy to hack and is a new frontier for the very criminal activity we want to eliminate
Let us hear what it is!
I am against going digital, I believe people have the right to privacy, and therefore #cash. But I think #Rogoff's compromise is a great idea. You tell me: why do non-criminals need access to denominations higher than $10? I don't believe they do.
Yet forcing criminals to deal with such low face-value bills places an extreme hardship on them. Back alley deals with an envelope or briefcase would have to be replaced with scheduled deliveries by 747s and fleets of armored cars. Impractical and very expensive. If you disagree, I'm happy to hear why. Perhaps I'm missing something.
Anastasija, Let me give you another perspective. Why should a Harvard Professor of Economics (Rogoff) suddenly be so interested in criminals (there are institutions and people who are doing the job of making life difficult for criminals) and their crimes on society. Are you telling me one fine day Rogoff woke up and decided he has to save people from criminals. Sounds far-fetched to me! It is only because it is tied to economics and not criminals, that too economics as regards imposing negative rates and the fear that people will pull out cash and it will cause bank runs.
He is acting as an academic stooge, trying to provide cover for the Fed to impose negative rates. Right now if the negative rates exceed storage and insurance cost of storing cash, these guys are done as keeping the cash under the mattress becomes a better option as compared to providing money to banksters to pay themselves bonus and have your digital money confiscated.
Maybe, maybe not. You have no real idea what his motivations were. I think it's just as likely (if not more so) that he's trying to do good, than he has some ulterior motive and is just a stooge.
Anastasija, criminals will just switch to gold or diamonds. Unlike us, they will not allow themselves to be locked out of their money.
That's a good point that I haven't thought of. But even gold and diamonds are more inconvenient than cash and easier to track. But what about the other question? Why do non-criminals need access to higher bills?
That's a good question. I don't think I've ever personally handled a bill larger than a $20. That being said, I'd hate to see the $20 disappear. Otherwise my wallet would be too fat to handle comfortably.
Duanne, For you it is $20, for me it is $100. What I mean is there is no end to it. Tomorrow Rogoff could decide $20 is too big and all of us should hold $1 bills only. Who gets to decide? I think with my money I do and not Rogoff..
Anastasija,
"Why do non-criminals need access to higher bills?" -- First why not? Second, in case you want to pull cash out of a bank (say during a crisis or whenever you want) it is much easier if it is $100 bills. It is your money and you get to decide the denomination to hold it. I like $100 bills I hold it in that denomination. You like $20 bills, you hold $20 bills.
Where is the proof that smaller bills will end crimes. Let them prove it. Hog wash IMO. Good for pulling wool over people's eyes, hiding the real intent.
Throw out the central bankers and good riddens to them!
It's true - only criminals and perverts need cash. Love the idea of getting rid of anything over a $10 bill. It makes criminal transactions too cumbersome to be practical.
Carol, poor people need cash. Travelers need cash. Hacked systems need cash as a backup. With all due respect, you have no idea what you are saying. Cashlessness is totalitarian in nature.
Gary, you are right. Those are all scenarios I had not thought of.
@[Gary Anderson](user:4798), I agree a cashless society is a mistake... I don't need a digital record created every time I go to a strip club or adult theater. But seriously though, Rogoff is not advocating for a cashless society. He's suggesting a compromise. Why do poor people need $100 bills? Why can't they use $1, $5 and $10 bills like the rest of us folks? While not perfect, I think the suggestion does have merit. But no cash at all? Absolutely not.
You have a good point, except for one thing, Craig. Once cash is rejected, the temptation of governments is to allow most businesses to do away with cash. We already have enough of those. But grocery stores, and pawn shops and other shops would be overwhelmed by 1 dollar bills or a basket full of quarters.
Carol, thanks for the encouragement. They are brainwashing us, as the majority of the owned media is speaking with one voice. They pound the concept of cashlessness home with a continual deluge of articles and pronouncements, and the same is true for self driving cars.
These are both globalist pets, and control of the citizenry, and control of Russia are the primary goals of the globalists. You thought our nation was sovereign. If it was sovereign, bankers would be in jail by the thousands as they were in the Great Depression.
This statement should not be construed as support for Trump. There is nationalism and there is bad nationalism. Good nationalism is based on things like the Peace of Westfalia or Westphalia. Bad nationalism could come with bigotry and hatred.
That's a good point. The suggestion loses a lot of steam when talking about businesses vs. individuals. Though I would think 99% of the cash handled by grocery stores are $20 bills or less anyway.
I don't support #Trump either. But I also don't support Hillary. I'm going a 3rd way and voting for #GaryJohnson.
As the author points out, cash could simply be substituted with gold bars.
I would think gold is even heavier. Not to mention the price can fluctuate which would make a street price hard to pin down. And that much gold may be hard to come by.