Banning the $100 bill is the latest bad idea that again highlights the failures of central bankers to micromanage the economy, writes publisher Steve Forbes.
He says the idea of banning the C-note recently touted by former Treasury Secretary Larry Summers as a tool to combat terrorists, drug dealers, bribers and tax evaders is only another step toward greater government control of the economy.
“People will have less privacy: Electronic commerce makes it easier for Big Brother to see what we’re doing, thereby making it simpler to bar activities it doesn’t like, such as purchasing salt, sugar, big bottles of soda and Big Macs,”
he writes on Forbes.com. “If the Obama Administration really wants to deny resources to terrorists, why is it giving tens of billions of dollars back to the globe’s terrorism central, Iran?”
Electronic transactions also would make it easier for financial institutions to hit savers with negative interest rates, as seen in Japan and parts of Europe. Central banks are charging commercial banks on certain kinds of deposits as a way of incentivizing them to instead issue cheap loans to businesses and consumers.
Forbes says economists are out of touch with reality.
“The move to destroy cash feeds into the economic commissars’ fantasy that they can better control the economy,” he writes. “Policymakers in Washington, Tokyo and the EU think the reason that their economies are stagnant is that ornery people aren’t spending and investing the way they should.”
Forbes says economic growth won’t be restored until governments refrain from attempts to micromanage people and businesses.
“The reason economies around the world are in the ditch -- which is fueling anger, discontent and ugly politics -- is structural, government-created barriers: unstable money, suffocating rules and too-high rates of taxation,” he writes.
Former Federal Reserve Chairman Alan Greenspan also doesn’t like the idea of negative interest rates,
he said in an interview with Bloomberg News.
“I wouldn’t say dangerous, but it is clearly not productive,” Greenspan, who left the Fed in 2006 after almost 20 years at its helm, said. “The big argument about excessively low interest rates for a very long period of time is that it warps the investment pattern on real investments.”
Greenspan, who turns 90 on March 6, told the newswire that he’s not optimistic about growth in the U.S. or globally because businesses aren’t investing enough in productivity.
“We’re in trouble basically because productivity is dead in the water,” he said. “Real capital investment is way below average. Why? Because business people are very uncertain about the future.”
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