Nearly 80% of the cash circulating outside financial institutions is in $100 bills, writes Kenneth Rogoff in his weekend essay. The Fed and the Treasury Department, according to the Rogoff essay, have recently dropped their longtime contention that 70% of the demand for U.S. paper currency is overseas.Harvard professor and former IMF chief economist Kenneth S. Rogoff argues in aReview section essay in the Wall Street Journal weekend edition that the U.S. should become a far more cashless society and, in fact, should move toward a phase-out of large notes, saying:
High-denomination notes facilitate crime, public corruption and tax evasion, among other ills, Rogoff says. They even lie “at the core of the illegal-immigration problem in the U.S.”
He acknowledges that the unbanked poor have legal and legitimate needs for cash and that others prefer cash to protect privacy in certain perfectly legal transactions.
But along with “the tax and crime angle,” Rogoff writes, central bankers would, with cash hoarding reined in, find themselves freed to push monetary-policy stimulus more aggressively.
“[I]f done gradually and properly, the balance of arguments is distinctly in favor of becoming a society that depends much less on cash.”
This article above in my opinion and for lack of “kinder words” explains why economists (not all) at times truly have no clue as to knowing how the real world operates. “Real world” meaning those of us who use both intellect AND common sense to live in the present, and use intellect and common sense to see what’s coming in the hopes of making a life for the future.
From my experiences economists live in a world where numbers dictate their decisions. Although in fairness, yes it is true that often times numbers do tell a story to aid in making a decision. Yet seemingly what’s left out of economist’s decisions is the ability to understand that what’s best for governments and central banks are not always good for you and me.
And so they point their noses downwards and plough through numbers and try to paint a picture for us instead of simply looking up at the world around us… you know, the common sense part. The thing is, when they paint a picture for us of where things are and where it is going it might as well be labeled “abstract art” since they, we, governments, all see different things. Their mission more and more it seems is to steer markets and opinions in favour of central banks and governments.
The problem is as I mentioned what’s good for governments and central banks are not always good for you and me. So as you ponder the article above ask yourself, “Do I want cashless where my finances and purchases are controlled in the name of peace and safety. Or would I rather buy and sell as I please and make politicians do their job which is ensuring my freedom, peace, and safety.”
The key point, notice how going cashless cannot anymore include, or at the very best puts limits on the word freedom. But don’t believe my words. Look at this economists words instead where he says, “central bankers would, with cash hoarding reined in, find themselves freed to push monetary-policy stimulus more aggressively.”
So my friends, does that statement mean freedom for you and me, or freedom for central banks and governments to do what they wish? For any economist, accountant, or any of us for that matter, it should be quite easy to see how when freedom shifts more in one direction, it means there is a lack of freedom in the other direction. It’s just common sense.
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Disclaimer, this commentary piece does not reflect the views, attitudes, or opinions of SilverAg.