David R. Henderson  

Rogoff on How to Deal with Emergencies Without Cash

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As noted in my previous post, I was discussion leader at a recent colloquium on moving towards a cashless or less-cash society. Here are some quotes from Rogoff, followed by questions I asked.

Rogoff:

Certainly, a lot of the angst over electronic currency comes from deeply rooted fears of digital theft and paralysis after a major power outage.

He goes on to say why he thinks this won't be a big problem.

What about a long emergency? Rogoff writes:

In a sufficiently prolonged emergency when there is no longer any way to recharge cell phones and supplies of small bills are depleted, the government can air-drop currency for temporary use, redeemable for electronic currency after the crisis.

I asked:
(i) Has any government ever air-dropped currency? If so, how well did that work out?
(ii) Can the government be trusted to do this well and at the right time?

One monetary economist answered the first question: if I recall correctly, the only case he knew of where a government air-dropped currency was the British government air-dropping counterfeit Germany currency in Germany.


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CATEGORIES: Monetary Policy , Money




COMMENTS (6 to date)
Justin Rietz writes:

Air-dropping currency for temporary use? Helicopter drops to boost aggregate demand? A bit disconcerting when well-known, respected economists have to rely on the Air Force to deal with economic crises :-)

Paul Crowley writes:

The only thing I can find is the other way around, Germans forging British cash. They didn't airdrop it though!

Phil writes:

I think you miss the critical libertarian point here. Using cash makes your purchases anonymous and something the government cannot subpoena. A cashless society is a society in which the government observes (or could observe) every transaction.

David R Henderson writes:

@Phil,
I think you miss the critical libertarian point here. Using cash makes your purchases anonymous and something the government cannot subpoena. A cashless society is a society in which the government observes (or could observe) every transaction.
I absolutely agree with your critique. That doesn’t mean I missed “the critical libertarian point.” The questions I reported above are two of many. I assure you that I asked questions about the liberty issue too.

Patricia Gillenwater writes:

I am just one of the common everyday American citizen, you know one that Hillary Clinton put into her basket of "deplorables".

War on cash I view as a war on all Americans. This is a setup for tyranny and authoritarian government.

All patriotic Americans should resist this war against us and future generations.

Just my humble opinion.

Rob Corelli writes:

Have you forgotten B-52 Ben so quickly?

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