There's another commenter that pointed out the concept of 'demurrage', there's a film about it - see this post on "Shillings from Heaven / Wörgl's Miracle" by Will Ruddick of Grassroots Economics: https://grassrootseconomics.org/worgl
What if money expired?
171–180 of 191 posts
Re: What if money expired?
#172Earlier quoted context omitted.
I suspect the confusion is indeed yours. From the fed link: > 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 g…
I've been reading up on MMT recently, and I haven't seen adherents (e.g. Mosler) claim that inflation is good. They do provide a heterodox account of how government spending leads to inflation, a sectoral one that focuses on demand from the public sector outbidding the private sector in areas were the economy is already at or near productive capacity. And they claim the traditional examples of hyperinflation e.g. Wei…
MMT ia utter garbage. It's wishful thinking rationalized by people looking at the current debt burdens and saying, "If things haven't broken under the current stress, the bifurcation point must be higher, and maybe so high indeed as to not be applicable."
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.
Re: What if money expired?
#173Earlier quoted context omitted.
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.…
> the optimal level of production is the level that satisfies the desired level of consumption 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 o…
They aren't saying demand is constant. They're saying that all peoole have different utility curves, and some people are at their most efficient point on the curve when they spend all their day ealkimg in nature, with their demand being periodic walking shoes and food.
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.
Re: What if money expired?
#174An 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…
Call me cynical but I have a strong feeling that the wealthy elite who are already paying an entire cottage industry's worth of six-figure or more finance professionals and lawyers to dodge taxes will find a way to make this work for them too, while it creates an even stronger barrier to entering the truly monied classes from whatever remains of the middle class. If you want to get money moving in the economy again,…
> 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.
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.
Re: What if money expired?
#175Earlier quoted context omitted.
> the optimal level of production is the level that satisfies the desired level of consumption 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 o…
They aren't saying demand is constant. They're saying that all peoole have different utility curves, and some people are at their most efficient point on the curve when they spend all their day ealkimg in nature, with their demand being periodic walking shoes and food. 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 inv…
> How would you save up cash for a good investment opportunity if it just died?
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.
Re: What if money expired?
#176Then the rich people would find a way so that their money doesn’t expire and the poor and middle class people’s money would expire.
Re: What if money expired?
#177In some places in Europe, like Sweden, when new bills are released, and if you don't get your old exchanged they will soon enough become worthless. So don't stuff cash in your matress or you'll lose it eventually.
That's more a technicality of the carrier. There's nothing lost in the value, you just have to replace them with newer version. Any sane country would do this if old bills turn out to be easily forged.
Re: What if money expired?
#178Earlier quoted context omitted.
I keep 200 Swiss Francs in my drawer, because the last time inflation in that country went above 4% was in the 90s and the last time they had war on their soil was in 1847. Over here this should afford you a month's worth of groceries for up to two people if you're careful with your spending.
200 francs isn’t going to buy you shit in any type of inflationary crisis situation.
It will buy you nearly a ton of wheat.
Re: What if money expired?
#179[dead]
Re: What if money expired?
#180Options?
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