Sunday, May 17, 2015

The End of Cash?

This kind of stuff has been running around the interwebs for a couple of weeks.

...Monetary policy, whether in the form of “conventional” methods such as the micromanagement of policy rates or so-called “unconventional” measures such as QE, has proven utterly ineffective when it comes to both “smoothing out” the business cycle and reigniting economic growth in the wake of severe downturns....

...a sane person might be tempted to call it a day on the monetary experiments, especially considering that at this point, the limits have been reached....

...But not so fast, say folks like Citi’s Willem Buiter and economist Ken Rogoff: the world could always ban cash because if you eliminate physical currency and force people to use a debit card linked to a government controlled bank account for all transactions, you can effectively centrally plan everything. Consumers not spending? No problem. Just tax their excess account balance. Economy overheating? Again, no problem. Raise the interest paid on account holdings to encourage people to stop spending. So with Citi, Harvard, and Denmark all onboard, we bring you the latest call for a cashless society, this time from German economist and member of the German Council Of Economic Experts Peter Bofinger....

When cash is outlawed, only outlaws will have cash!!

And yah, it will be interesting to see them try this; "alternative cash"--aside from gold/silver--is a neat package of brass, lead, and powder suitable for use on East Coast economists and Central Government slime.

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