Economy
Related: About this forumLawrence Summers: It’s time to kill the $100 bill
Source: Washington Post Wonkblog
It's time to go after big money
By Lawrence H. Summers February 16
Harvard's Mossavar Rahmani Center for Business and Government, which I am privileged to direct, has just issued an important paper by senior fellow Peter Sands and a group of student collaborators. The paper makes a compelling case for stopping the issuance of high denomination notes like the 500 euro note and $100 bill or even withdrawing them from circulation.
I remember that when the euro was being designed in the late 1990s, I argued with my European G7 colleagues that skirmishing over seigniorage by issuing a 500 euro note was highly irresponsible and mostly would be a boon to corruption and crime. Since the crime and corruption in significant part would happen outside European borders, I suggested that, to paraphrase John Connally, it was their currency, but would be everyones problem. And I made clear that in the context of an international agreement, the U.S. would consider policy regarding the $100 bill. But because the Germans were committed to having a high denomination note, the issue was never seriously debated in international forums.
The fact that as Sands points out in certain circles the 500 euro note is known as the Bin Laden confirms the arguments against it. Sands extensive analysis is totally convincing on the linkage between high denomination notes and crime. He is surely right that illicit activities are facilitated when a million dollars weighs 2.2 pounds as with the 500 euro note rather than more than 50 pounds as would be the case if the $20 bill was the high denomination note. And he is equally correct in arguing that technology is obviating whatever need there may ever have been for high denomination notes in legal commerce.
What should happen next? Id guess the idea of removing existing notes is a step too far. But a moratorium on printing new high denomination notes would make the world a better place. In terms of unilateral steps, the most important actor by far is the European Union. The 500 is almost six times as valuable as the $100. Some actors in Europe, notably the European Commission, have shown sympathy for the idea and European Central Bank chief Mario Draghi has shown interest as well. If Europe moved, pressure could likely be brought on others, notably Switzerland.
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Read more: https://www.washingtonpost.com/news/wonk/wp/2016/02/16/its-time-to-kill-the-100-bill/
villager
(26,001 posts)...we can't avoid "paying" for the privilege of storing that money, once we're "cashless?"
snot
(10,538 posts)E.g., because of the recent "bail-in" recent amendment to Dodd Frank, if a bank goes insolvent, depositors' funds will get tapped first instead of the bank's stock and bond holders. Harder to tap us if our cash is in mattresses.
villager
(26,001 posts)Great stuff that "reform," eh?
LW1977
(1,236 posts)They cost more to make than spend.
gcomeau
(5,764 posts)Festivito
(13,452 posts)From a week ago:
Its Official: Cash is Now Public Enemy Number One [View all]
http://www.democraticunderground.com/?com=view_post&forum=1116&pid=76368
Shamelessly. My post:
...Me thinks, because, people could not possibly use diamonds, gold, bearer bonds, etc.
http://www.democraticunderground.com/?com=view_post&forum=1116&pid=76375
PoliticAverse
(26,366 posts)when you spend it or receive it. By eliminating cash bankers can get a cut of all transactions
like they get now when people pay with credit cards instead of cash.
Fuddnik
(8,846 posts)I went to Chase last week to make a cash payment on a credit card. They demanded a photo id. Then they gave me a paper about a new policy, that ANY bill paid using cash had to produce a photo id, and can ONLY be made by the person the bills name is in.
Fuck 'm. It doesn't cost me anything, and no hassle to make the payment through my credit union online bill pay.
I suspect they will go after Precious Metals. PM's are one way to keep money out of banks. Of course, more risk holding PM's as their value can fluctuate. And much harder to smuggle across borders. Good luck trying to get a pile of gold coins on an airplane!
Diamonds would be easier.
zipplewrath
(16,646 posts)It is probably the most poorly cited paper I've seen in a while. Oh, yeah, when they are talking about simple facts about drug trade, or tax evasion, they're full of cites. But when they get to the part where there would be any tangible effect of changing currency, they are dreadfully short on them. And there is NO discussion about the impact on legal activity at all.
This is just coming from the larger effort to move away from cash towards a highly traceable and controllable currency (basically electronic transactions). Not only will this be a boon for law enforcement, and the NSA, but it will also put commercial banks firmly in charge of ALL commerce, taking a fee for every transaction. Is it any surprise this is coming from Summers?
PoliticAverse
(26,366 posts)Fuddnik
(8,846 posts)Just push him and his big mouth and bad ideas so far out of the public arena, he just shrivels up and blows away.