Bundesbank Chief Says “Nein” To Cash Ban
by Tyler Durden
ZeroHedge.com
06/17/2015
Last month, the calls for a cashless society got a bit louder when Peter Bofinger, a member of the German Council Of Economic Experts and a prominent Keynesian economist in a land where sound money policies generally predominate, called coins and bills “an anachronism” that limits the influence of central banks. Bofinger’s comments come on the heels of a growing chorus of cash abolitionists including Harvard economist Ken Rogoff and Citi’s Willem Buiter. Why a cashless society you ask? Here’s a brief refresher:
The collective actions of the world’s most influential central banks have done wonders when it comes to inflating asset bubbles but have done very little to revive robust economic growth. In fact, far from smoothing out the business cycle and resuscitating DM demand, post-crisis monetary policy has actually had the exact opposite effect: it has set the stage for an even more spectacular collapse while simultaneously creating a worldwide deflationary supply glut. At this stage, a sane person might be tempted to call it a day on the monetary experiments, especially considering that the limits have been reached. That is, there are literally no more assets to buy and rates have hit the effective lower bound where rational actors will eschew bank deposits in favor of the mattress. But not so fast. 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.
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