Kenneth Rogoff: Europe Must Forgive Debts

Interest rate hikes threaten a high-mortgaged world and the euro zone is struggling with debt crises in Italy and Greece. Both have the potential to be the next major financial crisis, but how should you know? Perhaps China or the US will be the center of focus when the crisis is a fact. Harvard Professor Kenneth Rogoff has previously served as chief economist at the IMF and is particularly interested in global financial crises. Katrine Marçal meets him in Paris to discuss crises, but also bitcoin, cashless societies and human behavior.

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Kenneth Rogoff
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Kenneth Rogoff: Europe Must Forgive The Debts


Probably the number one risk in the global economy is irrational policy coming from the United States I'm afraid embarrassed to say. But after that China is certainly the biggest vulnerability.

Home. Professor poor Harvard Kim the guy quips that poor. Kenneth Rogoff and a density of them they them to finance. His estate. They get paid less for half don't know how to. Finance a pullback Skoff bus home safe suburbia. So did I miss. Something.

Professor Kenneth Broga thank you for sitting down with us. My address. Sweetin was. Of course as you've written it in your book the first country in Europe to introduce a paper currency backed by government.

And now we may well become the first cashless society or at least we're moving very rapidly in that direction. And you argue that this is a good thing a cashless society is a society with less cash. Why is that.

So just to be clear last cap and I don't think you're using the cash less. I think having less cash and by the way everyone's following. So I think Sweden's at most five years ahead of the United States if you look at the statistics on the value of transactions it's all going in the same direction. So yes I do think it's a good thing. I think that cash in many countries today increasingly especially large notes are basically used for tax evasion and illegal activity Yes normal people do sometimes use the large denomination to the 100 dollar bills. So I must say when I asked my friends who say well I don't use 100 dollar bills then you ask them. What did you use 100 dollar bills for. And it's often to pay people who obviously aren't paying taxes and they're not reporting construction uses a tremendous amount of hundred dollar bills and large denomination notes. So I think that cash has these big notes under cut tax collection fomenting legal activity and also cash has stood in the way of really effective response to the financial crisis. Because the central banks are afraid to have used aggressive policy cutting interest rates into negative territory because people would workout. So yes my book also looks at the future of cash central bank digital currency Bitcoin and that sort of thing.

And you're not a big believer in bitcoin.

No I'm afraid not. I think that a not block chain. Great great idea. I don't know if it's the future but it's a possible future. Anonymous digital currencies. No I don't think so. I think that governments will eventually step in and regulate them they may appropriate the technology. But if you look at the history of cash in my book is about the past present and future of cash the private sector invents everything and eventually the government regulates it and eventually they appropriate. And I think that's what we'll see here. Same thing will happen. Same thing is absolutely going to happen here.

So you've written together with Professor Carmen Reinhart foully the big book on financial crisis. This time it's different with impressive data set going back 800 years. And the central theme being that excessive debt accumulation no matter the governmental corporations or banks will sort of always almost always be a systemic risk and we always underestimate the systemic risk. If you look out the world today through that lens. There is sort of the next financial crisis well you can see coming you know.