Another Keynesian Voodoo Economist Wants to See Cash Abolished

We have a few more bad news and for a change also some good news with respect to the ongoing attempt to prepare the ground for a ban of cash currency. By now everybody should know how this works: Whenever another step to curtail individual liberty further is in the preparatory stage, the ruling class starts trial balloons in the mainstream media, flanked by “expert” opinion pieces, to see how people react. If there is an uproar, they will pull back and wait for a better opportunity. If there is no uproar, you simply wake up one morning with yet more of your personal freedom taken away for the “collective good”.

This is why contrary to what some people seem to think, it is not a good idea to ignore what superficially appear to be outlandish notions. After all, as current EU commission president Jean Claude “we lie if we have to” Juncker once explained, this is precisely how the EU’s centralizers go about imposing policies which they suspect might be unpopular with voters.


big brotherA cash ban would bring about even more thorough surveillance and be one step closer to total bureaucratic control


They float trial balloons and accompanying propaganda pieces in the media and then gauge the public’s reaction. If there is no major protest, they quietly implement yet more regulations, bringing us one step closer to their wet dream of a socialist superstate under complete bureaucratic control.


DEU Deutschland Germany Berlin 12 11 2014 Prof Dr Peter Bofinger in der BundespressekonferenzPeter Bofinger, a statist and Keynesian voodoo economist, who for unfathomable reasons is a member of the group of “economic wise men” advising Germany’s government.

Photo credit: imago


Recently numerous establishment economists have come out in favor of outlawing currency in order to enable the planners running the central banks to impose their destructive policies more effectively by closing down one more avenue for savers intent on holding on to their hard-earned money. A ban on cash currency is offered as a “solution” to the alleged “problem” of the interest rate zero boundary.

After Kenneth Rogoff and Willem Buiter, another prominent Keynesian voodoo economist has decided to chime in. This time it is socialist Peter Bofinger, a prominent German economist, who is among the economic “wise men” (!) advising the German government. He has already come to our attention as a statist snake oil peddler on previous occasions, but this is definitely a new low for him. As German news magazine Der Spiegel reports in its German language edition:


“More Influence for Central Banks: Government Advisor on Economics Peter Bofinger Demands the Abolition of Cash”

Coins and banknotes are outdated and only decrease the influence of central banks. This position is taken by economic “wise man” Bofinger. The federal government should pursue the abolition of cash currency.

Peter Bofinger, economic advisor to the government, is campaigning for the abolition of cash currency. “In light of today’s technological possibilities, coins and banknotes are indeed an anachronism”, Bofinger told Der Spiegel.

Should they be discontinued, the markets for undeclared labor and drugs would wither on the vine. Moreover it would be easier for central banks to enforce their monetary policies. The economist living in Wuerzburg calls on the government to pursue the abolition of cash internationally. “This would be a great topic for the agenda of the G 7 summit in Elmau”, he said.

Former US treasury secretary and economist Larry Summers has pleaded for the abolition of cash as well. He likewise argued that central bank policy rates are less effective if banks or consumer start hoarding cash instead of holding deposit money. Critics warn however that such debates only distract from the real problems of monetary policy.”


The fact that other “high IQ morons” such as Larry Summers (h/t Bill Bonner) have also come out in favor of a cash ban doesn’t improve the proposal in the slightest. Critics meanwhile are railing against much more than merely the fact that these debates might “distract from the real problems of monetary policy”.

In a fractionally reserved banking system, the abolition of cash would force people to hold all their cash balances with institutions that are de facto insolvent (since they cannot possibly pay out the money that should be available on demand to even a fraction of their depositors). It would no longer be possible for people to sidestep a banking crisis by withdrawing their money, or to remain voluntarily “unbanked”, since that would be equivalent to condemning oneself to starvation. Financial privacy would be completely eradicated, and one’s economic life could be erased by faceless bureaucrats at the push of a button. This may of course seem like a glorious Utopia to an etatiste like Mr. Bofinger.

The idea is one of the most tyrannical these armchair authoritarians have propagated in recent years. Whenever you hear that something should be done to “protect the children” or to “combat the drug trade” and the “shadow economy”, you can be absolutely certain that the collectivists want to make you less free. As an aside to this, if there were no “shadow economy” in Europe, living standards would plummet and a large part of the formal economy would immediately be in freefall as well. One can only hope that the political class is aware of this fact, although one should never underestimate people’s stupidity.

Since we believe central banks and fiat money are antithetical to a market economy and have been a major obstacle to economic progress for far too long a time already, we are obviously not in favor of making life easier for them. It is not cash currency that needs to be abolished, but central banking. People like Mr. Bofinger and other “macroeconomic advisors” to central banks and governments are paid far above the value their services would command in an unhampered free market economy, so it is not surprising that they are constantly agitating in favor of even more central planning and economic coercion.

Robert Prechter recently wrote the following remarks in the context of Willem Buiter forwarding the idea of a cash ban. This assessment can be applied word for word to Mr. Bofinger as well:


“I won’t even address the Keynesian absurdity of discouraging saving in favor of consumption, as if eating one’s capital will magically lead to paradise instead of ruin. Such nonsense has become institutionalized among economists to the extent that it is offered up every day in the media. This philosophy both requires authoritarianism and leads to more of it.


To the point: Notice how this economist–who in this role is not an economist but a political central planner–disparages cash by associating it with criminals, the meek poor and the addled elderly. He says the answer to the distress that his plan will produce for the latter two groups is–surprise–more collectivism.

As for hard-working people who might want to protect their savings, he says, screw them. His blithe cleverness on how to do it is like that of East German bureaucrats who figured out that the best way to trap people into submission was just to outlaw employment without a permit. Simple! People will cooperate or die. Problem solved.

He says libertarians–people who champion the far-out-of-fashion value of liberty–should “take one for the team.” But central bankers and governments are not some team. They are grasping, corrupt, dissolute, self-interested rulers. This is like slave-owners telling their newest acquisitions to turn in all their production to the slave-master for the good of the team. Go, Slaves! America’s Team!”


(emphasis added)

This is a point that one must never lose sight of: As Mr. Prechter points out, central bankers and governments are not just some “team” playing on our side – they are acting in their own interest and incidentally advocating economic nonsense in the process.


Money is Coined Liberty

Meanwhile, in Denmark, one of Europe’s socialist golden cages (you can read all about it from an escapee here), politicians will soon vote on whether shops will be able to force their customers to make all payments electronically. Given that cash currency is “legal tender”, it was so far not possible for shops to refuse cash payments. Now this circuitous route is chosen to prepare the country for the complete cash ban that is undoubtedly waiting in the wings. So far, there is little resistance to the move:


“Scandinavia has long been the most cashless place on the planet. Now Denmark is considering whether to go a step further and allow retailers to ban cash altogether.

The Danish Chamber of Commerce is recommending that shops and services be given the option of going completely cash-free. The proposal needs to be approved by parliament but if it gets the green light, retailers could begin rejecting cash from January 2016.

“We’ve recognised what merchants have been telling us for some time now,” says Sofie Findling Andersen of the chamber of commerce. “Using cash is expensive, because it takes time for salaried employees to handle, and it’s also a security concern. Carrying cash opens you up to attack and even though we have relatively low levels of violent crime in Denmark, this is something business owners and employees tell us they worry about.”

There has been little resistance to the proposal from Danish media, consumers or businesses so far, with the country’s largest supermarket group, Dansk Supermarked, working on a system for cash-free grocery shopping with the mobile money transfer system MobilePay in the near future.”


(emphasis added)

Obviously there is a big difference between consumers adopting cash-less payment options voluntarily and banning the use of cash altogether. Readers won’t be surprised to learn which globalist bureaucratic agency is supporting this move wholeheartedly and who exactly is financing it. However, the identity of one prominent opponent may indeed come as a surprise:


“The move towards a brave new cash-free world is supported by the UN Capital Development Fund’s Better Than Cash Alliance, which aims to accelerate the shift to electronic payments, funded by the Bill & Melinda Gates Foundation, MasterCard and Visa.

But opponents of the concept express concerns about loss of liberty. German central banker Carl-Ludwig Thiele recently criticized the Danish government’s proposal, saying that “abolishing cash would hurt consumer sovereignty – the free choice of citizens about their payment instruments”, and citing Russian novelist Fyodor Dostoyevsky’s famous line: “Money is coined liberty.”


(emphasis added)

Dostoyevsky obviously had it right, and it is gratifying to learn that a central banker agrees with him. Carl-Ludwig Thiele is by the way the man who’s in charge of “currency and payments” at the Bundesbank.


quote-money-is-coined-liberty-and-so-it-is-ten-times-dearer-to-a-man-who-is-deprived-of-freedom-if-fyodor-dostoevsky-318155Dostoyevsky opines on money and liberty


Some Good News for a Change

Some good news are reaching us from an unexpected corner. It may not be very meaningful, but this is the first time since this debate has flared up that we hear a ruling political party come out in support of retaining cash currency. It really happened, in small and therefore unfortunately not very influential Austria. Austria’s conservative Volkspartei (People’s Party)v– one of the two biggest political parties in the country and currently in a government coalition with the social democrats, has adopted a resolution condemning the demands to abolish cash:


“In its new party program, the Volkspartei professes its commitment to digitalization, but also introduces a motion aimed at stopping the creation of a cash-less society.

State secretary for the economy Harald Mahrer wants to introduce a motion in which the ever more prevalent use of digital payments is subject to an important proviso. The convenience of cashless payments with credit cards and smart phones has to be contrasted with the enormous concerns about privacy and data security they raise: Mahrer wants to take worries about ever greater government surveillance and the associated loss of privacy into account.

It could e.g. in future be possible that credit card purchases of certain consumer goods (such as tobacco or fatty food items) could be linked up with one’s health data. Such purchases should therefore preferable be paid in cash, which is indeed the preferred method at present: 89% of Austrians (a high percentage in a EU comparison) are paying in cash. Mahrer therefore wants to add a commitment to cash currency to the party’s political program.


(emphasis added)

It is a good sign that at least in one EU member state some politicians are apparently realizing that a ban of cash would represent a totalitarian measure that is severely at odds with the principles of a free society and are prepared to do something to counter the emerging trend toward abolishing cash.


harald-mahrer-540x304Austria’s state secretary for the economy, Harald Mahrer – not a fan of the idea to ban cash.

Photo credit: Dieter Nagl / AFP / Getty Images



As you can see, assorted statist control freaks and social engineers are far from giving up on the idea of a cash ban and continue peddling their snake oil at every opportunity. Indeed, as the example of Denmark shows, things have already progressed well beyond idle talk in some regions. Don’t make the mistake of thinking it cannot happen elsewhere as well.

Meanwhile, the hollow arguments forwarded in favor of the abolition of cash currency can be used to argue for banning just about anything. After all, there are still a great many obstacles to perfect central economic planning and total government control in this world. Obviously, central banking could be made even more effective in a command economy, and criminal activity could be severely undermined by installing cameras everywhere and having jackbooted enforcers patrolling every street. Wouldn’t that be great? We’d be perfectly safe!

human-faceGeorge Orwell’s dystopian vision of the future: “Imagine a boot stamping on a human face – forever”



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