Isn't most wealth hoarded in non-currency investments? How might this effect those?
Paper Money with an Expiration Date
11–20 of 28 posts
Re: Paper Money with an Expiration Date
#12Isn't most wealth hoarded in non-currency investments? How might this effect those?
yup, this type of "expiring money" would just lead people to store wealth elsewhere. You could argue that this has already happened with long term low interest rates. I think a big part of the continued stock market and real estate bubbles is that interest rates are so low that there's a real disincentive to store cash in the bank, so folks put their wealth into houses and stocks.
Also, since when did "saving" become "hoarding"? Saving is a very important part personal financial wellness and business investment. Our goal should not be incentivizing people to spend money as quickly as they make it.
Re: Paper Money with an Expiration Date
#13Earlier quoted context omitted.
Yes, it's essentially the same as inflation. Although this scheme does open the possibility of having some lesser dollar that's statutorily inflated while perhaps the greater dollar retains its value. That might make it possible to throw a massive slug of stimulus into the economy without increasing the money supply.
I would think the "easier" way of doing this is Federal Reserve dollars, issued (in Fed issued deposit accounts) at the start of a calendar period with the explicit and clear understanding to accountholders that these funds evaporate at the end of the calendar period (EBT/food stamps come to mind; depending on the state, your EBT/food stamps funds expire after about a year if unused). I'm unsure how you get around fo…
Who would want to be left holding the bag with the expired "dollars" at the end of the period? I imagine they would trade at a substantial discount from the beginning, being dollars in name only.
Re: Paper Money with an Expiration Date
#14So what is to stop someone from depositing the near expiration date money into a bank and then withdrawing it right away?
In France, when people deposit more than 10k€, the bank has to notify Tracfin, the service of the French Ministry of Finances that fights money laundering. And you have to be able to explain where the money is coming from. Most of the time, people with large amounts of cash are workers (skilled construction workers...) that are able to get a significant part of their income in cash and do income tax avoidance. Or cri…
Sure, but if this scheme was implemented, then the people depositing and withdrawing their money are going to be people who would normally keep their money in banks and are NOT trying to launder or avoid taxes.
If they have to explain where the money came from, they can just say “it is the cash I withdrew a few months ago, here is the transaction number”
Re: Paper Money with an Expiration Date
#15Earlier quoted context omitted.
I would think the "easier" way of doing this is Federal Reserve dollars, issued (in Fed issued deposit accounts) at the start of a calendar period with the explicit and clear understanding to accountholders that these funds evaporate at the end of the calendar period (EBT/food stamps come to mind; depending on the state, your EBT/food stamps funds expire after about a year if unused). I'm unsure how you get around fo…
Who would want to be left holding the bag with the expired "dollars" at the end of the period? I imagine they would trade at a substantial discount from the beginning, being dollars in name only.
I think you'd find most people would spend every penny before the funds expire. Anyone who doesn't is likely not too concerned about the funds expiring.
I don't think we can say for sure without a proper experiment (although if anyone can get their hands on EBT account spend data in aggregate, that would seem like a path to some signal, considering the financial condition of those who rely on those benefits).
Re: Paper Money with an Expiration Date
#16If people know when the money will expire, they'll accept it at a lower and lower value as it approaches its expiration. Money that will expire tomorrow will be worthless. I think a better way would be to continually reduce all (digital) accounts by some rate. Say you want 1% depreciation per year. At the end of the year, every bank account balance is multiplied by x0.99. The "money" evaporates equally for everyone at the same time. In any case though, while technocrats might like the sound of all of this, the plebs (aka those of us without political power) are likely to be less enthusiastic.
Re: Paper Money with an Expiration Date
#17What concerns me about his idea is that businesses would be less incentivized to take payments if your money was closer to expiration. This could lead to situations where my dollar is worth significantly less near expiration than someone else's dollar that just got stamped. In this respect, businesses get screwed because the money that they just accepted is slowly deflating in value. Expiring money basically incentiv…
I think this is negated by the fact that the expiration date resets when the money is exchanged hands.
Re: Paper Money with an Expiration Date
#18So what is to stop someone from depositing the near expiration date money into a bank and then withdrawing it right away?
The banks charge a fee for deposits that reset the expiration.
Re: Paper Money with an Expiration Date
#19The fed has recently said they aren’t going to try and prevent inflation any longer - they think that acting aggressively to prevent inflation before it hits has actually hurt the economy. So, perhaps there is something to this logic. But I will say, in many ways we have the opposite problem right now. Too much money chasing too few good opportunities for a return has led to things like SoftBank, WeWork and many othe…
The most obvious answer would be to give money to people who need it to make rent, go back to school, buy porn, etc. Compared to the complete collapse of the economy, pretty much any stimulative use is preferable.
Re: Paper Money with an Expiration Date
#20What concerns me about his idea is that businesses would be less incentivized to take payments if your money was closer to expiration. This could lead to situations where my dollar is worth significantly less near expiration than someone else's dollar that just got stamped. In this respect, businesses get screwed because the money that they just accepted is slowly deflating in value. Expiring money basically incentiv…
Stated more generally, it breaks the concept of fungibility. One unit of currency would no longer be interchangable with another unit of currency. This makes it harder to use because now each bill has to be inspected before acceptance.