The Curse of Cash

by Kenneth S. Rogoff

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.

Genres: Economics, Finance, Nonfiction, Business, Politics, Money, Society

283 pages, Hardcover

First published September 6, 2016

About the author

Kenneth Saul "Ken" Rogoff is an American economist and chess Grandmaster. He is the Thomas D. Cabot Professor of Public Policy and Professor of Economics at Harvard University.

Reviews

[Athan Tolis · Rating 4 out of 5]

Back in the days of the Apollo 11, the program ran into a major problem: the biro ball-point pen could not work in the absence of gravity and was useless in space. A bit like what happens if you try to use yours on a wall. Famously, a high-tech solution was devised that solved this problem once and for all. “Space pens” featuring micro-canisters of pressurized gas were designed and fabricated in time for the mission. The gas applied the pressure to the ink and copious notes were duly taken in space. Problem solved.

The Russians issued pencils to their cosmonauts.

“The Curse of Cash” is first and foremost an American book by an American author on a luxury that only a hyper-affluent society would ever bother to seriously contemplate. It’s about getting rid of the “pencil” equivalent low-tech solution that’s done a 99% quality job of serving everybody’s needs for a number of centuries.

And it’s provoking hysterical reactions that only Americans could possibly have. Go to Amazon and have a look!

Oh, and it’s two books really. Rogoff wrote the first half some thirty years ago and he shelved it, for the simple reason that the world has bigger problems. It’s beautifully written, though. The author starts by a eulogy to paper money but goes on to explain, 100% convincingly, that getting rid of it would

1. Help raise considerable, meaningful, amounts of tax on unreported activities
2. Kick organized crime where it hurts, as most cash actually seems to be used by criminals!
3. Cost only a fraction of the tax raised in seignorage lost

He proves this stuff, he does not just put it out there. And he’s re-written this part of the book and updated it to 2016, crapping on Zuckman (in one sentence: getting rid of cash will do tons more for tax avoidance than going after money that’s hiding in the sundry tax havens), on Piketty (“stop kvetching about inequality within states when inequality is so dramatically higher across borders”) and provides a crystal-clear explanation of what seignorage is and now it works. It’s brilliant.

Also, he mentions (so he knows!) that some illegal activity is necessary and perhaps we need to have some illegal immigrants picking fruit and some illegal nannies and if we had to register them then this economic activity would become non-economic and would not occur. He does not do the math to put a price on this. I, for one, think the effects might actually be half an order of magnitude above the issues he does discuss.

And he’s got a tin ear for the times we live in.

Rogoff does the numbers right, but does not understand the human side much. It’s not only about the money. People want to close down the tax havens because it’s the rich who take advantage of them. The tax that would be collected by eliminating cash, if it were ever collected (a lot of the activity would cease, the legal well before the illegal), would be primarily collected from the poor and their potential employers. And as a result there would be an even bigger burden on the state to redistribute, at a point in time when (affluent, admittedly) Americans are rising against taxation in their droves.

Which brings us to the second part of the book, the one about negative rates.

The argument in favor is technically flawless:

1. The point is made very well that hanging out at zero rates can last 20 years with no results
2. The point is made equally well that QE is only proven as shock therapy, not as a permanent solution
3. The alternatives (such as changing the central bank’s mandate or inflation target) are also carefully considered and found to be inadequate and potentially confusing
4. The objections of the people who consider negative rates to be theft are (to a great extent, correctly) swiped aside as naïve: inflation stole from their pockets for decades and they did not make nearly as big a fuss. I would add (but you won't find this in the book) that the irony is lost on these strident objectors that in the absence of the expectation that an oh-so-hateful government somewhere will accept it as a means to pay tax, paper money is worthless. No government => no paper money.
5. If they were possible, perhaps negative rates could be a great additional tool in the hands of the authorities

In conclusion, the elimination of cash would open the door to the additional tool of negative rates. This is not presented as the one biggest argument in favor of eliminating cash, simply as a very nice side benefit. And the author is for once not naïve about this, he points out that one nation doing it unilaterally would be leaky and ineffective, similar to how it is for fiscal policy, and perhaps even more so.

There’s a large number of other interesting insights:

1. Cryptocurrency, a permanent ledger of all transactions ever, is dismissed as not crypto at all
2. Cryptocurrency as a barrier against inflation is additionally exposed as hyper naïve, as there is nobody to stop a million cryptocurrencies from emerging, all of them very deflationary of course
3. Gold is given its due respect, and is expected to rise in value as central banks cut down on the use of large-denomination bills. The author seldom misses a chance to add, however, that it is inferior technology to paper money!

All that said, the book is far too nerdy and focused and not at all “worldly,” basically.

The most cogent objection to negative rates comes from Mervyn King: you really don’t know what will happen, they would most genuinely fall under “extreme uncertainty” according to the former head of the Bank of England. Savers might go into anaphylactic shock, basically, exactly how all the commentators on Amazon who are giving one star to the book. In the US economy, which is 70% consumption, that effect could well trump the “transmission mechanism” of interest rates. There’s no mention of this here.

The revolt that is taking place in the world right now against central banks is akin to the objection he attributes to Milton Friedman. The people is shouting at the central banks: “give it up, guys, you don’t know what you’re doing.” Nobody really thinks central banks know anything anymore and the author makes a number of arguments about central bank credibility (for example with respect to controlling inflation) that you can only really make in the Littauer building where he works these days. OK, the Eccles building too.

The people who are shouting “leave cash alone” are shouting in the same way a man with a fever would tell a quack with suction cups to leave him alone, basically.

An even more virulent strand of this sentiment goes along the lines of “get rid of the Fed’s mandate to bring about prosperity and get them to do job 1, which is to keep an eye on the banks so they can stand behind them when the need comes up”

If you are writing a book about getting rid of the fundamental technology that has been underlying our market system, these are the issues you need to address first, in my view. Not the method via which you would launch parallel currencies.

That said, if any country can make this fly, it will be America. The story with the pencils does not have the moral you expect, besides. The Americans had the last laugh. They’ve been selling “space pens” to tourists for fifty years and have recouped a massive profit on what had seemed to be a weapons-grade idiotic investment…

[Kammie · Rating 1 out of 5]

This book is farcical.

Rogoff's solutions are de facto debt defaults and admissions that the government can not pay it debts. His solution is quite simply a back-door method to debt default by the government and at the expense of individual liberty and privacy.

I did enjoy reading the book, but Rogoff's arguments are spurious and meant to further the interests of government and not the interests of the people whom government actually serves.
Perhaps Rogoff should consider writing a book in praise of The Chicago Plan which would be a much better option!

[Stetson · Rating 4 out of 5]

I think this is a great example of a work that I disagree with yet still believe it is an excellent read.

Kenneth S. Rogoff’s The Curse of Cash (2016) makes the case that the widespread use of large-denomination paper currency has become economically and socially harmful in modern economies. He argues that most high-value bills, such as $100 notes in the U.S., circulate not in day-to-day legal transactions, but in the underground economy, enabling tax evasion, organized crime, corruption, and terrorism. By contrast, ordinary consumers and businesses primarily rely on electronic payments, meaning that the benefits of high-denomination cash to legitimate commerce are minimal. Rogoff walks through an accounting of the location of cash reserves in order to substantiate the claim that little real economic value is gleaned by regular Americans from cash.

Rogoff proposes a gradual phasing out of large bills and, eventually, much of physical cash, replacing it with digital payments under government oversight. This transition, he contends, would shrink the black/grey economy, increase tax compliance, and strengthen the effectiveness of monetary policy. In particular, reducing dependence on cash would allow central banks to implement negative interest rates during recessions, overcoming the “zero lower bound” problem that constrains conventional monetary stimulus.

The proposal has obvious tradeoffs with privacy, enabling total governmental surveillance. Additionally, the Americans who operate without access to digital finance will face a dramatic shift in their lifestyle. Rogoff anticipates these objections and suggests safeguards, such as maintaining small-denomination cash for day-to-day anonymity, expanding financial inclusion, and ensuring transparent governance of digital systems. However, it seems unlikely that once such a policy became active that it would eventually root out cash altogether.

Some of the premises of the central argument appear to have been challenged by subsequent developments, namely macroeconomic trends in the wake of the COVID19 pandemic. We yet again saw the central bank fail to tame inflation in a timely manner, dragging their feet on interest rate hikes, while Congress and the Presidency have continued to be cowardly and irresponsible stewards of the treasury, recklessly spraying money into the economy at every opportunity.

Additionally, I worry that Rogoff's interest and confidence in the effectiveness of negative interests rates is misplaced. I feel that the psychological consequences of such a policy are hard to predict and thus the risk to stability would be intolerable if there were substantial negative rates. I would need to see a robust empirical record to negative interest rates in similar scenarios and for enormous public messaging efforts to be made before such policies should be considered.

Overall, this is an edifying read for those who are looking for an interesting perspective on monetary policy and want to mull over the argument of ending cash. There were parts where the work appeared repetitive and perhaps longer than it needed to be.

[Karel Baloun · Rating 3 out of 5]

Rogoff effectively proves that large denomination bills only help crime and tax evasion, and that they have no other legitimate utility. He does this with very strong data and analysis, and shows governments allow this explicitly for profit (~0.5% of GDP, in seigniorage, in two distinct ways), and charts a more profitable path for democratic governance. Just this, in 30 pages would have been 5-stars, and the first sections of 100pgs may be worth a read, if you want to be convinced of this pretty obvious reality.

He goes deep on negative interest rates, and his opinions on digital currencies and debt and inflation. I just keep combing it for gems and ended disappointed.

[Ajay · Rating 1 out of 5]

The world is drowning in cash -- and it's making us poorer and less safe... That's the beginning of Kenneth Rogoff's fascinating and outlandish proposition to get rid of paper money in advanced economies around the world.

This is a book written by an American for Americans, written by an Economist and Academic, written by someone who is either and idiot or thinks you are.

I really disliked this book for 3 reasons:
1) The arguments for change are either farcical and or fundamentally misrepresenting the world and economic principles.
2) The solutions presented are politically unrealistic and poorly considered to such an extreme they they could be attributed to an Econ 101 student's class presentation.
3) The writing style is terribly boring, wordy, and jargon-filled with the marks of either poor literary skills or an active attempt to misguide and misdirect the audience.

Why remove cash from the global economy? You might solve tax evasion, corruption, terrorism, the drug trade, human trafficking, and the rest of the global underground economy (including illegal immigration) in one fell swoop. Oh and by the way, doing so would also happen to give Central Banks an unlimited license to create digital liquidity and drive interest rates into negative territory. Which of course is the only thing that has held central banks back from fixing that pesky Depression/Recession/Stagnation problem in America.

The paragraph above is a bit of a strawman because Rogoff does make the minor effort to mention some of the constraints, drawbacks, and considerations that limit his thesis. Yet, his premise is not far from what I have written above. The entire book than drones on about the subject in an obtuse manner over 283 pages writing over major concerns with a sentence here and there.

The big gaping holes that bring the edifice down? The historical data on the use of monetary policy reflects that it is a tool by Central Banks to signal to actors to borrow money and artificially stimulate demand in the near term. Perhaps useful in smoothing out short-term business cycles, but in no way a solution to the structural economic issues that challenge the American economy today (which is leveraged to the hilt). There are immense ways for those who participate in tax evasion, corruption, and criminal activities to continue unabated in a world where 100 dollar and 500 euro notes are removed from circulation, especially considering that these activities when conducted on a large scale rarely involve physical cash these days. Rogoff's suggestion that this change wouldn't greatly handicap the poor or immigrants to the US because of complimentary solutions (government debit accounts and more open legal immigration avenues) was a particularly misleading piece. These policies if implemented would not fully compensate for the loss of cash and the "if" is a big statement in itself given political opposition from various parties.

Simply put, this book is a difficult and boring take on an outlandish policy suggestion that I sincerely hope is never implemented. For those studying economics and politics and hoping to develop their critical analysis skills, this could be great subject material as there is a wealth of fallacious arguments, poor reasoning, and unsupported claims to expose in this read. For the rest of us, better pass this one.

[Sathya · Rating 4 out of 5]

Phasing out cash and the likely implications for its aren’t exactly watercooler talk. Yet, this was the focus of a lot of conversations that I used to have with an ex-colleague, where we imagined several scenarios of an economy operating without cash, how it would function and how it would affect the man-on-the-street in the short and long terms. Thus, The Curse of Cash was one I picked up with much interest and I wasn’t disappointed.

The book is a well-thought argument for the removal of cash from economies – albeit slowly starting with bigger denominations. Though some parts of it are repetitive (if I had a penny for every time the author said that small denomination notes or coins should be left to operate indefinitely…), the book included a decent consideration of the economic implications and potential fallouts of removing cash from circulation – including involved discussions of negative interest rates and alternates to a cashless existence, such as digital currencies.

The author argues that the phasing out of cash should start in more developed economies (the US, the UK or the European Union), pointing out that emerging economies might not yet be ready for such a transition. He also argues that many of the problems that people posit could arise by removing cash from the system can be tackled or nullified by phasing out physical currency incrementally over a long period of time.

And this is true – when small changes are made, governments give enough time for people to acclimatise and adapt and accept the new normal, making further introductions of changes easier to implement.

The important point that the author fails to consider in the book is the fact that entirely digital currency transactions kill the possibility of any privacy for people. According to him, people should be permitted to have private shielded transactions on the edge of the system, once cash has bene phased out, but doesn’t define how this would work in practice. Removing physical currency from any economy will curtail a lot of criminal activities (one of the strongest arguments for removing cash), but it will also mean the collapse of privacy for populations.

The other lapse is the lack of coverage on the potential social implications of such a transition – slow as it might be – especially on the reasonable percentages of people who live without accounts and do not come into contact with the banking system at all (even in developed economies).

The book demands some awareness of macroeconomics, and it will certainly help if you get into it with some awareness of the currency changes taking place around the world and the toying of banks with negative interest in the last few years (particularly after the 2008 financial crisis).

Highly recommended if you are looking for a cogent economic argument for phasing out cash. If you are more interested in the social angle, then give this one a miss.

[I · Rating 1 out of 5]

The failed demonetisation experiment in India is enough to show the shallowness of this Harvard economics professor's arguments

[Rommel Harlequin Monet · Rating 1 out of 5]

(p. 357)

Assuming uniformity of procedure, the credit-issuing banks are able to extend their issues indefinitely. It is within their power to stimulate the demand for capital by reducing the rate of interest on loans, and, except for the limits mentioned above, to go so far in this as the cost of granting the loans permits. In doing this they force their competitors in the loan market, that is all those who do not lend fiduciary media which they have created themselves, to make a corresponding reduction in the rate of interest also. Thus the rate of interest on loans may at first be reduced by the credit-issuing banks almost to zero. This, of course, is true only under the assumption that the fiduciary media enjoy the confidence of the public so that if any requests are made to the banks for liquidation of the promise of prompt cash redemption which constitutes the nature of fiduciary media, it is not because the holders have any doubts as to their soundness. Assuming this, the only possible reason for the withdrawal of deposits or the presentation of notes for redemption is the existence of a demand for money for making payments to persons who do not belong to the circle of customers of the individual banks. The banks need not necessarily meet such demands by paying out money; the fiduciary media of those banks among whose customers are those persons to whom the banks’ own customers wish to make payments are equally serviceable in this case. Thus there ceases to be any necessity for the banks to hold a redemption fund consisting of money; its place may be taken by a reserve fund consisting of the fiduciary media of other banks. If we imagine the whole credit system of the world concentrated in a single bank, it will follow that there is no longer any presentation of notes or withdrawal of deposits; in fact, the whole demand for money in the narrower sense may disappear. These suppositions are not at all arbitrary. It has already been shown that the circulation of fiduciary media is possible only on the assumption that the issuing bodies enjoy the full confidence of the public, since even the dawning of mistrust would immediately lead to a collapse of the house of cards that comprises the credit circulation. We know, furthermore, that all credit-issuing banks endeavor to extend their circulation of fiduciary media as much as possible, and that the only obstacles in their way nowadays are legal prescriptions and business customs concerning the covering of notes and deposits, not any resistance on the part of the public. If there were no artificial restriction of the credit system at all, and if the individual credit-issuing banks could agree to parallel procedure, then the complete cessation of the use of money would only be a question of time. It is, therefore, entirely justifiable to base our discussion on the above assumption.

Now, if this assumption holds good, and if we disregard the limit that has already been mentioned as applying to the case of metallic money, then there is no longer any limit, practically speaking, to the issue of fiduciary media; the rate of interest on loans and the level of the objective exchange value of money is then limited only by the banks’ running costs—a minimum, incidentally which is extraordinarily low. By making easier the conditions on which they will grant credit, the banks can extend their issue of fiduciary media almost indefinitely. Their doing so must be accompanied by a fall in the objective exchange value of money. The course taken by the depreciation that is a consequence of the issue of fiduciary media by the banks may diverge in some degree from that which it takes in the case of an increase of the stock of money in the narrower sense, or from that which it takes when the fiduciary media are issued otherwise than by banks; but the essence of the process remains the same. For it is a matter of indifference whether the diminution in the objective exchange value of money begins with the mine owners, with the government which issues fiat money credit money, or token coins, or with the undertakings that have the newly issued fiduciary media placed at their disposal by way of loans.

If it is possible for the credit-issuing banks to reduce the rate of interest on loans below the rate determined at the time by the whole economic situation (Wicksell’s natürliche Kapitalzins or natural rate of interest), then the question arises of the particular consequences of a situation of this kind. Does the matter rest there, or is some force automatically set in motion which eliminates this divergence between the two rates of interest? It is a striking thing that this problem, which even at a first glance cannot fail to appear extremely interesting, and which moreover under more detailed examination proves to be one of the greatest importance for comprehension of many of the processes of modern economic life, has until now hardly been dealt with seriously at all.

We shall not say anything further here of the effects of an increased issue of fiduciary media on the determination of the objective exchange value of money; they have already been dealt with exhaustively. Our task now is merely to discover the general economic consequences of any conceivable divergence between the natural and money rates of interest, given uniform procedure on the part of the credit-issuing banks. We obviously need only consider the case in which the banks reduce the rate of interest below the natural rate. The opposite case, in which the rate of interest charged by the banks is raised above the natural rate, need not be considered; if the banks acted in this way, they would simply withdraw from the competition of the loan market, without occasioning any other noteworthy consequences.

Now if the rate of interest on loans is artificially reduced below the natural rate as established by the free play of the forces operating in the market, then entrepreneurs are enabled and obliged to enter upon longer processes of production. It is true that longer roundabout processes of production may yield an absolutely greater return than shorter processes; but the return from them is relatively smaller, since although continual lengthening of the capitalistic process of production does lead to continually increasing returns, after a certain point is reached the increments themselves are of decreasing amount. Thus it is possible to enter upon a longer roundabout process of production only if this smaller additional productivity will still pay the entrepreneur. So long as the rate of interest on loans coincides with the natural rate, it will not pay him; to enter upon a longer period of production would involve a loss. On the other hand, a reduction of the rate of interest on loans must necessarily lead to a lengthening of the average period of production. It is true that fresh capital can be employed in production only if new roundabout processes are started. But every new roundabout process of production that is started must be more roundabout than those already started; new roundabout processes that are shorter than those already started are not available, for capital is of course always invested in the shortest available roundabout processes of production, because they yield the greatest returns. It is only when all the short roundabout processes of production have been appropriated that capital is employed in the longer ones.

A lengthening of the period of production is only practicable, however, either when the means of subsistence have increased sufficiently to support the laborers and entrepreneurs during the longer period or when the wants of producers have decreased sufficiently to enable them to make the same means of subsistence do for the longer period. Now it is true that an increase of fiduciary media brings about a redistribution of wealth in the course of its effects on the objective exchange value of money which may well lead to increased saving and a reduction of the standard of living. We are not concerned with a reduction in the natural rate of interest brought about by an increase in the issue of fiduciary media, but with a reduction below this rate in the money rate charged by the banks, inaugurated by the credit-issuing banks and necessarily followed by the rest of the loan market. The power of the banks to do such a thing has already been demonstrated.

The situation is as follows: despite the fact that there has been no increase of intermediate products and there is no possibility of lengthening the average period of production, a rate of interest is established in the loan market which corresponds to a longer period of production; and so, although it is in the last resort inadmissible and impracticable, a lengthening of the period of production promises for the time to be profitable. But there cannot be the slightest doubt as to where this will lead. A time must necessarily come when the means of subsistence available for consumption are all used up although the capital goods employed in production have not yet been transformed into consumption goods. This time must come all the more quickly inasmuch as the fall in the rate of interest weakens the motive for saving and so slows up the rate of accumulation of capital. The means of subsistence will prove insufficient to maintain the laborers during the whole period of the process of production that has been entered upon. Since production and consumption are continuous, so that every day new processes of production are started upon and others completed, this situation does not imperil human existence by suddenly manifesting itself as a complete lack of consumption goods; it is merely expressed in a reduction of the quantity of goods available for consumption and a consequent restriction of consumption. The market prices of consumption goods rise and those of production goods fall.

This is one of the ways in which the equilibrium of the loan market is reestablished after it has been disturbed by the intervention of the banks. The increased productive activity that sets in when the banks start the policy of granting loans at less than the natural rate of interest at first causes the prices of production goods to rise while the prices of consumption goods, although they rise also, do so only in a moderate degree, namely, only insofar as they are raised by the rise in wages. Thus the tendency toward a fall in the rate of interest on loans that originates in the policy of the banks is at first strengthened. But soon a countermovement sets in: the prices of consumption goods rise, those of production goods fall. That is, the rate of interest on loans rises again, it again approaches the natural rate.

This countermovement is now strengthened by the fact that the increase of the stock of money in the broader sense that is involved in the increase in the quantity of fiduciary media reduces the objective exchange value of money. Now, as has been shown, so long as this depreciation of money is going on, the rate of interest on loans must rise above the level that would be demanded and paid if the objective exchange value of money remained unaltered.22

At first the banks may try to oppose these two tendencies that counteract their interest policy by continually reducing the rate of interest charged for loans and forcing fresh quantities of fiduciary media into circulation. But the more they thus increase the stock of money in the broader sense, the more quickly does the value of money fall, and the stronger is its countereffect on the rate of interest. However much the banks may endeavor to extend their credit circulation, they cannot stop the rise in the rate of interest. Even if they were prepared to go on increasing the quantity of fiduciary media until further increase was no longer possible (whether because the money in use was metallic money and the limit had been reached below which the purchasing power of the money-and-credit unit could not sink without the banks being forced to suspend cash redemption, or whether because the reduction of the interest charged on loans had reached the limit set by the running costs of the banks), they would still be unable to secure the intended result. For such an avalanche of fiduciary media, when its cessation cannot be foreseen, must lead to a fall in the objective exchange value of the money-and-credit unit to the paniclike course of which there can be no bounds. Then the rate of interest on loans must also rise in a similar degree and fashion.

Thus the banks will ultimately be forced to cease their endeavors to underbid the natural rate of interest. That ratio between the prices of goods of the first order and of goods of higher orders which is determined by the state of the capital market and has been disturbed merely by the intervention of the banks will be approximately reestablished, and the only remaining trace of the disturbance will be a general increase in the objective exchange value of money due to factors emanating from the monetary side. A precise reestablishment of the old price ratios between production goods and consumption goods is not possible, on the one hand because the intervention of the banks has brought about a redistribution of property, and on the other hand because the automatic recovery of the loan market involves certain of the phenomena of a crisis, which are signs of the loss of some of the capital invested in the excessively lengthened roundabout processes of production. It is not practicable to transfer all the production goods from those uses that have proved unprofitable to other avenues of employment; a part of them cannot be withdrawn and must therefore either be left entirely unused or at least be used less economically. In either case there is a loss of value. Let us, for example, suppose that an artificial extension of bank credit is responsible for the establishment of an enterprise which only yields a net profit of four percent. So long as the rate of interest on loans was four and one-half percent, the establishment of such a business could not be thought of; we may suppose that it has been made possible by a fall to a rate of three and one-half percent which has followed an extension of the issue of fiduciary media. Now let us assume the reaction to begin, in the way described above. The rate of interest on loans rises to four and one-half percent again. It will no longer be profitable to conduct this enterprise. Whatever may now occur, whether the business is stopped entirely or whether it is carried on after the entrepreneur has decided to make do with the smaller profits, in either case—not merely from the individual point of view, but also from that of the community—there has been a loss of value. Economic goods which could have satisfied more important wants have been employed for the satisfaction of less important; only insofar as the mistake that has been made can be rectified by diversion into another channel can loss be prevented.

Our theory of banking, like that of the currency principle, leads ultimately to a theory of business cycles. It is true that the Currency School did not inquire thoroughly into even this problem. It did not ask what consequences follow from the unrestricted extension of credit on the part of the credit-issuing banks; it did not even inquire whether it was possible for them permanently to depress the natural rate of interest. It set itself more modest aims and was content to ask what would happen if the banks in one country extended the issue of fiduciary media more than those of other countries. Thus it arrived at its doctrine of the “external drain” and at its explanation of the English crises that had occurred up to the middle of the nineteenth century.

If our doctrine of crises is to be applied to more recent history, then it must be observed that the banks have never gone as far as they might in extending credit and expanding the issue of fiduciary media. They have always left off long before reaching this limit, whether because of growing uneasiness on their own part and on the part of all those who had not forgotten the earlier crises, or whether because they had to defer to legislative regulations concerning the maximum circulation of fiduciary media. And so the crises broke out before they need have broken out. It is only in this sense that we can interpret the statement that it is apparently true after all to say that restriction of loans is the cause of economic crises, or at least their immediate impulse; that if the banks would only go on reducing the rate of interest on loans they could continue to postpone the collapse of the market. If the stress is laid upon the word postpone, then this line of argument can be assented to without more ado. Certainly, the banks would be able to postpone the collapse; but nevertheless, as has been shown, the moment must eventually come when no further extension of the circulation of fiduciary media is possible. Then the catastrophe occurs, and its consequences are the worse and the reaction against the bull tendency of the market the stronger, the longer the period during which the rate of interest on loans has been below the natural rate of interest and the greater the extent to which roundabout processes of production that are not justified by the state of the capital market have been adopted.

https://web.mit.edu/merolish/Public/b...

[Wei Ye · Rating 4 out of 5]

Good book, inspiring my future research. Once met the author on a seminar.

[Xavier Shay · Rating 4 out of 5]

If you can accept the idea that a central bank should manage currency, this is a very well written book with a nuanced argument that seems pretty reasonable. Basically phase out the big notes, keep the small ones, while fairly addressing any potential objection you care to come up with. Many 1 star reviews (mostly on Amazon) likely written by people who didn't read it.

"Almost 80% of the US currency supply is in $100 bills."
"showing that 1 in 20 adults carries around a $100 bill is not quite the same as explaining why everyone isn’t carrying around at least 34 of them"

"SOCA’s research, involving multiple law enforcement agencies, showed that more than 90% of UK demand for the 500-euro note came from criminals."

"Despite the challenges to central bank independence, the status quo, where central banks make vast extra profits by providing a key financing instrument for the underground and criminal activity worldwide, is hard to defend."

"In theory, negative rate policy works pretty much the same way interest rate cuts work when rates are at positive levels. With a lower cost of borrowing, firms will invest more and consumers will spend more, particularly on consumer durables, such as refrigerators and autos. Lower interest rates also push up the price of assets from housing to stocks to fine art, making people feel wealthier and more inclined to spend." <- this is the scariest paragraph in the book, in that it so eloquently describes the necessity of consumerism to modern economies. His book takes it as a premise that this needs to be so, regardless of whether you think it should be that way or not.

[Terence P. · Rating 1 out of 5]

The author has served on the board of the Federal Reserve, and since his ideas were universally ignored there, he wrote a book about them instead. It's easy to tell he is an economist, because he quickly presumes the myth of barter — deftly debunked in David Graeber's magnum opus "Debt" — is real. That red flag early on should be enough to warn off the educated, at least.

Rogoff's notion is that paper currency is a bad thing. He spends half the book sowing fear about criminals and terrorists, but his main reason for disliking cash is that it's harder to steal money from the people when it's in physical form. Inflation, the act of pumping extra money into the economy and thereby making it easier to sustain a government almost entirely by borrowing, isn't fast enough for this man. He'd rather be able to introduce negative interest rates, which means that putting money in the bank would actually REDUCE its balance over time. That's hard to do if people can instead stuff it in a mattress.

The people in charge of our central banks use whatever tools they have to steal from the populace, and they're quite good at doing it in subtle ways and then throwing up their hands to say, "It's the economy!" That this plan of Rogoff's is too scary even for those pirates should send a clear message about how insane a plan this really is.

[Travis Scher · Rating 3 out of 5]

Very academic in style, but an important topic to those interested in the future of money and macroeconomic policy. The author does a good job presenting his case, but two arguments for eliminating most paper currency are basically unrelated - first, to reduce crime and tax evasion, and second, to enable effective negative interest rate policy. This left the book feeling a bit disharmonious, but both are arguments are interesting in their own right.

[Jason Furman · Rating 5 out of 5]

A thourough exploration of just about every aspect of a simple idea: phasing out paper currency.

[Iworld1991 · Rating 4 out of 5]

A timely read in light of the chaotic demonetization in India.

[Liquidlasagna · Rating 1 out of 5]

truly a bizarroworld tract from hell

---

Amazone

The final nail in the coffin of freedom
2/10

First, I will say that I am a financial advisor for 27 years, having been trained in economics. I give seminars that teach about our monetary system, and the history of money. I have the utmost respect for Ken Rogoff, and thought that the work that he did with Carmen Reinhart, This Time is Different, was eye-opening in studying the prior instances of excessive debt throughout world history. If you'd like to understand why inflation is the route chosen to deal with a debt crisis over and over again throughout history, take the time to read that tome.

This book, on the other hand, you should read to better understand the threat that those in power have in mind for you. In The Curse of Cash, sadly, Rogoff is an apologist for the state. I would begin my review asking a simple question - Since when are central banks engaged in/ responsible for fighting crime? At the very least, this is yet one more instance of mission creep for the Federal Reserve beyond its original mandate, having already taken on the responsibility of managing the global economy.

The Curse of Cash is an argument for why the state should have more ability to control our medium of exchange (at negative real interest rates, let alone nominal interest rates, it can hardly any longer be called a store of value). He begins his argument by listing the litany of illicit uses for cash, including tax evasion, drugs, corruption of our otherwise pure politicians, human trafficking, exploitation of migrants, illegal immigration, counterfeiting, terrorism, and polishes his argument off with the fact that cash can harbor germs. The arguments presented can easily be demolished by the fact that, except for the disease argument, gold would be a better form of payment to facilitate these illicit transactions. Ironically, a ban on cash might bolster the sale and the value of gold for these purposes.

All of his arguments decry the loss to government of tax revenues, seigniorage, and overall control of our money. He argues for greater ability for the government to tax, and to impose negative interest rates on the population. There is no transaction that cannot be taxed, no financial exchange that cannot be controlled. I would like readers to think about a world where all of your transactions are handled via debit/ credit card, and where your single-payer healthcare provider can see that you've eaten just a few too many candy bars this month, and maybe your health insurance premiums should be adjusted.

If paying the kid next door to cut your lawn, would you have to issue him a Form1099 at the end of the transaction? Would he need to be able to accept electronic payments to even be able to perform the service? One can easily see how the larger companies would gain even more of the business to be had in the overall economy. Then, only those companies that "play nice" would be rewarded with easy terms of business. We are already beginning to see companies around the country (ie. gun stores, medical marijuana, etc.) that don't toe the government line being punished by being pushed out of banking services.

We all should understand this threat, and make sure that when we vote, we elect honorable people who have no desire to control and tax our every financial transaction. It will be the end of our freedom.

Revere's Heir

[Zhi Wei Lee · Rating 4 out of 5]

Good read for those wanting to understand the potential adverse effects of cash usage. The book is not without its critics, but I would recommend it to anyone who has an interest in either encouraging greater cashlessness or in defending the use of cash. I've summarised the gist of the insights from the book below, but this may obscure some of the finer nuances and analytical details (e.g. data analysis) - for which reading the book itself would be necessary IMO.

Arguments for phasing out cash
- Reduces the size of the shadow economy, for both legitimate activities (but avoid taxation) and illegitimate transactions (e.g. bribery). Phasing out cash is not a panacea but is expected to at least make it more challenging or more costly for such activities to take place in an undetected manner, given that the costs of doing so is likely to be higher using non-cash channels
- Provides central banks with an avenue to undertake negative interest rate policy more effectively. Relevant where the interest rate environment is at the zero bound

Three guiding principles for phasing out currency
1. Make it more difficult to engage in anonymous (i.e. untraceable) and large transactions repeatedly
2. Ensure gradual transition (over at least 10 to 15 years) to avoid excessive disruption and gives institutions and individuals time to adapt as issues arise and new options become available
3. Ensure that poor and unbanked individuals have access to free basic debit accounts (or equivalent), and possibly also basic smartphones --- cost should be borne by the Government, though it can also be imposed on banks that will pass on costs to paying customers

Four key thrusts proposed for public policy
1. Phasing out paper currency
--- Begin with notes of $50 and above (or foreign equivalent), then the $20 bill, leaving only $1, $5 and perhaps $10 bills
--- Small bills to be left in circulation indefinitely but in final phase, to be replaced with equivalent-denomination coins of substantial weight

2. Universal financial inclusion
--- Government to provide all individuals option of access to free basic-function debit card or smartphone accounts
--- To be implemented by making government transfer payments into the debit account after it is created

3. Privacy
--- Regulatory framework to discourage other means of making large-scale payments that can be completely hidden from the Government

4. Real-time clearing
--- Government to facilitate development of payments infrastructure to achieve (near) real-time clearing for most transactions

[John Mihelic · Rating 5 out of 5]

Rogoff argues that we should eliminate big bills like US $100 and its big economy equivalents. Doing so will have two benefits.

The first benefit is that most people do not use large bill. These are in the financial system in the gray and black economy where having dense stores of value that are also a medium of exchange facilitates crime like drug dealing and human trafficking. There is profit to the issuing countries of these bills, a seignorage income that would be lost if these bills were pulled from the economy, but the ills caused and made easier by their presence are worse than the loss.

The other benefit is that by not having cash around, it gives the central banks more space to move interest rates if necessary. Right now, there is an effective floor at zero percent that the Federal Reserve and its sister institutions can’t go much lower because once you impose significant costs to keeping money in reserves, then the option is to hold cash. There is some cost to holding large quantities of cash so Japan and some European banks have gone a bit below zero, but not that far. This space is important because even conservative Taylor rules of setting the interest rates would have been significantly negative in the aftermath of 2008. The zero-bound kept the Fed from going lower and it may have significantly increased the duration of the downturn in the aftermath of the crisis (especially since in the US and Europe where there was little help from fiscal policy because austerian parties bought into the fallacious idea of the family analogy for governments).

I’m on Rogoff’s side here, especially since it isn’t new to me as I have seen the idea at length in the work of Miles Kimball (ex-Michigan, now at CU) as he has made the argument on his blog. I’m more a supporter because of the second reason, which I am sure is the more controversial part of his argument – many people are suspicious of central bank activity, and they feel that giving the banks more leeway would encourage the activist central banks. I am of the opinion that independent monetary policy needs all possible weapons in its quiver as we have seen inaction at the exchequer cause real damage in the real economy.

[Darshan Pala · Rating 3 out of 5]

Rogoff is a successful economist who has also worked in the federal reserve in the days of the great moderation, however, he presents a very deep foresight into inherent limits the federal reserve has in dealing with recessions. He presents a somewhat convincing case of retiring cash money from the economy in favor of going digital. He does so by citing many plausible explanation, the most serious one being the limits cash puts on a central bank ability to prescribe negative overnight rate. He gives many other moral and social reasons in favor of his case, the main one being to discourage malicious transactions in the underworld, which mainly deals in cash which is basically untraceable. The book gets pretty technical in the second half, Rogoff has clearly spent a lot of time in thinking about this topic and deeply cares for it. He gives several legal, social, fiscal, political and contractual limits that this plan may have, but is very quick in dismissing every one of them as a mere detail that can be ironed out with relative ease. He also presents alternative ways that the policy can be implemented, the most convincing being the Kimball-Agarwal approach of a dual currency. He concludes by giving a wake up call to all the wanna-be libertarians that cryptocurrencies like bitcoin cannot compete with a large organization like the government which has tremendous incentives in keeping its monopoly on the monetary supply.
Although, it seems that Rogoff has clearly done his research, I feel that he misses a much deeper point made by Hayek: it is very difficult to understand all the subtle things that help a market function. Extending the central bank's powers is not the part of the solution, it may very well be the cause of the problem in the first place. He acknowledges this Austrian/Chicago view in the book but is still convinced that something is better than nothing and there must be a balance between the Hayek and Keynes.
Overall, a provocative read for anyone interested in macroeconomics.

[Robert Høgh · Rating 3 out of 5]

De bedste bøger er somme tider også de mest tilfældige. Jeg fandt The Curse of Cash på bagerste hylde i printerrummet på mit arbejde. Det må være en kedelig bog, hvis folk gemmer den i printerrummet, tænkte jeg. Derfor er der nok heller ikke nogen, der vil savne den.

Kontanternes forbandelse, som den hedder på dansk, er skrevet af Kenneth S. Rogoff, Harvard-økonom og blandt verdens bedste skakspillere. Han mener, at vi bør afskaffe kontanter, fordi de gør det nemmere at udøve kriminalitet og snyde i skat.

Det tror jeg, at han har ret i, for både min frisør og rensemand på Nørrebrogade tager altid kun imod kontanter, og ingen af dem har CVR-registreret deres virksomhed.

Endnu mere alvorligt viser forskning, at bl.a. menneskehandel og korruption ofte foregår via kontanter.

Desuden forhindrer kontanter centralbankerne i at indføre negative renter på langt under 0% - hvis det koster at have sine penge stående i banken, kan man nemlig altid hive dem ud.

Rogoff indrømmer, at der er fordele ved kontanter. De er svære at spore, de sikrer privatliv, du kan bruge dem i nødssituationer (fx hvis strømmen går), og de spiller en vigtig rolle i vores kultur. Derudover ville det være rigtig dyrt (ca. 10% af BNP) for EU eller USA at købe alle kontanter tilbage.

Jeg holder af bøger, der sætter spørgsmålstegn ved ting, vi normalt tager for givet. Jeg havde aldrig overvejet fordele og ulemper ved kontanter, ligesom jeg heller ikke overvejer kvaliteterne ved mit sofabord eller cykelhjelm. Den slags er spændende. Derfor anbefaler jeg denne bog til alle nørderne blandt mine følgere

[Al Maki]

Rogoff argues for the elimination of large cash bills: $100 US, 100 euro, 1000 Swiss francs and so on for two reasons. Firstly, there is virtually no sign of these bills in the legal economy. For example, there are 32 $100 bills outstanding for every man, woman, child and other in the United States but when people are polled almost none of them are accounted for. He argues that they are almost completely in use for criminal activity and tax evasion and that there is no reason not to eliminate them and it would make those two types of activity more difficult. But his main point is that eliminating these bills would eliminate most of the value stored in cash and would make negative interest rates more feasible as a tool to manage the economy.
Although he presents many arguments for both his lines of reasoning I was far from convinced. As to criminal activity, most previous attempts to make people better through legislation seem to me to have failed, although in most rich countries we are less obviously murderous than people used to be. As to the second point, I think bringing the wild trade in financial derivatives under control would be more intuitively acceptable to most people and more effective than allowing money to essentially evaporate if not spent.
I read it because I would really like to understand how finance maintains its control on the world and anything that sheds light on how money works contributes to that goal. But I don't think in this instance the time spent reaped sufficient reward.

[Wej · Rating 3 out of 5]

The Curse of Cash contains Rogoff's arguments for making payments cashless or, as he puts it, 'less-cash'. The book is split into three parts:
The first one talks about the dark side of cash, history of money, underground economy, and seignorage. I expected that the whole book will be about it. If it were, then I would have given it five stars.
In the second part the author puts his macroeconomist's hat on and writes about interest rates. He writes that removing cash (or making it harder to use, getting rid of large denominations) would enable getting past the zero bound constraint. This part, which takes roughly half of the book, is all about negative rates. Rogoff writes why the negative rates would be useful in crisis and how this idea developed over time (e.g. stamping banknotes, time-limited notes, and current implementations in Europe).
The final part describes how phasing out paper currency would play on the international level (OK for the US). The last chapter explains why gold is still seen as a valuable asset and why it will not become a substitute for cash. Rogoff sees the case for removing the large notes as being largely beneficial for the US but he sees obstacles with implementing it in developing countries. At the time of writing Rogoff briefly mentioned health concerns related to cash but in the times of coronavirus these concerns might become more prominent.

[Richard Thompson · Rating 4 out of 5]

OK, I'm convinced, let's get rid of cash. Or at least let's get rid of large denomination bills. I agree that in today's world cash is mostly a nuisance, and its principal uses are for things like drugs, smuggling, human trafficking, bribery and tax evasion. I don't need cash for my privacy. What privacy? The NSA, Google and Facebook already know everything about me. I do have a concern for the unbanked, so maybe keep small notes for them, but nothing above a 20. Or maybe a program of free government sponsored debit cards for anyone with an income under $50k/year. It could be done in conjunction with a program for universal basic income.

Mr. Rogoff says that getting rid of cash is also the best way to allow central banks to implement a policy of negative interest rates which he sees as a key economic management tool. I understand why a negative interest rate could be a more effective tool than quantitative easing or forward guidance and why large holdings of cash make it hard to go below the "zero lower bound," but I don't know. I'm not so sure that many of the theories of macroeconomics as practiced by central banks are sound. They are as likely to screw us up as to help us. Giving them a new tool may not do much to help economic stability, so I find it hard to get excited about negative interest. I do give Mr. Rogoff some credit for giving the best explanation that I have encountered of quantitative easing and why it works, though not as well as old fashioned interest rate management.

[Nils · Rating 4 out of 5]

Not entirely clear that we needed a book-length treatise on this topic, but certainly this book is the definitive statement of both the social ills caused by the circulation of large amounts of large-denomination cash (notably, the facilitation of various crimes and associated money laundering) , but also the way cash represents a very serious part of the Lower-bound constraint on monetary policy, I.e. The ability to set negative interest rates during financial downturns.

(Of course, in a sense this is all an elaborate anti-Keynesian monetarist apologia that follows from Rogoff's infamous refusal to promote fiscal interventions to deal with the post-2008 financial crisis. But leave that aside: certainly being able to move to negative interest rates would be an occasionally useful tool for central bankers -- a tool inhibited by the ability of people to move large amounts of assets into cash.)

The book also provides a practical primer on what it would take to actually make the transition (short answer: universal access to digital payment systems) and notes correctly that it would necessarily require that society achieve greater bank-access equality. No surprise, then, that the countries closest to making the transition to a cashless economy are the Scandinavians....

[André Morais · Rating 5 out of 5]

The first point is that the book reveals an honest effort by the author to make it readable and accessible to readers who, like me, do not possess a background on economics. Nevertheless, at certain points, it becomes hard to follow the reasoning and easy to loose sight on the main topic: money and the path to a “less-cash” (not cashless, as Rogoff explains) world.
In addition, it was a very useful reading to learn more on hot topics such as negative interest rates or quantitative easing (shedding light on some widespread misconceptions) and lesser-known matters such as seigniorage.
Bearing in mind current events, mainly the recent soar in prices, it is also inevitable to find this book very insightful and able to predict some of the challenge that central banks around the world are facing (see discussion on the flexibility v commitment debate and the possibility to raise inflation rates targets).

[Field · Rating 3 out of 5]

This has been the only book that I strongly agree with half of the content and disagree with the rest.

The book in general talked about 2 opinions, one serving the other. First, the author proposed to reduce the supply of cash, or paper money to be specific. Accordingly, individuals and companies will be forced to hold the majority of the assets in electronic banking accounts. Therefore, the country can easily apply a negative interest rate to stimulate when a recession is foreseeable.

I strongly agree with the former perspective. The author did a good job explaining how paper bills served the purposes of many illegal activities and the benefits to curb their usage.

However, I was not convinced by his latter opinion, giving the FED the power to enforce negative rate. To be clear, if paper money is heavily circulated, people/companies can avoid negative interest by hoarding cash. Therefore, the reduction of cash supply automatically makes FED's monetary policies more powerful. I would like to make a few arguments. I'm by no means an economy expert so please correct me if I'm wrong.

1. The essence of money is debt. The fact that I hold U.S. dollars means I own a share of the U.S. treasury. In other words, money = U.S. treasury debt receipt. Supporting the FED to apply negative interest is basically encouraging the government to not pay the debt. Both the law and common sense, say that debt should be paid in full amount, if not together with the interest. It is extremely unsettling to make the government exceptional.

Government collect taxes. The taxes is considered a service that individuals and companies purchased from the government, including safety, basic education and health care for me and my family, the tidiness, etc. This transaction should be voluntary; i.e. I keep my options open to move to another country if I found the service provided doesn't reflect the taxes collected by the government. Voluntary exchange is the fundament of the economy and the enforcement of the negative rate is definitely a violation.

2. The author tried to equalize negative rate to the inflation, by claiming they are both decline in the buying power. To me they are different.

2.1 The author claimed the FED can set an inflation rate. Therefore, FED can set an interest rate of 0% and an inflation rate of 2%, or, they can set an interest rate of -2% and an inflation rate of 0% and the consequence is the same. Actually, FED was never able to set an inflation rate. Instead, they can only set an inflation target.
It's totally possible that people will freak out on FED's -2% interest rate policy and rush to spend their money, which will drive up the inflation, out of FED's control.

2.2 Negative rate does not equal to inflation. Inflation is a general term and CPI is a pool number, by which I mean an inflation of 2% is a combination a spectrum of price changes, like +5% from food, +3% from gas, 0% from clothing and -1% from electronic products. Therefore, under a slight inflation, I can change my spending habits according to the price change and still gain the same amount of fulfillness. For example, I'll purchase more electronic products and travel less. On the contrary, a negative 2% rate means my money disappear at 2% per year. No adjustment can be made to gain more fulfillness.

3. The author oversimplified FED's duty. He made it sounds like that interest rate is the only weapon FED can use to stimulate the economy. It seems the whole FED's job is to decrease the rate when economic growth slows down and increase the rate when the growth gets too fast. If that's the only tool/duty for FED, why don't we hire a 2-lines code to be the president of FED? Though he claimed the unpredictability of economic crisis, I feel like there is a culprit behind the 2 most recent economic crises, namely leverage.

I believe that investing, speculating and gambling are not that different in nature, and the bottom line is nobody should be allowed to put down more than he can afford. From my understanding, the subprime mortgage crisis is caused by a bunch of gamblers (not necessarily the top 1% richest) who betted on the housing market. The winners (whoever sold their properties at a surplus) took the stake and the losers can't afford because they used leverage. And some of them are too big to fail, unfortunately. It's true that the government has administered stricter rules for the big banks, however, the usage of leverage has never been banned. As a matter of fact, investors (gamblers) can still use leverage. For example, one can mortgage U.S. treasury bond to the bank to get a loan, with which more treasury bond can be purchased. Any significant rate hike will make them susceptible and they may cause another crisis. Instead of enforcing negative rate, I believe stricter regulation should be applied to resolve crises before they form.

3.1 Although everybody loves economic growth, and hates recession. I can't convince myself the economic growth is always good. If you turn open an economic textbook, you will learn that no nothing is really "the more the better". One example given by the textbook I read is the oxygen. We need oxygen to survive but too much oxygen intoxicate people. Therefore, although economic growth sounds good, we must not ignore the cost. The production of goods cost natural resources and energy. Will more goods necessarily increase people's fulfillness? If I consume one pound of beef a day, will 100 pounds of beef make me much happier? There must be a borderline though nobody can clearly draws it. It's equally difficult to argue whether we have already stepped through the borderline.

For all the reasonings I made above, I can't justify the enforcement of negative rate. Of course a bank can provide whatever rate they like, a country just can't.

[Ben · Rating 2 out of 5]

Rogoff's position here is basically that cash enables a whole range of illicit activity, and constrains monetary policy. He spends roughly equal time on each and maybe shouldn't, as the first issue feels like it gets a cursory treatment and the latter being a very deep dive into the mechanics of Federal Reserve policymaking, the history of negative interest rates, etc.

I am not an economist -- maybe this book (though it is not presented that way) is calibrated to work in economic circles. Maybe the legal, moral and logistical frameworks for phasing out cash are already self-evident to economists and the only debate left is how it affects the zero bound problem. To me, Rogoff is proposing a dramatic reconfiguration of human society and it feels like the ground-level impacts are worth a little more time.

[Evan · Rating 3 out of 5]

This book presents a strong challenge to my belief that cash is worth keeping. However, the book epitomizes the adage, "If you don't have a good reason, you better have many." At times, Rogoff throws every possible argument at readers just to see what sticks. IMO, it would be better to present a more concise set and offer possible counterarguments.
About half of his argument relies on the difficulties of monetary policy at the effective lower bound, and how a cash-minimal society would obliterate any lower bound. He does address other solutions to these difficulties but falls back on the fact that this is beyond the scope of the book... except half the book is about exactly this.

[F · Rating 2 out of 5]

The author has a interesting points on how a cashless society would work. But he is a huge ideologue. He proposes full control of money by governments via banning cash. His main points are : if you're not money laundering or evading taxes, it shouldn't affect you. The fact that then negative interest rates become easy to implement is seen as a positive thing.

He also fails to mention how cashless societies make financial ostracism something extremely easy to do. Check what Julian Assange or Snowden would say about that.

Basically, if you believe in the religion of big government, this book is for you

[Graham Seibert · Rating 2 out of 5]

So I'm better off entrusting my money to Wells Fargo?

Hmmm. So I'm better off entrusting my money to Wells Fargo, where the interest THEY CHARGE ME on my deposit will fund $125 million bonuses for fraudsters with get-out-of-jail-free cards? I don't think so.

Don't underestimate real criminals. They are adept at Bitcoin, gold smuggling, hawala transfers and much more.

Rogoff's plan would do exactly as all the other commenters say - simply make honest people's assets visible to Hillary Clinton et al. How frightening!

As others have noted, this represents a total turnaround by Rogoff. I gave his previous book "This Time Is Different: Eight Centuries of Financial Folly" five stars.

[Miguel Briones · Rating 5 out of 5]

Este libro es muy interesante en mi opinión. En la actualidad el efectivo es una tecnología que cumple con las propiedades deseables del dinero, pero su existencia limita el abanico de políticas monetarias al impedir el uso de los tipos negativos y facilita la economía sumergida y muchas actividades ilegales.

A lo largo del libro el autor comenta todas las visicitudes que se derivan de la existencia del efectivo y propone al menos para las economías avanzadas la eliminación de los billetes de gran denominación, que en su mayoría se encuentran fuera de la economía legal.