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What if money expired?

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Re: What if money expired?

#141

Post by thriftwy »

corethree wrote: post #129
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…

Right but the problem is money isnt value itself. It only represents value. Thus it's not a realistic representation of value because real value degrades while money does not. 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…

New value is being created all the time. The actual value is not the house; it is your desire to have that house, for which you are going to be ready to trade some money (either to buy or to rent).

The total value of a country usually grows with time.

Re: What if money expired?

#142

Post by 2OEH8eoCRo0 »

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.

One of the points in the article is that inflation wouldn't be necessary. Is inflation a workaround for the same issue that this is trying to solve? I imagine a bizarro world where they use this system and call inflation nonsensical- we already have expiring money!

I'm not an economist but it's intriguing. Keynes at least thought it was interesting as well.

Re: What if money expired?

#143

Post by 6510 »

I believe my similar idea to be more funny.

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.

Re: What if money expired?

#144

Post by friend_and_foe »

So much wrong in this article. First, barter does not outdate money, contrary to popular wisdom. Money is always the most difficult to produce or procure, most long lasting, widely saleable good. No matter what system you start with, it will evolve into these characteristics because that's what problem solving humans want because it benefits them.

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.

Re: What if money expired?

#145

Post by 2OEH8eoCRo0 »

phendrenad2 wrote: post #138
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.

Land cannot be owned! There is property tax.

Land can be owned but there are other obligations. The whole idea that you can buy the land is because of a government and law.

Re: What if money expired?

#146

Post by lisper »

lottin wrote: post #135
lisper wrote: post #115

Earlier quoted context omitted.

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.

> The whole point of an economy is NOT to encourage people to produce things.

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.

Re: What if money expired?

#147

Post by friend_and_foe »

znpy wrote: post #35

Who would this hurt, anyway? Rich people keep their “money” in the form of socks, bonds and properties anyway.

Why do you want it to hurt someone?

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.

Re: What if money expired?

#148

Post by corethree »

thriftwy wrote: post #141
corethree wrote: post #129

Earlier quoted context omitted.

Right but the problem is money isnt value itself. It only represents value. Thus it's not a realistic representation of value because real value degrades while money does not. 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…

New value is being created all the time. The actual value is not the house; it is your desire to have that house, for which you are going to be ready to trade some money (either to buy or to rent). The total value of a country usually grows with time.

Then print money at the rate at which new value is created. Which is also what occurs in a sense.

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.

Re: What if money expired?

#149

Post by mo_42 »

motohagiography wrote: post #140
mo_42 wrote: post #120

Earlier quoted context omitted.

> 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 w…

> 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

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...

Re: What if money expired?

#150

Post by lottin »

lisper wrote: post #146
lottin wrote: post #135

Earlier quoted context omitted.

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.

> The whole point of an economy is NOT to encourage people to produce things. 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 cons…

You said: "Hoarding/saving for long periods of time is bad because it discourages people from taking risks by putting resources to productive use"

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.

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