[HN Gopher] What if money expired?
___________________________________________________________________
What if money expired?
Author : rlnorthcutt
Score : 81 points
Date : 2023-11-16 19:34 UTC (2 days ago)
(HTM) web link (www.noemamag.com)
(TXT) w3m dump (www.noemamag.com)
| rlnorthcutt wrote:
| An 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.'
| bogantech wrote:
| > 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
| garrickvanburen wrote:
| Grain is quite stable under the right conditions (dry, cool),
| which is one of the reasons there can be a futures market for
| it and sales can happen over the winter and even the spring
| following a harvest.
|
| It wouldn't surprise me if the origin of currency began with
| grain.
| analog31 wrote:
| ... and possibly with futures. A clay tablet promising
| delivery of grain.
| ToucanLoucan wrote:
| 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, 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. We have tons of
| mechanisms to move money "down the hierarchy" as Dr. Peterson
| would say, but the problem is all of our politicians and media
| are owned by the very rich, and so taking money from the very
| rich is not on the table, which is how you do that. So we're
| left with this entire group of two professionals scratching
| their heads as to how we solve the problem of "the rich have
| too much money and the poor don't have enough" without having
| the rich give the poor money, which rather predictably lands at
| "we've tried nothing and we're all out of ideas."
|
| I'm not even necessarily arguing pro or con here (though if
| you're curious, I'm extremely pro) I'm just saying that the
| rich accumulating too much is doing exactly what economists
| have always said it will do: it stalls the economy, and it will
| continue to do that. No amount of thumb on the scale by the
| rich will change this fundamental fact, and even _some of them
| are saying this._ If you totally strip mine the consumer base
| in the never ending pursuit of number-go-up, eventually you
| have no one left to sell your products to and then the entire
| game is over.
| monero-xmr wrote:
| It's just too impractical. As a business I won't accept
| expiring money, unless when it's paid to me it converts into
| real money. But if that's the case then everyone will either
| have their own "business" or be friends with someone with one
| in order to convert it to real cash. People already easily
| avoid the restrictions on foodstamps / SNAP by purchasing and
| reselling for cash. An interesting idea but totally unworkable.
| numtel wrote:
| Uh, our money does already expire. It's called inflation.
| abe_m wrote:
| 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.
| latchkey wrote:
| 2% is an entirely made up number though.
|
| "The 2 percent target widely adopted by central banks today
| originated from New Zealand, and surprisingly it came not
| from any academic study, but rather from an offhand comment
| during a television interview."
|
| https://www.cfr.org/blog/history-and-future-federal-
| reserves...
| tiredofleftist wrote:
| Quoting. "those in favoured positions, close to..."
|
| Add: "Investment is the production of capital goods, and the
| production of capital goods involves consumption."
|
| and: "Are those countries flourishing as a result of local
| inflation? It doesn't seem"...so
|
| ...Question I have: "This disinflation, i.e. near or almost
| deflation, been first contested - because some things
| actually became truly expensiver, but to determine inflation
| you did not need to calculate it as an average?", i want to
| ask.
| rlnorthcutt wrote:
| 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.
| brookst wrote:
| 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.
| Retric wrote:
| 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.
| brookst wrote:
| That's true, but how is it different from nonlinear rates
| of return on bonds of varying lengths?
|
| Changing the way money enters the system is interesting
| for sure, but orthogonal to whether expiring money is
| just inflation by another name.
| LouisSayers wrote:
| 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.
| lisper wrote:
| > 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.
| lottin wrote:
| 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.
| lisper wrote:
| > consumption being the opposite of saving
|
| No. The opposite of saving is _spending_. You can spend
| on capital as well as consumption. Inflation only
| devalues _cash_ , i.e. money you keep in your mattress.
| You can avoid inflation by either consuming _or_
| investing, both of which help keep the economy humming
| along.
| lottin wrote:
| 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.
| lisper wrote:
| 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 an economy, to encourage
| people to produce things that others want in exchange for
| other people producing things that they want.
|
| Honestly, how could anyone possibly not understand that?
| lottin wrote:
| 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.
| lisper wrote:
| > 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.
| lottin wrote:
| 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.
| tiredofleftist wrote:
| Some leftists always saied that (i'm tired of):
| "Hoarding/saving for long periods of time is bad." and call
| themselves up, "because it discourages people from taking
| risks by putting resources to productive use."
|
| I think that named a problem.
|
| Think about something like "Measurement Importance" in
| terms of the "level of competence in the handling of the
| vehicle", so to speak ?
|
| So how is your MI as high roller ? Think some people have
| not only accounts for that, but alghorithms, nor ? ^^
| _0ffh wrote:
| >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.
|
| That's happening even now with inflation, even if the
| mechanism is less obvious.
|
| It's called the Cantillon Effect.
| genman wrote:
| The question then becomes - when is the money created? Is it
| created when it is issued by a (central) bank or is created
| when an exchange (for value) takes place?
|
| (the later has an interesting side effect as it would
| incentive to make transactions legal)
| paulddraper wrote:
| "The money keeps moving, in a circle."
|
| - Mac McDonald, It's Always Sunny in Philadelphia
| stickfigure wrote:
| It won't change the way people think about money, but it will
| certainly change the way they think about _your_ money. That
| is, they 'll stop using it and start using someone else's
| money (bitcoin, Euros, whatever) that doesn't expire.
| trompetenaccoun wrote:
| Yes but they want more. Authorities can't print endlessly,
| inflation would get too bad and apart from the danger of
| economic collapse, ordinary people do notice when the
| purchasing power of their money rapidly depreciates, even when
| they don't fully understand why. In comes CBDC and the
| realistic ability to make this "free money" stamp idea a thing
| at scale. They could give the tokens an expiry date as well,
| Chinese authorities have proposed such a thing.* Or void
| certain ones while leaving others untouched. For example if you
| were to take part in an illegal trucker protest, poof go your
| savings.
|
| *https://www.econ.iastate.edu/ask-an-economist/why-would-
| chin...
| saintkaye wrote:
| To be fair, we tried it when people had money on
|
| _insert any crypto exchange name_
|
| The results weren't great.
| erikig wrote:
| This also reminded me of the "Aaand it's gone" meme from South
| Park https://youtu.be/jEBnrzNuUSA
| swader999 wrote:
| Options?
| pphysch wrote:
| That is the digital economy of the future. Tagged credits, some
| with expirations and other constraints (perhaps geospatial).
|
| It's the only reasonable way to implement something like UBI:
| give everyone X "food credits" and Y "housing credits" each week.
| There would still be fraud and "credit laundering" to get around
| the expirations, but the overall waste would be tiny compared to
| the legacy finance system.
| zmgsabst wrote:
| Do you have a study showing EBT cards are more effective and
| reduce fraud compared to direct cash subsidies?
| hakfoo wrote:
| The problem isn't a lack of expiration, so much as it is
| relying on commercial middlemen.
|
| Nationalize the real-estate and you create a monopsony for
| housing credits. Open up state-run distribution centres that
| accept the food vouchers, and only redeem them there.
|
| The laundering/cashout concept relies on someone qualified to
| accept the credits and get real money back from the state.
| Stereotypically, this was a shady bodega or landlord who would
| fudge the books to claim they had enough sales to cover the
| vouchers they bought for 20% of face value. Going to direct
| fulfillment means they fall out of the loop: there's nobody[0]
| who can give you anything for the voucher except for a can of
| corn.
|
| [0] Yes, someone might be willing to buy up vouchers if they
| wanted a LOT of cans of corn, but the logistics and difficulty
| of converting that to real cash means that it's not going to
| scale. It might surge during crisis events, where the cash
| price of a staple suddenly skyrocketed, but a voucher
| denominated in grams/litres/bushels held value.
| Throwfi44 wrote:
| 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.
| thicknavyrain wrote:
| It's remarkable how many problems seemingly come back to Land
| Value Taxation.
| ysofunny wrote:
| maybe the only real technical problem is "whose is that?"
| scotty79 wrote:
| If nobody is to he found to tax then you can just take the
| land. Super lax version of use it or loose it
| genman wrote:
| Actually no. Expiration of money and inflation can exist
| simultaneously.
|
| Expiration of money is an end of life cycle event of individual
| bills - it affects certain lump sum of money that will become
| void in corpore. The nominal value of the money will remain the
| same.
|
| Inflation is continuous devaluation of nominal value of all the
| money regardless of individual bills.
|
| If we discuss expiration of money then we should consider what
| constitutes as money creation - when will the countdown start.
|
| Is the money created when it is issued by a (central) bank or
| is created when an exchange (for value) takes place?
|
| With the first idea a single transaction can contain money with
| multiple expiration dates and as such the money with longer
| expiration date will immediately become more valuable and the
| nominal value of the money is not universal anymore.
|
| The second approach avoids this problem - the nominal value of
| the transaction is always the same. This has an other
| interesting side effect as it would incentive to make
| transactions legal.
|
| But what Gesell describes is mandatory deflation of value of
| money by insisting a tax on money - a monetary money holder
| tax, kind of. Whoever holds the money is obliged to pay the tax
| - if you put your money into bank then it would be the bank. So
| his idea is considerably different.
| dagaci wrote:
| Inflation serves the purpose. But more directly we also have
| various fractional reserve systems of money creation through
| debt.
|
| Bank creates credit (money), often with timed terms of
| repayment
|
| As you repay, that credit is gradually removed from the
| financial network.
| stickfigure wrote:
| These seem easy to game, and would just generate a (pure
| dead-weight) industry of money persistence optimization.
| Alternatively, people would ditch their <expiring currency>
| and buy <some other country's more stable currency> instead.
|
| The whole thing sounds incredibly dumb.
| ysofunny wrote:
| > Expiration of money and inflation can exist simultaneously.
|
| yes, but we are also expected to pay: rent, taxes, and
| subscription (utility) services simultaneously
| mikewarot wrote:
| I carry around a piece of hard currency (1901 Silver Dollar) to
| remind me of what real money is like... it's always been worth
| about 4 retail gallons of gasoline. I expect that trend to
| continue for at least another decade.
|
| Soft money, tends towards zero, as you said.
| grogenaut wrote:
| How do you get a gas station attendant to give you $16 worth
| of gas on the spot for a $1 coin. No intermediaries.
| edgarvaldes wrote:
| I think the comment is about the equivalence, not about
| being ready to perform the real transaction.
| Tade0 wrote:
| 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.
| 4death4 wrote:
| 200 francs isn't going to buy you shit in any type of
| inflationary crisis situation.
| jjgreen wrote:
| ... and what did that produce? The cuckoo clock
| lottin wrote:
| According to the internet this coin is worth between $45 and
| $2150, depending on the condition, but its weight in silver
| is only worth $18.40 [1]
|
| [1] https://www.ngccoin.com/coin-explorer/united-
| states/dollars/...
| mikewarot wrote:
| I don't mess with coin collecting, just the melt value.
| whartung wrote:
| I've actually been casually looking for a Carson City dollar
| to carry around, just as a keepsake. Trick is finding one in
| bad enough shape to lose much of its numismatic value (since
| my intent is to carry it in a pocket with keys and other
| horrors) but retain the fact that it is, indeed, a CC dollar.
| hcks wrote:
| Yeah but inflation also affects rich people you see. With this
| we can have selective inflation but only for proles
| scotty79 wrote:
| Not really. Rich people don't sit on cash. They have their
| money either in safe staff that has real value so it isn't
| affected by inflation (like real estate or gold) or some
| gambles like stock or other stuff.
|
| When rich people use cash it's usually borrowed as needed.
| amelius wrote:
| > Money do expire! There is inflation...
|
| If someone put 1 dollar on the bank in 1900, then what would it
| be worth now, considering both inflation and interest?
| gretch wrote:
| Well it'd still be worth "1 dollar". But that's the problem
| with talking about the value of a dollar - the typical unit
| of measurement is the dollar itself.
|
| However, in 1900 you used to be able to buy 70 pounds of
| potatoes for $1. Now you can buy 1 potato.
|
| So yeah I would say that's pretty expired.
|
| https://historycollection.com/30-things-you-could-buy-
| for-1-...
| saurik wrote:
| So. that isn't "money", that's "debt"; and, in fact, the
| article covers this...
|
| > Money could be deposited in a bank, whereby it would retain
| its value because the bank would be responsible for the
| stamps. To avoid paying for the stamps, the bank would be
| incentivized to loan the money, passing on the holding
| expense to others. In Gesell's vision, banks would loan so
| freely that their interest rates would eventually fall to
| zero, and they would collect only a small risk premium and an
| administration fee.
| dontwearitout wrote:
| This only goes back to 1913, but says $1 in 1913 is worth
| $30.65 today. That's pretty rough.
| https://www.minneapolisfed.org/about-us/monetary-
| policy/infl...
| temporarara wrote:
| 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.
| Throwfi44 wrote:
| And is that really a problem?
|
| Infrastructure ages and needs to be refreshed. Look at NYC,
| how old "land improvements" get stuck.
| WhereIsTheTruth wrote:
| 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
| phendrenad2 wrote:
| Land cannot be owned! There is property tax.
| 2OEH8eoCRo0 wrote:
| 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.
| 2OEH8eoCRo0 wrote:
| 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.
| cpursley wrote:
| It does, it's called inflation.
| terminous wrote:
| So you came to this thread and saw this comment made 18 minutes
| before yours, with replies to that comment, and just reposted
| the same irrelevant, dismissive, low-effort comment? Did you
| think it needed to be said twice?
| https://news.ycombinator.com/item?id=38294857
|
| On an unrelated note, HN rules forbid me from implying that a
| commenter has not read the article.
| cpursley wrote:
| I originally opened the article and didn't and comment until
| later. Real time messages would solve that.
| demondemidi wrote:
| the number if plays it takes to game this out is making my head
| creak. my paycheck expires in a week so i have to spend it
| immediately on food and utilities. i have no job security so i'm
| always terrified. but everyone has to spend their money asap so
| job security is increased. however there aren't enough people to
| service all of the needs because savings would have created a
| buffer if it existed, but now we have too much demand and way too
| little supply. so people start stealing and killing from each
| other and the whole world descends into chaos.
|
| let me go prompt DeathByAi.gg with this scenario.
| seanmcdirmid wrote:
| Even normal money expires via something other than inflation. I
| have a bunch of CHF that can only be exchanged at the Swiss
| national bank now. No idea if I'll ever be able to do that.
| t8sr wrote:
| This might not help you if you're outside the country, but I
| believe the railway ticket office and the post office will also
| accept them.
|
| An anecdote: few months ago, my partner actually exchanged a
| 100 CHF note in the big SNB building on Burkliplatz, and it's
| essentially a Jason Bourne scene (although that wasn't really
| Zurich in the movie). You walk in, a guy speaking with a
| stereotypical Bunzli accent takes your name, then brings you
| individually into an office where you can hand your gross old
| bank note to a man wearing a suit. Next to arguing about chess
| in German over a beer on the train, this is the most Swiss
| experience available.
|
| EDIT: Maybe more to the point, like everything else in
| Switzerland, apparently you can resolve this by sending a
| registered letter. In this case, if you mail them the banknotes
| at the Cashier's office in Bern, along with your account
| information, they will wire you the money.
| hakfoo wrote:
| Note that there's a phase even beyond that where the notes
| are completely unredeemable.
|
| At a numismatics fair, I saw a 10 CHF note in a stack priced
| at 4 USD, and thought "Woo! Free money!"
|
| However, it was a 5th series note, which were fully
| demonetized in 2000.
| seanmcdirmid wrote:
| I'm not in Switzerland or even Europe, however. I just have
| some cash left over from when I closed an account in 2011,
| actually, it's around 5K or so. When they retired the
| currency, they only now allow exchanges at the Swiss national
| bank. I didn't hear that I could do it by mail, will check
| that out. Otherwise a family vacation to Bern might be nice.
| matt3210 wrote:
| If money expired ID be living lavishly instead of in an RV and
| hoarding cash
| newscracker wrote:
| Inflation, negative interest rates and the impending introduction
| of CBDCs (which will bring along more purpose limited and
| expiring vouchers too) all cause or will cause money to expire.
| In other words, these are tools to prod people to spend now or
| invest somewhere now to keep the consumption economy going.
|
| Depending on the country and other events, entire fiat currencies
| or specific denominations of fiat currencies can expire and
| become color paper worth almost nothing. We've seen this many
| times over the last several decades that fiat currency (not
| backed by gold or other physical asset) has existed.
|
| It's all about trust from every angle and every motive.
| TheBlight wrote:
| We can be sure when CBCDs come into existence they will feature
| demurrage of some form.
| agumonkey wrote:
| And how much of adult life is the derivative logic of
| expirations.
| JumpinJack_Cash wrote:
| There should be an expiration sort of penalty for every KYCed
| account larger than a 0.0000x% of GDP. Current, savings,
| brokerage, insurance or whatever.
|
| Beyond a certain amount of wealth and cash in the bank people and
| institutions stop thinking in an entrepreneurial way and start
| thinking about the economy at large, or predicting the economy at
| large.
|
| And GDP is very much like performance anxiety, when everybody is
| thinking about that, then it becomes very difficult to get it up.
| Or you do get it up but it's not nearly as rewarding because it
| becomes an artificially inflated number without any connection
| with actual welfare of the population and developement of a
| country.
| jonnycomputer wrote:
| Money is a contract with the state. It expires with the state.
|
| Physical paper bills also do wear out.
| https://www.washingtonpost.com/business/interactive/2023/old...
| mikewarot wrote:
| Soft money is a contract with the state, hard money doesn't
| expire. A $1 silver dollar coin from 1901 is worth a heck of a
| lot more than a $1 bill from the same time.
| jonnycomputer wrote:
| The value of that $1 silver coin is either the market value
| of the silver, or the sentimental value to collectors. It not
| functionally money anymore.
|
| The notion of "hard money" is a joke.
| latency-guy2 wrote:
| > The notion of "hard money" is a joke.
|
| Why? I don't even think modern Keynesians would argue
| against commodities this confidently, maybe MMT's would?
| anonporridge wrote:
| Hard money can expire, sort of.
|
| Hard money is a contract with generalized civilization that
| only has value so long as civilization continues to organize
| and complexify our resources. A $1 silver dollar coin still
| has a lot of objective value because civilization still
| provides lots of good and useful stuff for us to consume.
| jmclnx wrote:
| In a way we kine of have it, it is oil or really energy. And
| inflation is a factor of energy supply.
|
| But if money expired, I think people would go back to Gold and
| Silver as a base of wealth with "money" being worthless.
| OscarCunningham wrote:
| The article is just making stuff up here:
|
| > Total U.S. bank deposits are around $17 trillion. Meanwhile,
| total wealth in this country, including nonmonetary assets, is
| around $149 trillion, more than 63 times the total available
| cash. The gaps between these numbers are like dark matter in the
| universe -- we don't have a way to empirically account for it,
| and yet without it our understanding of the universe, or the
| economy, would collapse.
|
| There's no reason you would expect these numbers to be the same,
| and nothing relies on them being the same.
| Jevon23 wrote:
| Complete insanity.
|
| Don't plan for the future. Don't delay gratification. Never save
| up enough money that you're allowed to have a taste of true
| freedom. Always be precarious, always be dependent on your boss
| for the next handout, lest your food and shelter be in jeopardy.
| Don't step out of line, lest that handout be jeopardized.
|
| Keep your hands off my bank account.
| argiopetech wrote:
| Too late - these ideas have, in a backward sort of way, been
| implemented in the form of quantitative easing, aka inflating
| away your savings.
| lotsofpulp wrote:
| >Keep your hands off my bank account.
|
| Your bank account balance is of little importance with a fiat
| currency. Banks themselves are superfluous now that money does
| not have to be represented by cash and thus needs no vault.
|
| Maybe you mean "Keep your hands off the purchasing power of the
| currency in my bank account".
| kylebenzle wrote:
| "Your" bank account? Only so long as you don't step out of line
| or say the wrong thing. Access to "your" money is a privilege
| granted by the state and large corporations you are awarded
| only so long as you are making money for they system. What you
| seem to be upset about is EXACTLY the system we have now.
|
| Roughly, state backed currencies seem to inflate by about an
| order of magnitude each generation, a nickle 40 years ago will
| buy what $.50 buys today. When I was a kid, soda was $0.25, now
| $2.50 for a bottle of pop is not uncommon, state money does
| expire and whats in your bank account can be taken away
| anytime.
|
| Thank god we've had a solution to this problem for over a
| decade now but it might take another decade still for normal
| average people to catch on, I'm still surprised the HN crowd is
| so far behind in this regard :(
| ForkMeOnTinder wrote:
| "Another decade" may be optimistic. Money is so core to many
| people's identity and sense of purpose that they block
| themselves off from considering any change to the familiar
| status quo, even when they're able to recognize the problem
| that needs solved. This might be one of those times where the
| older generation needs to die off, and its ideology with it,
| before new ideas can begin to flourish.
| genman wrote:
| No actually, at least by the idea of Gesell.
|
| His idea was to put a kind of tax on money and the responsible
| to pay this tax is on the holder of the money.
|
| As such you could still put your money into a bank and free
| yourself of this responsibility and the bank on the other hand
| is highly motivated to loan the money out as fast as possible
| to relive itself from the responsibility.
| znpy wrote:
| Who would this hurt, anyway?
|
| Rich people keep their "money" in the form of socks, bonds and
| properties anyway.
| zmgsabst wrote:
| I always think things like this are amusing:
|
| Poor people "failing" the Marshmallow Test is taken as not
| having impulse control -- but I'd argue studies fail to account
| for different life experience in people taking your
| "marshmallow" away, no matter what they promise.
|
| This is stealing marshmallows on an industrial scale.
| goodpoint wrote:
| Absolutely spot on. When someone is used to an unsafe
| environment, eating the marshmallow immediately is a
| perfectly rational behavior.
| friend_and_foe wrote:
| 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.
| Zigurd wrote:
| Might be the wrong question. Humans expire. Inheritance taxes,
| and shorter copyright expiration would solve many of the same
| problems that expiring money claims to address. As many others
| have noted, inflation already is a strong disincentive for
| hoarding money.
| outside1234 wrote:
| People would buy gold or other money
|
| We don't want that
| latchkey wrote:
| This is honestly the winning comment. Water flows through the
| path of least resistance.
| al_be_back wrote:
| Unless you go back to Bartering, Money can't expire, but currency
| can, such as when an Empire/Country/Political union
| collapses/arises, new currencies appear. A more recent case being
| the Euro currency - many EU countries dropped their currency, for
| Euro. In the process there were losses and gains, since there may
| not be cross-market consensus in value-conversion. For instance,
| Real Estate may suddenly be more expensive, likewise groceries,
| but salaries stay the same.
|
| What you could do though (i'm not an economist) is to
| periodically introduce Monetary and Fiscal Policies that
| reset/adjust the economy (outside a government's influence e.g.
| Central Bank + Supreme Court).
| Geee wrote:
| Insanely bad idea. People will always try to store their wealth
| in inperishable goods. People will get rid of their perishable
| money and buy property. Which is what happens now already,
| because of inflation. When property becomes a "money" in a store
| of value sense, it will become overvalued, and people can't
| afford houses for living anymore.
| LouisSayers wrote:
| > People will get rid of their perishable money and buy
| property
|
| Which has rates to pay - assuming the market stands still that
| property is actually a liability.
|
| Storing money in gold is probably a better example, until we
| find a way to cheaply create it...
| knorker wrote:
| And with going off the gold standard, it came to pass. Right?
|
| Even his percentage of cost to hoarding money is in the ballpark
| of current inflation.
|
| This was written in a time before inflation, where hoarding cash
| was not stupid. Today it is. We don't need the incentive to
| increase the velocity of money.
|
| Well, I say that, but too many people just have their savings in
| a cash account. Sometimes not even a saving account, but an
| account with no interest at all.
|
| But then again that just means that the bank invests it in one
| way or another.
|
| Short of physical cash, there's not really any way to keep money
| being "unused".
| motohagiography wrote:
| 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 exactly what happens to
| everything else in an inflationary environment. Hedges include
| gold and metals, land, art and alternative assets, or like Wiemar
| [0], people just spend devalued money on gambling and
| prostitution. If history is any indicator of what happens when
| you debase a currency, I'd say the best hedges are a second
| passport and ammo.
|
| [0]
| https://en.wikipedia.org/wiki/Weimar_culture#Berlin's_reputa...
| haolez wrote:
| That's a very good way of explaining this.
|
| Here in Brazil the previous generations have a golden rule that
| you must store value in land, not in money. And Brazil has had
| tons of inflation and weak currencies in the last decades (with
| all the poverty and stagnation that it brings).
| gumby wrote:
| 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)
| temporarara wrote:
| If you buy forest or agricultural land you are pretty safe.
| The worst thing that can happen in civilized places is that
| a big entity forcefully buys it away from you for "reasons"
| and you don't get as much profit as you would like, but
| nonetheless then you can just buy more land somewhere else.
| Owning developed land is just a liability in many places
| since you've got to pay taxes and all kind of annual fees.
| It's business at that point and not just owning land (your
| business instincts don't have to be nearly as good when
| dealing with forest and agricultural land).
| alittleotbut wrote:
| Expire !? For example, let's think about a solid basic land
| reform, and every owner now has to pay 5% of the immobile-
| value on it, as an annually tax.
|
| And after twenty years i don't have paid the debt for an
| apartment or house, two-times?
|
| But, sure so americans try to sell us houses builded from;
| chipboard, insulating wool, plasterboard and roofing
| cardboard?
|
| i am questioning this... in terms of: "money was to last
| longer than the expiring and perishable things" and "The
| real estate bubble created by low interest rates"
|
| Cos for me it seem that it ignored grief and "people" for
| -to be objective something the OP named "interest", i won't
| sound offending but it seem to be a mistake (both..all
| three...)
|
| regards...
|
| edited: sry "alittlebut" i mistaken you for the op p-:
| haolez wrote:
| They probably preach that because they never saw land
| expire in decades, but they've seen money expire a few
| times.
| bombcar wrote:
| A 1% land tax expires the land in 100 years.
| CapitalistCartr wrote:
| 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%.
| thriftwy wrote:
| What is the utility of a piece of a forest somewhere in
| Brazil? Assuming you do not deforest it.
| mo_42 wrote:
| > 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 phenomenon that
| evolved over several stages. I think there's so much confusion
| about money because people refer to different stages. If we
| wanted to have really stable money, we could fix prices of
| goods. But I guess this doesn't make much sense in a dynamic
| economy (how do we compare a basket of goods from 1920 with one
| in 2020 which includes iPhones).
|
| > The real estate bubble created by low interest rates is
| exactly what happens to everything else in an inflationary
| environment.
|
| I wouldn't be so sure whether there's a real estate bubble. I
| think our current situation is different from the years before
| 2008 where people where actually buying houses in expectation
| to sell them at higher prices one year later. I would rather
| explain the real estate prices as adaptations of net present
| values to changes of the interest rate.
|
| > Hedges include gold and metals, land, art and alternative
| assets, or like Wiemar [0], people just spend devalued money on
| gambling and prostitution.
|
| I don't see how a reference to prostitution in Berlin in the
| 1920ies supports your economic argument. I guess the situation
| in the Weimar Republic is more complex than simply explaining
| inflation with printing of money. (As far as I know, monetarism
| was abandoned by major central banks long ago. The German
| Bundesbank tried it quite long though, not surprisingly.)
|
| Germany lost WWI and had to pay for reparations. So it had to
| produce goods for which they didn't get foreign currency.
| Before the inflation really kicked in, the Reichsmark devalued
| already. Basically, the central bank didn't have any currency
| reserves to counter this. So everything imported became much
| more expensive. It probably also didn't help that Germany had
| to take care of wounded soldiers that weren't fully part of the
| workforce. In sum, the production capacity was hindered but
| there was excess demand.
| motohagiography wrote:
| 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.
| mo_42 wrote:
| > 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...
| corethree wrote:
| 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
| now has 2 million dollars in paper bills representing nothing.
|
| This is why money is inflated deliberately. To keep the
| representation from getting too unrealistic. It incentives you
| to move your value into more realistic representations of
| value.
|
| In short money already does have an expiry date or something
| equivalent. It's inflation.
| thriftwy wrote:
| 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.
| corethree wrote:
| 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.
| uwagar wrote:
| i took 'paper' 20 quid note from i think 2015 to an exchange here
| in this asian country to turn it into $ and was told no 'sir' we
| dont take this note anymore, only 'plastic' 20 quid note. my 20
| quid note was valueless right here. of course i suppose i could
| go back to london and exchange it for a plastic 20 quid note.
| just saying.
| latchkey wrote:
| A couple other recent blog posts on the topic:
|
| https://blogs.worldbank.org/allaboutfinance/expiring-money-p...
|
| https://blogs.worldbank.org/allaboutfinance/expiring-money-p...
| throwaway81523 wrote:
| https://en.wikipedia.org/wiki/Demurrage_(currency)
| LinuxBender wrote:
| If money expired I would invest in freeze dried foods, fuel and
| land. What remains would be added as credit in utility services.
| Most businesses beyond that would never see a penny of my money.
| pelorat wrote:
| In 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.
| PopAlongKid wrote:
| Not that different in U.S. The older bills without modern anti-
| counterfeiting (colored threads, holograms, etc) already
| attract increased scrutiny (not exactly worthless, but heading
| in the same direction). I recently went to an In-N-Out with a
| $50 bill from around the turn of the century, and a manager had
| to be called over to inspect it.
| KomoD wrote:
| That's very different, it was inspected but you could still
| use it...? It was not invalid.
| captn3m0 wrote:
| There's 2 interesting implementations of money that do expire:
|
| 1. GNU Taler (going live next year I think?) has expiry attached
| to all signed tokens, to prevent the tokens (really EUR tokens
| signed by an issuing licensed entity, not blockchain/crypto
| bullshit) to promote it as a payment instrument instead of an
| investment.
|
| 2. CBDC does offer expiry as one axis. The Indian implementation,
| which is very early, has very little adoption is extended from
| e-RUPI which is a purpose delimited voucher-based money,
| primarily meant for social welfare schemes. I'm not 100% certain
| but this includes inbuilt expiry.
| chaostheory wrote:
| We already have inflation, but if governments want this then it's
| possible via CBDCs
| Tommstein wrote:
| A portion of it _is_ effectively always expiring: it 's called
| inflation.
| RecycledEle wrote:
| In America in 2023, everything is corruption.
|
| First, the wealthy would agree to complicated contracts with each
| other so they trade back and forth to avoid ever letting their
| money expire.
|
| Then my landlord would sneak into my home and swap my new money
| for her about-to-expire money.
|
| Then my employer would pay me with about-to-expire money by lying
| and saying they paid me that money long ago, and offer to pay me
| in fresh money if I worked a lot more hours and accepted a lower
| wage.
|
| I's still be where I am, unable to gather enough weapons grade
| material to get even with The System.
| owlstuffing wrote:
| Fiat money already DOES expire. It's called INFLATION. If you put
| all your investments in a savings account in 2008, your "money"
| would smell like a compost pit.
| CivilWart wrote:
| Inflationary expiration is not guaranteed though. Deflation is
| always a possibility.
| owlstuffing wrote:
| Historically, inflation dominates and ultimately collapses
| fiat currency.
| chrisbrandow wrote:
| It feels like there's a "Congratulations, you just re-invented
| the inheritance tax!" joke in here.
|
| But all snark aside, I think this is part in parcel with the
| general observation that money as a stored good has mostly
| negative impacts beyond some amount amount proportional to single
| digit multipliers of median annual income.
| randomname93857 wrote:
| I see, crooks look for new venues to rob people of hard earned
| money?
| MongoTheMad wrote:
| I already live in a world where money can expire in 60 to 120
| days.
|
| It's called a check, and hardly anybody accepts them anymore.
| ZeljkoS wrote:
| But the money _does_ expire, it is called inflation!
|
| Mainstream economist think inflation is good and recommend 1-3%
| for a healty economy. And inflation is more practical to
| implement than putting date stamps on the back of bills like the
| original idea in the article.
| seydor wrote:
| Inflation is a good implementation of this.
|
| The period of high inflation circa '70s was also the most equal
| economy of the recent decades. It's all been downhill from there
| LanceH wrote:
| If I were looking for a way to put myself under the thumb of some
| authority, great.
| theodric wrote:
| Money does expire: it's called inflation
| 6510 wrote:
| 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.
| friend_and_foe wrote:
| 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.
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