Hostage to a Bull Market

by James Grant

Grant has a scathing review of Kenneth S. Rogoff’s Saturday essay in The Wall Street Journal taken from his book, The Curse of Cash. Rogoff is a chaired Harvard economics professor and a one-time chief economist at the IMF.

Hostage to a Bull Market“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,” said Grant.

In a deep recession, Rogoff says the Fed shouldn’t stop cutting rates when it comes to zero. At one negative rate or another, bank depositors will stop saving and start spending. According to the worldview of the people who constitute what Rogoff calls the ‘policy community,’ the spending will buttress ‘aggregate demand,’ and restore prosperity.

For Rogoff, the problem is cash. If your bank charged 3% per year for holding your money, you might rent a safe deposit box and stash it there. If Rogoff has his way, there won’t be any paper money. Ideally, he says, many of today’s banknotes will be coins ‘to make it even more difficult to carry large quantities of currency.’

It’s difficult enough now. Try to buy a car with a case full of legal tender. Or deposit those tens of thousands of green dollar bills in the bank.

In conclusion, Grant says that Rogoff’s brief is best seen not as detached scientific analysis, but as a kind of left-wing crotchet. Strip away the technical pretense and what you have is politics. “The author wants the government to control your money. It’s as simple as that.”


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