What if money expired?
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What if money expired?
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Re: What if money expired?
#2An interesting look at theories around "perishable" money.
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.'
Re: What if money expired?
#3Uh, our money does already expire. It's called inflation.
Re: What if money expired?
#4Uh, our money does already expire. It's called inflation.
It is interesting how closely the proposals of Gesell are to current US Fed policy of 2% inflation.
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.
Re: What if money expired?
#5Uh, our money does already expire. It's called inflation.
There is a difference between inflation, which affects the entire monetary system, and money expiration which affects individual units of currency.
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.
Re: What if money expired?
#6Uh, our money does already expire. It's called inflation.
There is a difference between inflation, which affects the entire monetary system, and money expiration which affects individual units of currency. 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 quick…
I’m not seeing the difference. If I have $1 that’s worth $1 today and $0 in one year, doesn’t it stand to reason that in 6 months I could exchange it for $0.50 with a one year expiration?
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.
Re: What if money expired?
#7An interesting look at theories around "perishable" money. 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 l…
> A very interesting concept. Most resources in the world have a lifespan - even an iron bar will eventually rust.
Gold doesn't though, we'd just end up back at hoarding / investing in gold
Re: What if money expired?
#8To be fair, we tried it when people had money on
insert any crypto exchange name
The results weren’t great.
Re: What if money expired?
#9Options?
Re: What if money expired?
#10Uh, our money does already expire. It's called inflation.
There is a difference between inflation, which affects the entire monetary system, and money expiration which affects individual units of currency. 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 quick…
> there could be incentives to hoard/save it
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.