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March 24, 2015


Donald A. Coffin

I suppose I would make an even stronger claim for the class bias inherent in eliminating cash. I suspect that the ratio of cash to total transactions declines steeply with income. As a result, eliminating cash would work a very real hardship on lower-income families/individuals.

At my place of employment (a U.S. university), salary disbursements went from actual checks to direct deposit in about 1995. At that time, virtually all the faculty and the professional staff had bank accounts, whereas about half the clerical and maintenance staff did not. Almost all of them opened accounts at the university's credit union, which I think is more socially beneficial than using large commercial banks. (In fact, because of the costs incurred by using check-cashing services, it probably was cheaper for everyone to have bank accounts...but, that's substituting someone else's preferences for theirs.)

JP Koning


It pains me that you haven't linked to any of my posts since I write (obsessively) on this subject ;)

No matter, I'll make up for it in my response:

1. You point to a John Cochrane post that holds no water.


2. Cash use is beginning to decline in parts of the world as digital payments take hold: Sweden, Norway, and Denmark.


3. You say that banning cash amounts to banning capitalist acts between consenting adults. However, banks in a hypothetical free banking system would NOT consent to issuing 0% notes when the return on loans has fallen to some negative level, and would call their note issues in for cancellation. No institution is required to issue liabilities it doesn't want to.


4. Why do you draw such a stark line between fiscal vs monetary solutions? Surely the best way to approach the problem is to provide a list of ways for the powers-that-be to stimulate an economy, and let them choose which approach: fiscal, monetary, rain dances, whatever.

That being said, I don't support a cash ban. But there are ways to play around with cash to allow for further declines in rates.



Positive interest rates are a tax, since currency yields 0%.

A way to repeal the tax, while allowing positive or negative rates, would be to pay interest on currency. Miles Kimball has figured out how (unfortunately not referenced in that Ken Rogoff paper).

Ralph Musgrave

I’m baffled as to why anyone listens to Kenneth Rogoff. He’s done more to give academic credibility to austerity than anyone else in the World. Members of Congress have regularly waved his articles in the air while arguing for less stimulus over the last five years.

His understanding of deficits, national debts etc is right down there with the likes of George Osborne, David Cameron and the others who believe in “macromedia” B.S.

Christie Malry

In London, the final cash bus fare before cash bus fares were abolished due to lack of use was £2.35. The astute among you will note that a minimum of four coins are required to make up £2.35, and that most tendered inexact amounts will yield more than one different coin in change. It was therefore a profoundly inconvenient sum to set as a fare.

The sceptical among us - yes, there may be one or two - would argue that it was chosen precisely to discourage the use of cash on buses to make withdrawing the cash option easier.

An Alien Visitor

Eliminating cash would surely require consensus across the globe? You couldn't be the only non cash kid on the block could you?

And if they can get international consensus on that they would have no excuse for bank reform.

gastro george

I can confirm JPs input about Sweden. I work there regularly, and haven't used cash for anything for years, and my (admittedly middle class) Swedish colleagues would say the same. Can't comment about non-middle-class Sweden, though.

n j

no money? use cigarettes:



In the course of a day I leave £20 cash for my cleaner, she later gives £10 to her babysitter and £10 to a hire-car driver. So far, the money's still all in Yorkshire.

But if we all do this using IPhone pay-by-bonk, Apple have, within twelve hours, transferred 0.6p * of my original £20 from Yorkshire to California. If the hire car is UBER, then even more goes west.

No government revenue service is remotely as efficient at micro-taxation. Or at taxing other governments' citizens when they are not even in the territory. Even better, Apple is arranging to 'tax' payments made to, and by, the US government **

* http://www.theregister.co.uk/Print/2014/09/13/apple_to_get_15_cents_for_every_100_dollar_payment_on_its_pay_service_says_ft/

** https://gigaom.com/2015/02/13/why-it-matters-that-the-federal-government-will-accept-apple-pay/


You missed the biggest argument - the possibility of interference from the heavens (e.g. magnetic field switch)
http://www.livescience.com/18426-earth-magnetic-poles-flip.html .


Does the tooth fairy leave electronic credits in Sweden? How do people give their children pocket money? How do you tip a busker, or add to the collection bottle in your local pub when there is no physical cash? I'm genuinely curious as there is surely a bedrock of necessary physical cash transactions, mainly among the least powerful or most excluded in society. And the point about big tech firms micro-skimming from worldwide electronic payment methods is surely not to be dismissed.

TK Texas

It would allow big brother to police the gray and underground economies. Gov't can catch, tax, punish people who pay the cleaning lady or buy illegal drugs off the books.


"... people who pay the cleaning lady or buy illegal drugs off the books."

In the UK this is now done via betting machines:

They can then collect a printed ticket showing they have gambled that day – meaning that if stopped by police, they can answer questions about why an apparently unemployed young man carries hundreds of pounds in rolled-up cash.


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