The Curse of Cash


Kenneth S. Rogoff, Princeton University Press, 283 pages, $29.95. There are some things that are so woven into the fabric of our existence that we never think about them. Cash is one of those things. In “The Curse of Cash,” economist Kenneth Rogoff argues that we’d be better off without it. We all know that money is changing today, from the proliferation of debit cards to PayPal and Google Wallet. So it might be logical to surmise that the use of cash is declining. One of the many surprising facts in Rogoff’s book is that it is not. Cash transactions account for only about 14 percent of the total by value. But Rogoff argues that the costs of cash — allowing an underground economy, corruption and tax evasion — aren’t worth the benefits, despite the fact that the benefits are considerable. Probably the biggest is “seigniorage”: the government’s ability to print money that costs nothing but can be spent at face value. In the United States, Rogoff says, seigniorage profits have averaged 0.4 percent of GDP annually in recent years. But he says that getting rid of cash still makes sense, because the loss of that revenue would allow for true reform in the central banks, allowing them to cut interest rates all the way to negative territory to help during recessions. One of the most appealing aspects of Rogoff’s books is that he’s willing to write, “We just don’t know” when it comes to the risks in his proposal. Rogoff is an academic, and the book is not easy, breezy reading, particularly for lay people. But it’s clear and coherent, and even if you disagree with him, chances are you’ll think a little bit differently about money.