What if money expired?
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If money expires/inflates, people use it to buy something to hedge it, which creates a bubble in that asset. The real estate bubble created by low interest rates is exactly what happens to everything else in an inflationary environment. Hedges include gold and metals, land, art and alternative assets, or like Wiemar [0], people just spend devalued money on gambling and prostitution. If history is any indicator of what happens when you debase a currency, I'd say the best hedges are a second passport and ammo.
[0] https://en.wikipedia.org/wiki/Weimar_culture#Berlin's_reputa...
I agree that store of value is an important property of money. Although, I think money wasn't explicitly designed as you suggest. Modern money is a complex cultural phenomenon that evolved over several stages. I think there's so much confusion about money because people refer to different stages. If we wanted to have really stable money, we could fix prices of goods. But I guess this doesn't make much sense in a dynamic economy (how do we compare a basket of goods from 1920 with one in 2020 which includes iPhones).
> The real estate bubble created by low interest rates is exactly what happens to everything else in an inflationary environment.
I wouldn't be so sure whether there's a real estate bubble. I think our current situation is different from the years before 2008 where people where actually buying houses in expectation to sell them at higher prices one year later. I would rather explain the real estate prices as adaptations of net present values to changes of the interest rate.
> Hedges include gold and metals, land, art and alternative assets, or like Wiemar [0], people just spend devalued money on gambling and prostitution.
I don't see how a reference to prostitution in Berlin in the 1920ies supports your economic argument. I guess the situation in the Weimar Republic is more complex than simply explaining inflation with printing of money. (As far as I know, monetarism was abandoned by major central banks long ago. The German Bundesbank tried it quite long though, not surprisingly.)
Germany lost WWI and had to pay for reparations. So it had to produce goods for which they didn't get foreign currency. Before the inflation really kicked in, the Reichsmark devalued already. Basically, the central bank didn't have any currency reserves to counter this. So everything imported became much more expensive. It probably also didn't help that Germany had to take care of wounded soldiers that weren't fully part of the workforce. In sum, the production capacity was hindered but there was excess demand.
Inflation destroys stability in the labour market and incentivises piece work to stay afloat.
Fixing the price of goods does not create stable money, it just creates huge black markets in foreign and alternative currency. Ask Argentina, Cuba, and the former USSR.
If you are interested in the history of money and banking, I highly recommend the book The Ascent of Money by Niall Ferguson as a basis for what most interested people outside of finance understand about how money works.
This sounds a bit confusing. Does an increase of inflation mean the rate of price changes goes from 2% to 4% p.a. or is it an increase of prices? Then, what does it mean that inflation increases faster than wage work? I can only imagine that it means that prices increase faster than productivity. But even this doesn't necessarily imply inflation. For economists, inflation has a specific meaning that's slightly different than what people usually think (e.g. [0]).
> Wiemar was the complete destruction of a social fabric under reparations and inflation, and the vice businesses that sprung up as people switched from regular wages to survive caused the social reaction that produced the second world war.
Hyperinflation of the Weimar Repulic did not directly cause WWII. Hyperinflation was in the early 1920ies. The final rise of the NSDAP and the election of Hitler as chancellor is attributed more to the misery of the Great Depression beginning at the end of the end of the 1920ies. Although, one can also argue that the overall instability of the Weimar Republic helped this party in gaining votes.
[0] https://www.clevelandfed.org/publications/economic-commentar...
> Strictly speaking, inflation refers only to a drop in the purchasing power of money that results when a central bank creates more money than its public wants to hold. Inflation manifests itself as a rise in all prices and wages—not just some subset of prices.
When you debase the purchasing power of the currency, you get demand bubbles for goods as people get out of depleted/inflated cash. This causes the staple goods price increases that cause desperation. Fuel taxes to pay down the debt the state accrues also causes a similar desperation via price inflation today. What kind of chaff argument is trying to confuse the issue with the rate of change and the net change? If you want to lie to people and tell them that inflation and MMT will be good for them so they do nothing while their society is demolished, this makes sense, but otherwise, it's dishonest. The Wiemar era humiliated a generation of Germans who became cruel and gravitated to NSDAP (and its precursors) as the result. A decade is a short time in culture. People in 2023 remember 2013 very clearly, as those in 1933 did of 1923.
The US is in an extremely privileged position in that it is the world's reserve currency, so most of the ill effects from QE haven't spilled into everyday products. At least until recently.
Mostly it impacted speculative assets such as crypto, equities, and real estate. Now it's starting to hit other sectors, jumpstarted by the supply side constraints introduced in covid.
The US is able to print dollars and exchange them for real goods. No other country can do that. But once foreign countries stop buyung treasuries and start demanding goods for goods instead of devalued dollars for goods, thr US won't have any goods to trade, and the MMG hypothesis will die with instant hyperinflation drovenby extraordinary supply side shocks to the US economy.
Imagine I sell a house for 2 million. Now that house burns down. Basically that money now represents value that doesn't exist anymore. If this was an island economy consisting of 1 burned down house and 2 million dollars the economy essentially now has 2 million dollars in paper bills representing nothing.
This is why money is inflated deliberately. To keep the representation from getting too unrealistic. It incentives you to move your value into more realistic representations of value.
In short money already does have an expiry date or something equivalent. It's inflation.
The total value of a country usually grows with time.
What isn't realistic is I save money and that money grows it's value with the economy while I sit on my ass, contributing nothing. A little inflation makes the situation more realistic.
Here in Brazil the previous generations have a golden rule that you must store value in land, not in money. And Brazil has had tons of inflation and weak currencies in the last decades (with all the poverty and stagnation that it brings).
The same effect is why many economists believe that a bit of inflation is important (this argument is different from the widely held central bank theory that an inflation target of ~2% is better than 0)
When you buy land with a 99-year lease in Singapore, it will be turned over to the government at the expiration of the term, with $0 in compensation. There have been a lucky few who get en bloc development where the land is sold before expiration and a new 99-year is provided - so current residents get bought out at values higher than otherwise.
A few 60 year leases expired recently. The government assisted in finding new homes, but it was pretty much "get your belonging and leave".
https://www.channelnewsasia.com/singapore/lorong-3-geylang-e...
And after twenty years i don't have paid the debt for an apartment or house, two-times?
But, sure so americans try to sell us houses builded from; chipboard, insulating wool, plasterboard and roofing cardboard?
i am questioning this... in terms of: "money was to last longer than the expiring and perishable things" and "The real estate bubble created by low interest rates"
Cos for me it seem that it ignored grief and "people" for -to be objective something the OP named "interest", i won't sound offending but it seem to be a mistake (both..all three...)
regards...
edited: sry "alittlebut" i mistaken you for the op p-:
I would like similar system for land ownership and buildings. Property taxes at level of 5%. In China land can not be owned, but only leased for 70 years.
Soft money, tends towards zero, as you said.
[1] https://www.ngccoin.com/coin-explorer/united-states/dollars/...
Over here this should afford you a month's worth of groceries for up to two people if you're careful with your spending.
Money that expire will work well in the EU/Asia, probably not in the US, it's a way too self-centred and selfish country
Infrastructure ages and needs to be refreshed. Look at NYC, how old "land improvements" get stuck.
Expiration of money is an end of life cycle event of individual bills - it affects certain lump sum of money that will become void in corpore. The nominal value of the money will remain the same.
Inflation is continuous devaluation of nominal value of all the money regardless of individual bills.
If we discuss expiration of money then we should consider what constitutes as money creation - when will the countdown start.
Is the money created when it is issued by a (central) bank or is created when an exchange (for value) takes place?
With the first idea a single transaction can contain money with multiple expiration dates and as such the money with longer expiration date will immediately become more valuable and the nominal value of the money is not universal anymore.
The second approach avoids this problem - the nominal value of the transaction is always the same. This has an other interesting side effect as it would incentive to make transactions legal.
But what Gesell describes is mandatory deflation of value of money by insisting a tax on money - a monetary money holder tax, kind of. Whoever holds the money is obliged to pay the tax - if you put your money into bank then it would be the bank. So his idea is considerably different.
The whole thing sounds incredibly dumb.
Bank creates credit (money), often with timed terms of repayment
As you repay, that credit is gradually removed from the financial network.
yes, but we are also expected to pay: rent, taxes, and subscription (utility) services simultaneously
I'm not an economist but it's intriguing. Keynes at least thought it was interesting as well.
When rich people use cash it's usually borrowed as needed.
If someone put 1 dollar on the bank in 1900, then what would it be worth now, considering both inflation and interest?
However, in 1900 you used to be able to buy 70 pounds of potatoes for $1. Now you can buy 1 potato.
So yeah I would say that's pretty expired.
https://historycollection.com/30-things-you-could-buy-for-1-...
> Money could be deposited in a bank, whereby it would retain its value because the bank would be responsible for the stamps. To avoid paying for the stamps, the bank would be incentivized to loan the money, passing on the holding expense to others. In Gesell’s vision, banks would loan so freely that their interest rates would eventually fall to zero, and they would collect only a small risk premium and an administration fee.
If you open a bank account today and deposit $1, you'll be in the red next month due to maintenance fees.
Exactly this. This is how money came to be, "organically", in the first place. Because of modern fiat currency people tend to think that money is some sort of invention, but it doesn't take much to realize that if you're a dairy farmer then barter is completely untenable. How do you save and store enough milk to buy a car, and who has a car for sale and wants to trade it for a ton of milk anyway?
Throughout history everything from salt to spices to metals has been used as currency. There are 5 properties that make for a good currency:
- Easily divisible
- Relatively light weight / easy to store
- Difficult to counterfeit / fake
- Other people are highly willing to trade for it (high market value)
- Durable / non-perishable
You need all of the above, which is why precious metals became so common.
If fiat currency "expired" then people would just replace it with something that satisfies durable / non-perishable.
Which has rates to pay - assuming the market stands still that property is actually a liability.
Storing money in gold is probably a better example, until we find a way to cheaply create it...
In the first case, there is no incentive to use the money any faster, and as long as inflation isn't too high, there could be incentives to hoard/save it.
In the second case, each unit has an expiration, and like the game of hot potato, you want it out of your hands quickly. This should heat up the economy overall, while inflation is seen as the result of an overheated system.
The trick, as noted, is who is poised to benefit? The "new" dollars would be worth more, so the people at the top of the flow would have more advantages than those at the bottom.
In order for something like this to work, it would also need to recognize the creation of value, and not just the creation of the currency. The person who turns a pile of wood into a chair is creating value, but they are usually not able to capture the true value of their time and skill.
Overall, this is an interesting idea especially in that it changes the way we think about money.
Taken further, every day I could exchange all of my wealth which now has 364 days left for slightly less wealth with 365 days left.
That sure sounds like inflation.
Changing the way money enters the system is interesting for sure, but orthogonal to whether expiring money is just inflation by another name.
That's happening even now with inflation, even if the mechanism is less obvious.
It's called the Cantillon Effect.
Yes -- for a while. Not forever. This is a feature, not a bug. Hoarding/saving for short periods of time (relative to human life spans) is a good thing. It helps damp out transients. Hoarding/saving for long periods of time is bad because it discourages people from taking risks by putting resources to productive use.
I think that named a problem.
Think about something like "Measurement Importance" in terms of the "level of competence in the handling of the vehicle", so to speak ?
So how is your MI as high roller ? Think some people have not only accounts for that, but alghorithms, nor ? ^^
No. The opposite of saving is spending. You can spend on capital as well as consumption. Inflation only devalues cash, i.e. money you keep in your mattress. You can avoid inflation by either consuming or investing, both of which help keep the economy humming along.
The point is:
> The idea that people need to be encouraged to consume (consumption being the opposite of saving) I don't think is supported by economic theory.
People absolutely need to be encouraged to be productive. That's the whole point of an economy, to encourage people to produce things that others want in exchange for other people producing things that they want.
Honestly, how could anyone possibly not understand that?
The whole point of an economy is NOT to encourage people to produce things. The point of producing is to satisfy a demand for consumption, and individuals choose their level of consumption according to their preferences and budget constraints. They don't need to be encouraged to consume. That doesn't make any sense.
I guess we'll just have to agree to disagree about that. Maybe things are different where you are, but where I live most people expect to be compensated for their labor, and investors expect at least a shot at a positive ROI. But if you want to work for free, by no means allow me to discourage you.
> They don't need to be encouraged to consume. That doesn't make any sense.
You're right about that. But that was not what I said. I said that they needed to be encouraged to produce, not to consume.
> I understand it fine,
Manifestly not. You couldn't even write three sentences without losing the plot.
And later you added that by "saving" you meant specifically "not spending".
Then "taking risks by putting resources to productive use" is just a fancy way of saying "producing"
So, you're saying that people not spending is bad because it discourages people from producing.
In a market economy, the optimal level of production is the level that satisfies the desired level of consumption. If people want to save more, and therefore consume less, and as a result we also produce less, that's not bad. That's how the economy is supposed to work.
You're assuming that "the desired level of consumption" is a constant. It's not. It's a function that depends on circumstances. People discover new things, and some of those discoveries lead to desires that were previously unknown or even unimaginable. It would never even occur to our neolithic ancestors to want an iPhone or a Tesla. But some of our ancestors wanted to discover new things, and some of those discoveries naturally lead to discovering new things to want.
And that's not even mentioning the fact that one of the things that people naturally want is to have children, which leads to more people wanting things. So even if the things they want are the same old things, demand will naturally grow as the population increases.
Such a person may not need to produce because their savings exceeds their total expected lifetime demand. And even if they had 80% of their assets invested, thry still may want a 20% cash buffer in case their investments go belly-up. Most people call this an emergency fund.
The idea of expiring money is plain dumb. We don't need to artifically increase the velocity of money. We don't need to increase demand for assets because people have time-constrained purchase windows. All that would do is lead to a lot of poor decisions as people scramble to find the most efficient ways to convert the expiring money into convertable value stores. Of course this would just increase demand and make those value stores more expensive. Some will be able to arbitrage market inefficiencies. I bet a whole lot more would just lose.
How would you save up cash for a good investment opportunity if it just died? How would people save for house down payments or businesses? So dumb.
Before publishing thr above, I decided to try reading the article. This Gisell dude is an idiot. Here is an example, and where I stopped reading
> The faults of money go further, Gesell wrote. When small businesses take out loans from banks, they must pay the banks interest on those loans, which means they must raise prices or cut wages. Thus, interest is a private gain at a public cost.
There is no public cost! The private bank lent money to someone they expect to pay it back. They make money if they're paid back and lose money if they don't.
The business, which would not exist without the loan, opens and brings more supply to the market. Increasing supply lowers prices (public benefits). The business emoloyes people. Those people choose to be employed at a given rate, even if that rate is lower than it could be if the business, which would not exist without the loan, didn't have to pay interest on its loan. (job creation: public benefits). The alternative presented is raising costs of goods. Okay... Either they raise them too high and have no customers and then go out of business and all concerns are washed, or they have higher prices than otherwise. But otherwise means there's no business and nothing to buy anyway, so here again thr public clearly wins. The only maybe scenario for public loss is if thr bank makes a loan thay isn't repaid. But obviously this is expected to happen from time to time, so either the losses are absorbed by the other profitable loans or the bank eventually goes out of business. Big deal. That's part of choosing a bank for bank consumers.
That depends on how fast it died. Too much inflation is clearly bad, but so is none at all. And deflation is really, really bad. The last time the world saw deflation was during the Great Depression of the 1930s.
Empirically, 2% seems to lead to pretty good outcomes by my personal quality metric. That's a halving of value every 30 years or so, which seems about right to me.
(the later has an interesting side effect as it would incentive to make transactions legal)
"Ich möchte das nochmal klarstellen, ich redete (schon was her) nicht von 'Zinsfrei' in Umlauf gebrachten Geld, aber sehrwohl und im Interesse aller Beteiligten, von Schuldfrei (i think 'debt-free money' would be the word in english, and against debt driven creation of money) in Umlauf gebrachtem Geld."
And explicit nothing from the Muzzies "economical"-stuff!
- Mac McDonald, It's Always Sunny in Philadelphia
The main difference seems to be the current system runs on the Cantillion effect, where those in favoured positions (close to where the money is created) benefit from the inflation, while those farthest away bear the cost. In effect, it is the rich who are able to borrow direct from Central Banks and Government Treasuries get negative effective interest, and are able to parlay that into charging more interest to those farther down the chain, until you hit people paying 20+% on credit cards and payday loans.
But as far as the perishable money, there are currently places like Turkey and Argentina where inflation is far higher than Gesell's proposed 5% inflation. Are those countries flourishing as a result of local inflation? It doesn't seem that way.
"The 2 percent target widely adopted by central banks today originated from New Zealand, and surprisingly it came not from any academic study, but rather from an offhand comment during a television interview."
https://www.cfr.org/blog/history-and-future-federal-reserves...
Add: "Investment is the production of capital goods, and the production of capital goods involves consumption."
and: "Are those countries flourishing as a result of local inflation? It doesn't seem"...so
...Question I have: "This disinflation, i.e. near or almost deflation, been first contested - because some things actually became truly expensiver, but to determine inflation you did not need to calculate it as an average?", i want to ask.
*https://www.econ.iastate.edu/ask-an-economist/why-would-chin...
Money is, among other things, a tool to transfer capital temporally. Saving it is tranfering capital you created today into the future. Borrowing it is transferring capital you will create in the future to today, at a cost that benefits a facilitator. Financially this is equivalent to shorting the present or shorting the future, or going long on the future with leverage, if you borrow for investment purposes.
Creating a type of money that can only do this in one direction, that is, borrowing, is creating a world where we can only take from our futures and not give to our future selves. How you can do that without making the future worse is beyond me, seems impossible to my simple mind.
We already have a softer version of this. Money doesn't expire, but it devalues, there's a cost to saving in money, that is higher in the present and near term than the cost to borrow it. So the game is such that the incentive is to borrow. And we see the effects of this, taking from our future, the future looks increasingly bleak because it is a certainty that, at some point in the future, this system will spiral out of control. We have sucked the value out of our future for frivolities today.
If you can look at the state of the world and see the impact that our current monetary system has had, and believe that money that expires will be a positive development, I'd love to hear your reasoning.
A very interesting concept. Most resources in the world have a lifespan - even an iron bar will eventually rust. However, a dollar is as perpetual as the system itself.
On top of that, the entire economic system is designed to reward those who take more and give less - that is how you become rich, and being rich is the highest ideal.
However, if money had a lifespan... if it could "decay" just like the crops we grow, then things would change. If you try to sell a bushel of corn today, and there isn't much demand, you will need to lower the price to sell it. This is because it will go bad and then you will have nothing.
If you get paid a dollar today, and you know that dollar has a lifespan, then you are incentivized to spend it! If you have a million dollars that can expire, there isn't much use in holding or hoarding it... like the corn, it will go bad. So, you want to spend it - on things you need, or services, or by investing in equipment, training, research,etc. Heck - even just going on a trip or getting a nice meal is better than letting the money "rot" in a bank account.
I'm not so sure that something like this would work at scale. It seems to be more workable in smaller circles, like a LETS or local trade system. Still, the thought experiment is useful, and I thnk it helps to highlight how some of the problems we face are actually baked into the system.
From the article: 'Gesell believed that the most-rewarded impulse in our present economy is to give as little as possible and to receive as much as possible, in every transaction.
In doing so, he thought, we grow materially, morally and socially poorer. “The exploitation of our neighbor’s need, mutual plundering conducted with all the wiles of salesmanship, is the foundation of our economic life,” he lamented.'
If you want to get money moving in the economy again, we already know how to do that. Tax the shit out of the wealthy in such a way that they can't weasel out of it, and turn that money over to the people, be it through hiring them for public works projects, more and wider spread research grants, Universal Basic Income, or economic stimulus. We have tons of mechanisms to move money "down the hierarchy" as Dr. Peterson would say, but the problem is all of our politicians and media are owned by the very rich, and so taking money from the very rich is not on the table, which is how you do that. So we're left with this entire group of two professionals scratching their heads as to how we solve the problem of "the rich have too much money and the poor don't have enough" without having the rich give the poor money, which rather predictably lands at "we've tried nothing and we're all out of ideas."
I'm not even necessarily arguing pro or con here (though if you're curious, I'm extremely pro) I'm just saying that the rich accumulating too much is doing exactly what economists have always said it will do: it stalls the economy, and it will continue to do that. No amount of thumb on the scale by the rich will change this fundamental fact, and even some of them are saying this. If you totally strip mine the consumer base in the never ending pursuit of number-go-up, eventually you have no one left to sell your products to and then the entire game is over.
Yes, you will indeed increase the velocity of money if you steal it from people. But that is typically short lived and not sustained.
It tends to be better to allow those wealthy folks with capital to use it to create new businesses that then have the same effect, and the benefit is that this solution is pareto optimal since it's composed of voluntary transactions.
The vast majority of the history of the United States is a story of the rich being taxed extremely highly once they crossed a certain threshold of wealth, usually around 70%. Corporations too. We still had massive corporations, and we still had insanely rich people, so much so that the most famous anti-trust cases occurred during that time. And we also, in addition to that, built the highway system, built the Hoover dam, built three electrical grids, went to the moon, waged two police actions in southeast Asia (I didn't say it was all good) and created the fundamental technologies that gave us the Internet.
Conversely there is no evidence that the super-rich do anything with their money consistently besides hoard it.
Didn't Elon just use a bunch of money to buy Twitter? Didn't he also aink a bunch of personal money wagering on SpaceX?
I'd hardly say the wealthy don't use their money. Typically they invest it in new companies and businesses. They don't just let it sit there. And those investments create jobs and new services.
Conversely, despite all the cool things yhe federal government has done in the past, we see massivr amounts of bloat and inefficient resource allocations. I don't keep to keep any of my yearly salary until approximately Easter each year. And what am I getting for that? Maybe the FAA is about the best outcome.
SpaceX is at least better for an example but it still isn't great as SpaceX itself is funded largely by the Government anyway, which Tesla is also a large beneficiary over. I'm not opposed to spending money on important new technology, unless there's an Elon Musk at the top getting rich off it. If we're already paying for Tesla and SpaceX to exist, who the fuck needs the Aparthied profiteer? He's shown himself so many times to be wildly incompetent and out of touch with all of the large businesses he's an investor in, not the least of which is the absolute clown show that Twitter's become, while he's set fire to 40 billion of it's 44 billion purchase price. And according to insiders, that seems to be because Twitter didn't have the chance to build the "Elon management team" that exists at all his other companies to prevent his boondoggling from causing more havoc than it has to.
I'm not even saying he's a bad guy (though he is) I'm saying we don't fucking need him, we need his money, which he only has because we've said he's allowed to keep it. So tax his ass and then he can go have a normal mid-life post-divorce crisis and like, buy a Ferrari and crash it into a tree or something instead of buying and sinking a social media site.
> Conversely, despite all the cool things yhe federal government has done in the past, we see massivr amounts of bloat and inefficient resource allocations.
You see the exact same thing in the private sector. This isn't a bug in Government, it's a bug in human organizations.
Sure, but when the private sector wastes it only does so at the expense of its customers, as the waste leads to higher prices. It opens the door for that company to be out-competed.
There is no such mechanism for the waste in gov. It has no competition, and therefore the bloat keeps growing. Voters are the only recourse. There is no natural dynamic to keep operations efficient.
> I'm not even saying he's a bad guy (though he is) I'm saying we don't fucking need him, we need his money, which he only has because we've said he's allowed to keep it. So tax his ass...
This is called theft. We have plenty of money for public goods, such as national defense. You want to steal this man's money; plain and simple.
Gold doesn't though, we'd just end up back at hoarding / investing in gold
It wouldn’t surprise me if the origin of currency began with grain.
Physical paper bills also do wear out. https://www.washingtonpost.com/business/interactive/2023/old...
The notion of "hard money" is a joke.
Why? I don't even think modern Keynesians would argue against commodities this confidently, maybe MMT's would?
Hard money is a contract with generalized civilization that only has value so long as civilization continues to organize and complexify our resources. A $1 silver dollar coin still has a lot of objective value because civilization still provides lots of good and useful stuff for us to consume.
I fully agree that the value of silver is very unlikely to crater but it's not exactly Star Trek unlikely.
Don’t plan for the future. Don’t delay gratification. Never save up enough money that you’re allowed to have a taste of true freedom. Always be precarious, always be dependent on your boss for the next handout, lest your food and shelter be in jeopardy. Don’t step out of line, lest that handout be jeopardized.
Keep your hands off my bank account.
Roughly, state backed currencies seem to inflate by about an order of magnitude each generation, a nickle 40 years ago will buy what $.50 buys today. When I was a kid, soda was $0.25, now $2.50 for a bottle of pop is not uncommon, state money does expire and whats in your bank account can be taken away anytime.
Thank god we've had a solution to this problem for over a decade now but it might take another decade still for normal average people to catch on, I'm still surprised the HN crowd is so far behind in this regard :(
A tax on money costs the people who hold it, and benefits the people who primarily use it as a medium of exchange.
His idea was to put a kind of tax on money and the responsible to pay this tax is on the holder of the money.
As such you could still put your money into a bank and free yourself of this responsibility and the bank on the other hand is highly motivated to loan the money out as fast as possible to relive itself from the responsibility.
Your bank account balance is of little importance with a fiat currency. Banks themselves are superfluous now that money does not have to be represented by cash and thus needs no vault.
Maybe you mean “Keep your hands off the purchasing power of the currency in my bank account”.
let me go prompt DeathByAi.gg with this scenario.
1. GNU Taler (going live next year I think?) has expiry attached to all signed tokens, to prevent the tokens (really EUR tokens signed by an issuing licensed entity, not blockchain/crypto bullshit) to promote it as a payment instrument instead of an investment.
2. CBDC does offer expiry as one axis. The Indian implementation, which is very early, has very little adoption is extended from e-RUPI which is a purpose delimited voucher-based money, primarily meant for social welfare schemes. I’m not 100% certain but this includes inbuilt expiry.
insert any crypto exchange name
The results weren’t great.
Even his percentage of cost to hoarding money is in the ballpark of current inflation.
This was written in a time before inflation, where hoarding cash was not stupid. Today it is. We don't need the incentive to increase the velocity of money.
Well, I say that, but too many people just have their savings in a cash account. Sometimes not even a saving account, but an account with no interest at all.
But then again that just means that the bank invests it in one way or another.
Short of physical cash, there's not really any way to keep money being "unused".
We don't want that
What you could do though (i'm not an economist) is to periodically introduce Monetary and Fiscal Policies that reset/adjust the economy (outside a government's influence e.g. Central Bank + Supreme Court).
Beyond a certain amount of wealth and cash in the bank people and institutions stop thinking in an entrepreneurial way and start thinking about the economy at large, or predicting the economy at large.
And GDP is very much like performance anxiety, when everybody is thinking about that, then it becomes very difficult to get it up. Or you do get it up but it's not nearly as rewarding because it becomes an artificially inflated number without any connection with actual welfare of the population and developement of a country.
Government mints a currency that can be used to pay taxes (for example 2024)
It uses the currency to buy products and services from the private sector. It will have a flexible exchange rate.
You anticipate how much taxes you will have to pay and try to buy the currency cheaper than using the conventional coins.
A forex market will happen based on economic activity, how much collective tax there will have to be paid.
If there is a crisis there is likely to be more of the currency in circulation than the total sum of 2025 taxes.
After the final tax day the currency is worthless.
https://blogs.worldbank.org/allaboutfinance/expiring-money-p...
https://blogs.worldbank.org/allaboutfinance/expiring-money-p...
It's the only reasonable way to implement something like UBI: give everyone X "food credits" and Y "housing credits" each week. There would still be fraud and "credit laundering" to get around the expirations, but the overall waste would be tiny compared to the legacy finance system.
Nationalize the real-estate and you create a monopsony for housing credits. Open up state-run distribution centres that accept the food vouchers, and only redeem them there.
The laundering/cashout concept relies on someone qualified to accept the credits and get real money back from the state. Stereotypically, this was a shady bodega or landlord who would fudge the books to claim they had enough sales to cover the vouchers they bought for 20% of face value. Going to direct fulfillment means they fall out of the loop: there's nobody[0] who can give you anything for the voucher except for a can of corn.
[0] Yes, someone might be willing to buy up vouchers if they wanted a LOT of cans of corn, but the logistics and difficulty of converting that to real cash means that it's not going to scale. It might surge during crisis events, where the cash price of a staple suddenly skyrocketed, but a voucher denominated in grams/litres/bushels held value.
But all snark aside, I think this is part in parcel with the general observation that money as a stored good has mostly negative impacts beyond some amount amount proportional to single digit multipliers of median annual income.
Mainstream economist think inflation is good and recommend 1-3% for a healty economy. And inflation is more practical to implement than putting date stamps on the back of bills like the original idea in the article.
But if money expired, I think people would go back to Gold and Silver as a base of wealth with "money" being worthless.
An anecdote: few months ago, my partner actually exchanged a 100 CHF note in the big SNB building on Bürkliplatz, and it’s essentially a Jason Bourne scene (although that wasn’t really Zurich in the movie). You walk in, a guy speaking with a stereotypical Bünzli accent takes your name, then brings you individually into an office where you can hand your gross old bank note to a man wearing a suit. Next to arguing about chess in German over a beer on the train, this is the most Swiss experience available.
EDIT: Maybe more to the point, like everything else in Switzerland, apparently you can resolve this by sending a registered letter. In this case, if you mail them the banknotes at the Cashier’s office in Bern, along with your account information, they will wire you the money.
At a numismatics fair, I saw a 10 CHF note in a stack priced at 4 USD, and thought "Woo! Free money!"
However, it was a 5th series note, which were fully demonetized in 2000.
Depending on the country and other events, entire fiat currencies or specific denominations of fiat currencies can expire and become color paper worth almost nothing. We’ve seen this many times over the last several decades that fiat currency (not backed by gold or other physical asset) has existed.
It’s all about trust from every angle and every motive.
The period of high inflation circa '70s was also the most equal economy of the recent decades. It's all been downhill from there
It's called a check, and hardly anybody accepts them anymore.
Rich people keep their “money” in the form of socks, bonds and properties anyway.
Poor people “failing” the Marshmallow Test is taken as not having impulse control — but I’d argue studies fail to account for different life experience in people taking your “marshmallow” away, no matter what they promise.
This is stealing marshmallows on an industrial scale.
The real question is, who would this help? It doesn't appear that it would help anyone, it would turn money into breadline vouchers and enable the powerful to enslave us all.
> Total U.S. bank deposits are around $17 trillion. Meanwhile, total wealth in this country, including nonmonetary assets, is around $149 trillion, more than 63 times the total available cash. The gaps between these numbers are like dark matter in the universe — we don’t have a way to empirically account for it, and yet without it our understanding of the universe, or the economy, would collapse.
There's no reason you would expect these numbers to be the same, and nothing relies on them being the same.
On an unrelated note, HN rules forbid me from implying that a commenter has not read the article.
First, the wealthy would agree to complicated contracts with each other so they trade back and forth to avoid ever letting their money expire.
Then my landlord would sneak into my home and swap my new money for her about-to-expire money.
Then my employer would pay me with about-to-expire money by lying and saying they paid me that money long ago, and offer to pay me in fresh money if I worked a lot more hours and accepted a lower wage.
I's still be where I am, unable to gather enough weapons grade material to get even with The System.