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What if money expired?

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Re: What if money expired?

#131

Post by LouisSayers »

Retric wrote: post #24
brookst wrote: post #6

Earlier quoted context omitted.

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.

The important difference is the inflation rate could differ from its current value. Money 200 months left is unlikely to be worth exactly 10x as much as money with 20 months left. That difference may not be meaningful on its own but could have interesting knock on effects depending on how money enters the system.

That truly sounds like a nightmare. Imagine going to buy a loaf of bread and being asked "what's your expiry", then being told "your money is no good here" because it only has a week left.

Re: What if money expired?

#132

Post by [deleted] »

mo_42 wrote: post #120
motohagiography wrote: post #50

The whole point of money was to last longer than the expiring and perishable things it was used to pay for. The purchasing power of a dollar in the last century is about 1/500th of what it was when it was paid for the value someone created back then. 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 exac…

> The whole point of money was to last longer than the expiring and perishable things it was used to pay for. The purchasing power of a dollar in the last century is about 1/500th of what it was when it was paid for the value someone created back then. 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 ph…

[deleted]

Re: What if money expired?

#133

Post by WhereIsTheTruth »

temporarara wrote: post #111
Throwfi44 wrote: post #14

Money do expire! There is inflation... 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.

If land is not owned by anyone the risk is that it's treated poorly since there is no incentive to treat it well. Take the profits that are available during your 70 years lease and run, it's not your problem afterwards.

I disagree, it's about the culture, the culture and education will dictate how well public property will be treated, just look at public toilets in Japan vs ones in the US, it's quite revealing

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

Re: What if money expired?

#135

Post by lottin »

lisper wrote: post #115
lottin wrote: post #112

Earlier quoted context omitted.

Maybe 'spending' is a better word, yes. However, 'consumption' isn't entirely inaccurate. Investment is the production of capital goods, and the production of capital goods involves consumption.

Well, yeah, you can't create something from nothing. But that's not exactly a deep insight. All economic activity involves consumption if you want to cast the net that broadly. 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…

I understand it fine, I just don't agree with it.

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.

Re: What if money expired?

#136

Post by CapitalistCartr »

bombcar wrote: post #121
gumby wrote: post #84

Earlier quoted context omitted.

Land can expire. IIRC back in the late 60s and 70s Singapore had, and may still have, a law requiring purchased land to be developed within 7 years else the government would auction it off. 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)

A 1% land tax expires the land in 100 years.

Because of compound interest, the total tax will equal original land value in about 70 years, assuming simple interest. But the utility of land is worth far more than 1%.

Re: What if money expired?

#139

Post by thriftwy »

CapitalistCartr wrote: post #136
bombcar wrote: post #121

Earlier quoted context omitted.

A 1% land tax expires the land in 100 years.

Because of compound interest, the total tax will equal original land value in about 70 years, assuming simple interest. But the utility of land is worth far more than 1%.

What is the utility of a piece of a forest somewhere in Brazil? Assuming you do not deforest it.

Re: What if money expired?

#140

Post by motohagiography »

mo_42 wrote: post #120
motohagiography wrote: post #50

The whole point of money was to last longer than the expiring and perishable things it was used to pay for. The purchasing power of a dollar in the last century is about 1/500th of what it was when it was paid for the value someone created back then. 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 exac…

> The whole point of money was to last longer than the expiring and perishable things it was used to pay for. The purchasing power of a dollar in the last century is about 1/500th of what it was when it was paid for the value someone created back then. 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 ph…

The vice angle is that when inflation increases faster than wage work, people switch from a longer term wage, to selling what they can negotiate spot prices for to keep up with inflation - like the value of a bet in gambling, or client prices in prostitution. 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. Unmitigated inflation reduces people to animals.

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.

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