The Curse of Cash : How Large-Denomination Bills Aid Crime and Tax Evasion and Constrain Monetary Policy

"A brilliant and lucid new book" (John Lanchester, New York Times Magazine ) about why paper money and digital currencies lie at the heart of many of the world's most difficult problems—and their solutions In The Curse of Cash , acclaimed economist and bestselling author Kenneth Rogoff explores the past, present, and future of currency, showing why, contrary to conventional economic wisdom, the regulation of paper bills—and now digital currencies—lies at the heart some of the world's most difficult problems, but also their potential solutions. When it comes to currency, history shows that the private sector often innovates but eventually the government regulates and appropriates. Using examples ranging from the history of standardized coinage to the development of paper money, Rogoff explains why the cryptocurrency boom will inevitably end with dominant digital currencies created and controlled by governments, regardless of what Bitcoin libertarians want. Advanced countries still urgently need to stem the global flood of large paper bills—the vast majority of which serve no legitimate purpose and only enable tax evasion and other crimes—but cryptocurrencies are like $100 bills on steroids. The Curse of Cash is filled with revealing insights about many of the most pressing issues facing monetary policymakers, from quantitative easing to alternative inflation targeting regimes. It also explains in detail why, if low interest rates persist, the best way to reinvigorate monetary policy is to implement fully effective and unconstrained negative interest rates. Provocative, engaging, and backed by compelling original arguments and evidence, The Curse of Cash has sparked widespread debate and its ideas have moved to the center of financial and policy discussions. 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. From the New York Times bestselling author of This Time Is Different, "a fascinating and important book" (Ben Bernanke) about the surprising reasons why paper money lies at the heart of many of the world's most difficult problemsThe world is drowning in cash-and it's making us poorer and less safe. In The Curse of Cash, acclaimed economist Kenneth Rogoff explores the past, present, and future of currency, from ancient China to today's cryptocurrencies, showing why, contrary to conventional economic wisdom, paper money surprisingly lies at the heart of some of the world's most difficult problems.Cash is becoming increasingly marginalized in the legal economy, but there is a record amount of it in circulation- .4 trillion in U.S. dollars alone, or ,200 for every American, mostly in 00 bills-and most of it is used to finance tax evasion, corruption, terrorism, the drug trade, human trafficking, and the rest of a massive global underground economy. Paper money also cripples monetary policy by making it impossible for central banks to lower interest rates significantly below zero, and The Curse of Cash explains why countries must establish effective negative interest rate policies to manage the next financial crisis.Even if governments take better control of paper currency, perhaps by phasing out large-denomination notes, cryptocurrencies raise old and new issues. Looking to the future of public and private digital currency, The Curse of Cash cites the lesson of history: when it comes to currency, the private sector may innovate but eventually the government regulates and appropriates.Provocative, engaging, and backed by compelling original arguments and evidence, The Curse of Cash is certain to spark widespread debate 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.--amazon.com. Introduction And Overview -- The Early Development Of Coins And Paper Currency -- Size And Composition Of Global Currency Supplies, And The Share Held Abroad -- Holdings Of Currency In The Domestic Legal, Tax-paying Economy -- Currency Demand In The Underground Economy -- Seigniorage -- A Plan For Phasing Out Most Paper Currency -- The Cost Of The Zero Bound Constraint -- Higher Inflation Targets, Nominal Gdp, Escape Clauses And Fiscal Policy -- Other Paths To Negative Interest Rates -- Other Possible Downsides To Negative Nominal Policy Rates -- Negative Interest Rates As A Violation Of Trust And A Step Away From Rule-based Systems -- International Dimensions To Phasing Out Paper Currency -- Digital Currencies And Gold -- Final Thoughts. Kenneth S. Rogoff. Includes Bibliographical References (pages 233-272) And Index. Introduction and overview -- The early development of coins and paper currency -- Size and composition of global currency supplies, and the share held abroad -- Holdings of currency in the domestic legal, tax-paying economy -- Currency demand in the underground economy -- Seigniorage -- A plan for phasing out most paper currency -- The cost of the zero bound constraint -- Higher inflation targets, nominal GDP, escape clauses and fiscal policy -- Other paths to negative interest rates -- Other possible downsides to negative nominal policy rates -- Negative interest rates as a violation of trust and a step away from rule-based systems -- International dimensions to phasing out paper currency -- Digital currencies and gold -- Final thoughts.;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.--Amazon.com. **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** 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. __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.