The Curse of Cash

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.)