From the New York Times bestselling author of This Time Is Different , "a fascinating and important book" (Ben Bernanke) about phasing out most paper money to fight crime and tax evasion--and to battle financial crises by tapping the power of negative interest rates
The world is drowning in cash--and it's making us poorer and less safe.Read more...
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From the New York Times bestselling author of This Time Is Different, "a fascinating and important book" (Ben Bernanke) about phasing out most paper money to fight crime and tax evasion--and to battle financial crises by tapping the power of negative interest rates
The world is drowning in cash--and it's making us poorer and less safe. In The Curse of Cash, Kenneth Rogoff, one of the world's leading economists, makes a persuasive and fascinating case for an idea that until recently would have seemed outlandish: getting rid of most paper money.
Even as people in advanced economies are using less paper money, there is more cash in circulation--a record $1.4 trillion in U.S. dollars alone, or $4,200 for every American, mostly in $100 bills. And the United States is hardly exceptional. So what is all that cash being used for? The answer is simple: a large part is feeding tax evasion, corruption, terrorism, the drug trade, human trafficking, and the rest of a massive global underground economy.
As Rogoff shows, paper money can also cripple monetary policy. In the aftermath of the recent financial crisis, central banks have been unable to stimulate growth and inflation by cutting interest rates significantly below zero for fear that it would drive investors to abandon treasury bills and stockpile cash. This constraint has paralyzed monetary policy in virtually every advanced economy, and is likely to be a recurring problem in the future.
The Curse of Cash offers a plan for phasing out most paper money--while leaving small-denomination bills and coins in circulation indefinitely--and addresses the issues the transition will pose, ranging from fears about privacy and price stability to the need to provide subsidized debit cards for the poor.
While phasing out the bulk of paper money will hardly solve the world's problems, it would be a significant step toward addressing a surprising number of very big ones. Provocative, engaging, and backed by compelling original arguments and evidence, The Curse of Cash is certain to spark widespread debate.
Publishers Weekly® Reviews
- Reviewed in: Publishers Weekly, page .
- Review Date: 2016-07-11
- Reviewer: Staff
According to this fascinating economic manifesto from Rogoff (coauthor of This Time Is Different), a public policy professor at Harvard University, money isn’t the root of all evil; cash is, and the sooner it’s rooted out, the better. Why? Cash, he argues, is key to criminal activities: tax evasion, bribery, smuggling, human trafficking, illegal immigration, and more. Cash’s liquidity, anonymity, and ungovernability place it beyond the authorities’ control. Rogoff’s principal concern is not with tax evasion or crime, however, but with the ability of central banks to compel consumer spending during economic crises. If central banks could implement negative interest rates, they would have substantially greater power to combat deflation and avoid recessions—but large cash reserves could defeat such efforts. Rogoff sidesteps the politically sticky problem of governments attempting to take away citizens’ cash. Even if one disagrees with him, Rogoff has collected so many fascinating facts about cash (how much is held abroad, how much is used for criminal activities, how much governments profit from its use) that the book never feels like ivory tower pontification. The result is an absorbing exploration of the uses, and misuses, of currency, and its intractability in controlling modern economies. (Sept.)