Tag Archives: Ken Rogoff

Rogoff, Orwell and Kafka, by Raúl Ilargi Meijer

Posted on August 15, 2017 | 1 comment

Raúl Ilargi Meijer cuts to the immoral insanity of central banking. From Meijer at theautomaticearth.com:

Harvard professor and chess grandmaster Kenneth Rogoff has said some pretty out there stuff before, in his role as self-appointed crusader against cash, but apparently he’s not done yet. In fact, he might just be getting started. This time around he sounds like a crossover between George Orwell and Franz Kafka, with a serving of ‘theater of the absurd’ on top. Rogoff wants to give central banks total control over your lives. They must decide what you do with your money. First and foremost, they must make it impossible for you to save your money from their disastrous policies, so they are free to create more mayhem.

Prepare For Negative Interest Rates In The Next Recession Says Top Economist

Negative interest rates will be needed in the next major recession or financial crisis, and central banks should do more to prepare the ground for such policies, according to leading economist Kenneth Rogoff. Quantitative easing is not as effective a tonic as cutting rates to below zero, he believes. Central banks around the world turned to money creation in the credit crunch to stimulate the economy when interest rates were already at rock bottom.

Central banks create recessions and crises. Not people, and not economies. Central banks. The next recession, which is inevitable, that’s the one thing Rogoff has right, will come when the bubbles in housing, stocks, bonds, etc., created by central banks’ QE, ZIRP, NIRP, start to pop. And there’s nothing worse than giving central banks even more tools for creating crises. We should take away the tools they have now, not hand them more sledgehammers.

In a new paper published in the Journal of Economic Perspectives the professor of economics at Harvard University argues that central banks should start preparing now to find ways to cut rates to below zero so they are not caught out when the next recession strikes. Traditionally economists have assumed that cutting rates into negative territory would risk pushing savers to take their money out of banks and stuff the cash – metaphorically or possibly literally – under their mattress. As electronic transfers become the standard way of paying for purchases, Mr Rogoff believes this is a diminishing risk.

To continue reading: Rogoff, Orwell and Kafka

1 Comment

Posted in Collapse, Debt, Economics, Economy, Financial markets, Government

Tagged ,

Hostage to a Bull Market, by James Grant

Posted on September 11, 2016 | 4 comments

Jim Grant is one of the more astute financial observers out there. He’s also an excellent writer. Here he takes on Ken Rogoff, who advocates abolishing cash in his recently published book, The Curse of Cash. Grant’s review, at wsj.com:

If there is a curse between the covers of this thin, self-satisfied volume, it doesn’t have to do with cash, the title to the contrary notwithstanding. Freedom is rather the subject of the author’s malediction. He’s not against it in principle, only in practice.

Ken Rogoff is a chaired Harvard economics professor, a one-time chief economist at the International Monetary Fund and (to boot) a chess grandmaster. He laid out his case against cash in a Saturday essay in this newspaper two weeks ago. By abolishing large-denomination bills, he said there, the government could strike a blow against sin and perfect the Federal Reserve’s control of interest rates.

 

“The Curse of Cash,” the Rogoffian case in full, comes in two parts. The first is a helping of monetary small bites: a little history (in which the gold standard gets the back of the author’s hand), a little central-banking practice, a little underground economy. It’s all in the service of showing where money came from and where it should be going.

Terrorists traffic in cash, Mr. Rogoff observes. So do drug dealers and tax cheats. Good, compliant citizens rarely touch the $100 bills that constitute a sizable portion of the suspiciously immense volume of greenbacks outstanding—$4,200 per capita. Get rid of them is the author’s message.

Then, again, one could legalize certain narcotics to discommode the drug dealers and adopt Steve Forbes’s flat tax to fill up the Treasury. Mr. Rogoff considers neither policy option. Government control is not only his preferred position. It is the only position that seems to cross his mind.
Which brings us to the business end of this production. Come the next recession, the book’s second part contends, the Fed should have the latitude to drive interest rates below zero. Mr. Rogoff lays the blame for America’s lamentable post-financial-crisis economic record not on the Obama administration’s suffocating tax and regulatory policies. The problem is rather the Fed’s inability to put its main interest rate, the federal funds rate, where it has never been before.

In a deep recession, Mr. Rogoff proposes, the Fed ought not to stop cutting rates when it comes to zero. It should plunge right ahead, to minus 1%, minus 2%, minus 3% and so forth. At one negative rate or another, the theory goes, despoiled bank depositors will stop saving and start spending. According to the worldview of the people who constitute what Mr. Rogoff fraternally calls the “policy community” (who elected them?), the spending will buttress “aggregate demand,” thus restore prosperity.

You may doubt this. Mr. Rogoff himself sees difficulties. For him, the problem is cash. The ungrateful objects of the policy community’s statecraft will stockpile it.

What would you do if your bank docked you, say, 3% a year for the privilege of holding your money? Why, you might convert your deposit into $100 bills, rent a safe deposit box and count yourself a shrewd investor. Hence the shooting war against currency. If the author has his way, there will be no more Benjamin Franklins, only Hamiltons, Lincolns and George Washingtons. Ideally, says Mr. Rogoff, many of today’s banknotes will take the future form of clunky, base-metal coins “to make it even more difficult to carry large quantities of currency.”

To continue reading: Hostage to a Bull Market

4 Comments

Posted in Debt, Economy, Government, Money

Tagged ,

Let’s Discontinue Kenneth Rogoff’s Commentary, Not the $100 Bill, by John Tamny

Posted on August 30, 2016 | Leave a comment

This is a clever commentary about a recent noxious emission from an economic eminence. From John Tammy at realcearmarkets.com:

In a recent opinion piece for the Wall Street Journal, Harvard economist Kenneth Rogoff declared that there’s “little debate among law-enforcement agencies that paper currency, especially large notes such as the $100 bill, facilitates crime.” Rogoff would like to discontinue the $100 in order to – try not to laugh – reduce crime.

Can the eminent economist really be so naïve as to presume that the disappearance of a piece of paper would prove effective at making the U.S. (and the world) more honest and safe? Apparently he does, while lightly acknowledging what economists refer to as the “substitution effect.” If $100 Federal Reserve notes prove scarce, then similar euro and Pound bills will do the job, as will 10,000 yen notes. If $100 bills simplify big criminal transactions, wouldn’t little gold coins simplify crime even more?
While Rogoff is fully focused on the problems presented by $100 bills for government, he ignores how problematic it is that our government is so large and intrusive as to want to take away something that we the people (law abiding and not) find convenient. Did it ever occur to Rogoff that maybe there are too many laws and too many crimes as opposed to too many $100 bills? To you the reader, if cocaine and heroin are legalized tomorrow, will you become users?

As opposed to wanting to abolish the $100 bill in order to increase our individual freedoms, Rogoff seeks an end to the $100 to increase the size and scope of government. A principle reason Rogoff is in favor of abolishing the C-note is because “Cash is also deeply implicated in tax evasion, which costs the federal government some $500 billion a year in revenue.” Lower federal revenues are apparently bad in the eyes of Rogoff and his ilk, but they’re surely good for the rest of us. Ignored by Rogoff, or worse, understood by the Keynesian thinker, is that a dollar collected by the IRS is an extra dollar for Congress to spend.

The above matters simply because the only true “multiplier” in economics concerns government spending: once Congress spends on anything, whether it works or not the spending increases by many multiples in future years and decades. Medicare began as a $3 billion program, one paid for by a revenue surge that sprung from the 1964 tax cuts. By 2020, this program will cost U.S. taxpayers $1 trillion annually despite it having routinely failed to secure universal medical care for the very elderly it was intended to help.

Stated simply, rising federal revenues beget more government spending, and yes, more borrowing from Treasury. Governments can only spend what they’ve taxed or borrowed from the private sector first. All of this in mind, the last thing the already overburdened American taxpayer needs is for an already-too-large federal government to be able to tap into yet another revenue stream that will increase the burden that is government even more.

To continue reading: Let’s Discontinue Kenneth Rogoff’s Commentary, Not the $100 Bill

Leave a comment

Posted in Crime, Economics, Money

Tagged