Harvard Economist Ken Rogoff Dreams Of A Cashless Society And Bank Bail-ins

Today I want to share with my fellow Steemians an article from the popular news aggregation website Zero Hedge. The article, entitled 'Ken Rogoff Warns "China Will Be At The Center Of The Next Global Financial Crisis"', contains an interview with chess grandmaster and Harvard professor Kenneth Rogoff.

The article starts off rather mildly with the almost mandatory type of crystal-ball prognostication by pseudo-intellectual professors we've all grown to despise.

"China is probably the place most at risk of having a significant downturn in the near term," Rogoff warns, citing the Chinese economy's over-reliance on investments and exports as a possible cause for recession in the world's second largest economy.

Well, duh, you don't have to be a Harvard educated economist to realize there's a massive bubble brewing in China. But then again, the same can be said for the US and Japan, with gigantic bubbles in the stock market, soaring default rates in student and auto loans, and oversized deficit spending.

Europe is in no better shape, either, as the sovereign debt crisis that started in Greece and then spread to other countries like Ireland, Portugal, Spain and Italy hasn't been properly resolved.

So I'm skeptical of Mr. Rogoff's claim that China will likely be the trigger for the next economic recession. Maybe it will, maybe it won't. When dealing with complex systems like the economy, you often don't need a specific catalyst to precipitate a major downturn.

Still, it was what came next that sent a chill down my spine. When asked about negative interest rates, Mr. Rogoff brushed aside the notion that negative interest rates are harming the economy, and said he believed that implementing "much deeper" negative interest rates will be a common strategy in "every central bank's toolkit," moving forward.

For centuries, Mankind has equated interest with time and counter-party risk. The higher the risk of default, the higher the interest charged on a loan. It's a concept we're almost instinctively hard-wired to understand.

Negative interest rates, however, takes this intuitive system of incentives, and perverts it utterly. The moment interest rates dip below zero, banks are better off holding cash than paying to park their funds with the friendly neighborhood central bank.

How then do we prevent the big players(and presumably regular people as banks decide to pass this cost to their depositors further down the line) from hoarding cash instead?

Why, by removing higher denomination paper bills from circulation, of course!

That's right! Mr. Rogoff's solution to the boom-and-bust cycle is to simply corral the population into the banking system, and have the government simply skim a bail-in tax from everyone's checking account! Sounds lovely, doesn't it?

In addition to rampant inflation eating away at your purchasing power, now every 8 to 10 year, whenever a major recession hits, you'll also lose 10% to 25% of your savings balance.

Here we are trying to create a more equitable and decentralized monetary system, and all that these scum want is to reduce everyone to abject serfdom.

It truly shocking just how arrogant and brazen these people are.