The Financial Times

Letter to the Editor

May 29, 2014

From Ms Janet Tavakoli.

Sir, It seems to me Kenneth Rogoff’s commentary, “Paper money is unfit for a world of high crime and low inflation” (May 28), is less about deterring crime and the problems of “low” inflation – food consumers in the US know double-digit inflation – than it is about eliminating the zero bound on interest rates and preventing people from bailing into cash.

In other words, Mr Rogoff proposes to machine-gun one of the lifeboats by eliminating paper currency as an alternative to unlimited digital currency.

His specious argument about the anonymity of paper currency facilitating tax evasion and crime is propaganda.

Massive programmes of drug- money laundering and tax evasion were facilitated with electronic currency. International banks eagerly participated in those crimes and the subsequent cover-ups. Banks that are ongoing beneficiaries of government subsidies paid taxpayer-subsidised fines, but senior officers did no jail time.

If Mr Rogoff is interested in deterring crime, he might consider that. These are the people who are supposed to be, in part, stewards of sound sovereign currencies, and they never fail to disappoint.

Janet Tavakoli, President, Tavakoli Structured Finance, Inc. Chicago, IL, US