Kenneth Rogoff is one of today’s most influential and brilliant economists. He is a professor at Harvard University and was, for some years previously, Chief Economist of the International Monetary Fund (IMF).
His opinions are hugely influential and, in his opinion, negative interest rates are necessary to stimulate the economy further in today's crisis, writes Prince Michael of Liechtenstein.
Various GIS reports have mentioned that monetary measures can support the economy but cannot be the sole driver. The success of these measures is more than doubtful.
The policy of easy money has already been applied for a long time without stimulating the economy. It is continuing a strategy which has proved unsuccessful so far. Zero interest rates already diminish the purchasing power of savings. Negative rates will do untold harm to savers.
Professor Rogoff went even further in a speech in Munich, Germany, by proposing to totally abolish cash in the form of banknotes and coins. This would facilitate the implementation of negative interests, as all liquidity would then be held in banks.
Such a move would penalise all savers and especially pension funds. This could be seen as legalised ‘theft’ of savers’ funds.
Personal savings are important for personal independence and freedom.
Professor Rogoff said that abolishing cash would help fight drug crime and tax evasion. But whether this would really help tackle these issues, it is inappropriate and even cynical to use some sort of ethical excuse to argue for such measures which will badly affect savings.
Abolishing cash would be an extra step in the exaggerated control of citizens and further limitation of individual freedom.
How much trust does this economic and political ‘elite’, which claims to be democratic, have in the citizen? Democracy can only survive long term if it is based on mutual trust between the population and the administration – with respect for individual freedom.
‘Misappropriation’ or stealing savings will certainly not inspire trust. Exaggerated control of citizens’ communications and financial transactions is clear proof of distrust and limits legitimate freedom.
Limiting freedom such as abolishing cash or the bulk recording of telephone calls, to mention just two examples, are likely to finally destroy democracy - whatever the pretext.