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What if money expired?

I keep a short(ish) list of things that if we didn't have them, the first thing we'd do is invent them. Things like:
  • police
  • democracy
  • money
I guess one of the corollaries to this is that if it made sense for something on the list to be done different than it is, we'd already be doing it that way. The Italian bancos that invented letters of credit didn't invent expiring credit. They didn't invent deposits lose their value if you don't spend them fast enough. The people who started minting coins never saw fit to mint them with expiration dates.

So I'm going to go with "probably a crackpot."
 
theprestige said:
I keep a short(ish) list of things that if we didn't have them, the first thing we'd do is invent them. Things like:
  • police
  • democracy
  • money
I guess one of the corollaries to this is that if it made sense for something on the list to be done different than it is, we'd already be doing it that way. The Italian bancos that invented letters of credit didn't invent expiring credit. They didn't invent deposits lose their value if you don't spend them fast enough. The people who started minting coins never saw fit to mint them with expiration dates.

So I'm going to go with "probably a crackpot."
Click to expand...

They also didn't invent things like deposit insurance in case they went out of business (in the 16th century Venetian sense of that). Pretty sure they didn't have 24 hour ATMs either. Maybe we perhaps expand on some of their original ideas.

I'm not sure "Expiring money" is going to work. Rich people will simply keep "investing" and acquiring "new money", while working folks will be "saving".

Also,, in the book Debt: The First 5000 Years , the author stipulates that currency started as a way to track minor debts we owe each other. That's why the original coins had the stamp of the king or whatever deity. To show that this debt was good for whoever held it. Not sure how much I buy that, but its an interesting idea and changes how we look at money.
 
dann said:
It used to be: 9,000-6,000 BC: Cattle as the First Form of Money
It was also more or less self-replicating.
Click to expand...

Are all mediums of exchange money? Are all trade goods money? Is the fruit bowl on my kitchen counter full of perishable money? Or is it full of apples that I paid for with money? Are the (electronic records of) funds remitted to the grocery store by my credit card company withering away in the store's bank account, just like the apples in my fruit bowl?
 
Donal said:
They also didn't invent things like deposit insurance in case they went out of business (in the 16th century Venetian sense of that). Pretty sure they didn't have 24 hour ATMs either. Maybe we perhaps expand on some of their original ideas.
Click to expand...
We have, of course. Hence the evolution of things like deposit insurance. But they did invent insurance in general, so maybe they were more on top of what's important than you think.
 
The Great Zaganza said:
they kinda are.
you are basically putting a tax on the future.
Click to expand...

Depends on myriad factors, starting with rate of return. My real estate transactions have all paid off nicely, more than doubling in value inside of a decade. That more than kept up with inflation, in spades.

Even a simple savings account or whatever, whose interest exceeds inflationary rates, pays the saver and provides a financial buffer, and allows the lender to hustle for a higher rate, all longish term gigs.
 
Thermal said:
Depends on myriad factors, starting with rate of return. My real estate transactions have all paid off nicely, more than doubling in value inside of a decade. That more than kept up with inflation, in spades.

Even a simple savings account or whatever, whose interest exceeds inflationary rates, pays the saver and provides a financial buffer, and allows the lender to hustle for a higher rate, all longish term gigs.
Click to expand...

you are proving the point.

it's basically impossible to participate in the real estate market unless you have extensive savings or other real estate.
In other words, the market is restricted, which is never a good thing.
 
theprestige said:
[*]police
[*]democracy
[*]money[/list]I guess one of the corollaries to this is that if it made sense for something on the list to be done different than it is, we'd already be doing it that way.
Click to expand...


Let's see:
1) What you call democracy is there to separate people from power, to hand over decision-making to people who decide in favor of capital. It obviously excels in doing just that.
2) Money is there to separate people from the wealth being produced in capitalism. It excels in doing just that: If you have no money, you starve.
3) And the police are there to make sure that people can't get hold of food, housing and whatever else they need. If they could, it would ruin the separation of people from what they need, money as the means to regulate this separation, and democracy as the way to make people hand over power to politicians.

So all three things do what they're supposed to do: maintain class society with a very small (and shrinking) minority of people with wealth and power on one side of the equation, and a very large majority of impotent as well as impoverished people on the other.
 
theprestige said:
Are all mediums of exchange money? Are all trade goods money? Is the fruit bowl on my kitchen counter full of perishable money? Or is it full of apples that I paid for with money? Are the (electronic records of) funds remitted to the grocery store by my credit card company withering away in the store's bank account, just like the apples in my fruit bowl?
Click to expand...


What is it about "used to be" that you don't understand?
 
dann said:
Let's see:
1) What you call democracy is there to separate people from power, to hand over decision-making to people who decide in favor of capital. It obviously excels in doing just that.
2) Money is there to separate people from the wealth being produced in capitalism. It excels in doing just that: If you have no money, you starve.
3) And the police are there to make sure that people can't get hold of food, housing and whatever else they need. If they could, it would ruin the separation of people from what they need, money as the means to regulate this separation, and democracy as the way to make people hand over power to politicians.

So all three things do what they're supposed to do: maintain class society with a very small (and shrinking) minority of people with wealth and power on one side of the equation, and a very large majority of impotent as well as impoverished people on the other.
Click to expand...

And I predict that if you tried to create a society that abolished or banned those three things, the very first thing your citizens would do is recreate those three things. They'd hoard private property as capital, and set up black markets to exchange goods and services amongst themselves. They'd establish lines of credit and credit tokens because straight barter is too awkward. They'd develop trade associations where every member in good standing gets a vote in the association's policies. They'd hire people to protect their stuff and uphold their community values.

Hell, the first thing you'd do is establish tormtroopers to crack down on all the stuff in the previous paragraph. You might not call them police, but police they would be.
 
The Great Zaganza said:
you are proving the point.

it's basically impossible to participate in the real estate market unless you have extensive savings or other real estate.
Click to expand...

Negative. Brokish at the start, fixer uppers and sweat equity. Took a long time, and expiring money would have killed that. Although in fairness, it seems a lot tougher in the starter home market today.

In other words, the market is restricted, which is never a good thing.
Click to expand...

Real estate is of course "restricted", like any other valuable property. You can't really give deeds to mansions away in boxes of Captain Crunch. It means you are going to have to bust hump to play in that game. Work it and reap, not stick out your hand and reap.
 
If money expired, the poor would have to turnover what they had quickly, never amassing enough to get ahead. Meanwhile, the rich play the fast turnaround games and still sit on the largest piles at any given time.
 
Thermal said:
If money expired, the poor would have to turnover what they had quickly, never amassing enough to get ahead. Meanwhile, the rich play the fast turnaround games and still sit on the largest piles at any given time.
Click to expand...

nope.

the poor already live hand to mouth.
 
I can sort of understand the desire to curb the huge accumulation of wealth and its inheritance, but I suspect the cost would greatly outweigh the benefit, and the desire to accumulate and pass on wealth would simply take some form other than currency.

I browsed the proposal linked, and for one thing it seems that other forms of value would not deteriorate, only money. Which means, one would assume, that people wishing to accumulate and pass on wealth would simply find other ways to do it, with investments and other property, as if they had not already figured that out.

The proposal is that one must pay in a certain interest to keep money fresh, but I did not in my cursory reading see to whom that interest would be paid. If I have to pay to keep my hundred dollar bill worth a hundred dollars, someone else is getting it.

Unless rotting money is renewed at the moment of each transaction, which would be a huge bureaucratic nightmare, it will become nearly worthless because the recipient of the money will be getting money that has already started going bad, with an ever-shortening period within which it can be used.

I think some of the theorizing in the article fails to see the important difference between providing certain benefits which deteriorate and making currency itself deteriorate regardless of its use. I can see the sense in some of the schemes mentioned, of stimulating spending and the like by giving people a chit, or an expense account with a predictable leak. Some budgets are done this way: spend it in some time frame, or it's gone. That's quite different from doing away with fungible currency, though.
 
Thermal said:
Negative. Brokish at the start, fixer uppers and sweat equity. Took a long time, and expiring money would have killed that. Although in fairness, it seems a lot tougher in the starter home market today.



Real estate is of course "restricted", like any other valuable property. You can't really give deeds to mansions away in boxes of Captain Crunch. It means you are going to have to bust hump to play in that game. Work it and reap, not stick out your hand and reap.
Click to expand...

But without amassed wealth, mansions would be a whole lot smaller.

Historically, societies would find ways to regularly destroy large amounts of wealth to undo the damage done by wealth inequality.
Lavish grave goods are an example.
Debt amnesties every seven years are another.
and the most effective of all: wars.

We are living in an extremely unusual time where families have been able to amass wealth over multiple generations.
 
The Great Zaganza said:
nope.

the poor already live hand to mouth.
Click to expand...
Some do, some don't. It's possible to be poor when young and just starting out. It's possible live cheaply - because you can't afford to live better and save at the same time - while you develop marketable skills and save up some capital for future investment in yourself and your prospects. Expiring money would force even those folks to live hand to mouth, with no hope of ever getting ahead of where they started out.
 
The Great Zaganza said:
But without amassed wealth, mansions would be a whole lot smaller.

Historically, societies would find ways to regularly destroy large amounts of wealth to undo the damage done by wealth inequality.
Lavish grave goods are an example.
Debt amnesties every seven years are another.
and the most effective of all: wars.

We are living in an extremely unusual time where families have been able to amass wealth over multiple generations.
Click to expand...

We are living in an extremely unusual time where the number of middle-class families that have been able to accumulate wealth is much higher than the historical norm.

It's actually extremely usual, for all time periods in human history, for (some) families to be able to amass wealth over generations. What we're seeing now is the commoditization of that behavior, and I don't think it's a bad thing.
 
theprestige said:
Some do, some don't. It's possible to be poor when young and just starting out. It's possible live cheaply - because you can't afford to live better and save at the same time - while you develop marketable skills and save up some capital for future investment in yourself and your prospects. Expiring money would force even those folks to live hand to mouth, with no hope of ever getting ahead of where they started out.
Click to expand...

which is the definition of living hand-to-mouth.

thanks for supporting my point.
 
Most people don't amass wealth by hoarding money. They either invest it in things like equities or property, or in themselves via things like education. I don't understand what would be accomplished by making money expire. Probably just result in asset bubbles, people with large savings accounts would just buy gold or real estate.

ETA: a funny thing is... money does essentially expire via inflation. If you do nothing with it, it slowly loses its value. Generally speaking, the poorer the country, the more inflation their currency suffers.
 
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theprestige said:
We are living in an extremely unusual time where the number of middle-class families that have been able to accumulate wealth is much higher than the historical norm.

It's actually extremely usual, for all time periods in human history, for (some) families to be able to amass wealth over generations. What we're seeing now is the commoditization of that behavior, and I don't think it's a bad thing.
Click to expand...

The time when the middle-class accumulated the wealth is over since Reagan.
we are now in a more unequal society than under the Ancien Régime.
And the historical cure for that is to put the mansions of the rich to the torch.
given how much the rich pay for personal security, and keeping wealth offshore, they are well aware of that.
 
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The Great Zaganza said:
which is the definition of living hand-to-mouth.

thanks for supporting my point.
Click to expand...

I'm explicitly refuting your point. There's being so poor that you can't save and survive, and that's different from being so poor that you have to live very cheaply in order to save and get ahead.

Expiring money would force everyone from the second category - the category you don't recognize - into the first category - the only category that you believe in. The existence of the second category undermines your point, and you should thank me for it.
 
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The Great Zaganza said:
The time when the middle-class accumulated the wealth is over since Reagan.
we are now in a more unequal society than under the Ancien Régime.And the historical cure for that is to put the mansions of the rich to the torch.
given how much the rich pay for personal security, and keeping wealth offshore, they are well aware of that.
Click to expand...

I'd love to see any sort of actual evidence of that.

In reality, the middle class of America is richer now than it has ever been.

That the very wealthy are even richer is also true, and have an even higher slice of the total wealth.

The working class OTOH are getting ******. Anyone who missed out on buying a home back when it was affordable is pretty much screwed.
 
lobosrul5 said:
I'd love to see any sort of actual evidence of that.

In reality, the middle class of America is richer now than it has ever been.

That the very wealthy are even richer is also true, and have an even higher slice of the total wealth.

The working class OTOH are getting ******. Anyone who missed out on buying a home back when it was affordable is pretty much screwed.
Click to expand...

I think he's talking about wealth disparity. The middle class today is wealthier than the 1% class of the Ancien Regime, but our 1% class is able to reach far greater heights of abstract wealth than the corresponding class of the Ancien Regime. So our middle class is relatively impoverished if you choose to look at it that way. The real question is, why on earth would you choose to look at it that way?
 
theprestige said:
I'm explicitly refuting your point. There's being so poor that you can't save and survive, and that's different from being so poor that you have to live very cheaply in order to save and get ahead.

Expiring money would force everyone from the second category - the category you don't recognize - into the first category - the only category that you believe in. The existence of the second category undermines your point, and you should thank me for it.
Click to expand...

you refute nothing
living hand to mouth means not having enough to save anything.
That it might not be enough to live on is a subcase.
 
The Great Zaganza said:
you refute nothing
living hand to mouth means not having enough to save anything.
That it might not be enough to live on is a subcase.
Click to expand...

I'm saying there's whole categories of poverty that are not yet living hand to mouth, that would be forced into living hand to mouth by expiring money.

Someone who sublets a crappy corner of somebody's crappy garage, wears donated clothes, and subsists on rice and beans, all so they can save a few dollars from every paycheck, is definitely poor. But they won't always be poor, if they keep saving. Sooner or later they'll have saved enough to buy better tools for their trade, or to move to a better job market, or partner with a friend or relative to start a new business, or make some other capital investment to improve their situation. Expiring money would deny them even that, and lock them into hand-to-mouth poverty forever.

Your too-narrow definition of poverty ignores this scenario.
 
theprestige said:
I think he's talking about wealth disparity. The middle class today is wealthier than the 1% class of the Ancien Regime, but our 1% class is able to reach far greater heights of abstract wealth than the corresponding class of the Ancien Regime. So our middle class is relatively impoverished if you choose to look at it that way. The real question is, why on earth would you choose to look at it that way?
Click to expand...

I do think income and wealth inequality are problems that the world is facing. Too much to the top will lead to instability and stagnation.

Even so, I have a very hard time believing that the GINI index for 2023 USA is worse than the Ancien Regime. That was a time when the average person in France had a hard time finding enough food to survive, while the aristocracy was building palaces that even most of today's .1%'s would find incredibly gaudy.

And another ETA: expiring money would mean very little to the VERY poor, but it would also mean very little to the very wealthy. They'd just put it into other assets. Its a solution in search of a problem.
 
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theprestige said:
In the context of TGZ's definition of poverty, expiring money would force some people into poverty, who are not in poverty at the moment.
Click to expand...

I guess I'd need an exact definition of "money". Is it just paper money, savings accounts... is it sovereign debt? Thats what the backing of "money market" accounts is btw. If it included sovereign debt just expiring that would cause everyone holding treasuries to replace it with other assets, ie gold, commodities, or real estate. That'd cause inflation like the USA has never experienced before. So, yeah it would put lots of people into poverty.

Theres probably a reason that just one unkown economist is advocating for it. If someone like Mohammed El-Erian starts suggesting it, I'd take it more seriously.
 
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lobosrul5 said:
I guess I'd need an exact definition of "money". Is it just paper money, savings accounts... is it sovereign debt? Thats what the backing of "money market" accounts is btw. If it included sovereign debt just expiring that would cause everyone holding treasuries to replace it with other assets, ie gold, commodities, or real estate. That'd cause inflation like the USA has never experienced before. So, yeah it would put lots of people into poverty.
Click to expand...

Apparently the proposal in the OP is just for fiat currency specifically. I'm including "money in the bank" as part of this.

But I think you have a good point. The whole thing gets really bizarre really fast, if you start to think about it.

I have a line of credit with a credit card company. I use the card for pretty much every transaction I make, because it gives me airline miles with my preferred airline.

Is that line of credit money? Would I need to pay interest on it, or see it dwindle, month by month? If I set up an automatic pipeline, from my payroll direct deposit to my checking account to my credit card bill, is there ever any money hanging around in my account long enough to expire?

What about my retirement funds? I'm not saving a lot of money in a savings account. Rather, I put it into diversified investment portfolios and whole life insurance policies. When I need to extract money from those things, I'll take what I need, and spend it immediately on the things I need it for. Would I need to pay interest on the nominal dollar value of my 401(k)? Would I need to pay interest on the current buying price of the company stock I'm acquiring through my employee stock purchase program?

---

Would I need to pay interest on the land I invest in?

Actually, that happens already. It's not called interest, it's a property tax. But the principle is broadly similar: You can't just sit on it, you have to use it. Either spend it or invest it. Or lose money on it.

So maybe "tax" is a better word than "interest" in this case. You pull out a ten dollar bill at the cash register, but it's two years old. So now, in addition to the sales tax, a separate "freshening" tax is assessed, based on how old the bill is when you tender it as payment.

---

I keep thinking about the idea, but it keeps not seeming any less crackpot.
 
theprestige said:
---

I keep thinking about the idea, but it keeps not seeming any less crackpot.
Click to expand...

Thinking about it some more...

Its crackpot because its an overly complicated way to achieve the desired effect. It would just be a hard to administer wealth tax. So why not just have a wealth tax? If wealth redistribution is the goal, why not just re-distribute wealth?

In addition what if there was a way to penalize people for hoarding cash to stimulate the economy? We we're doing that until very recently. Cash sitting around in a bank account, even in no-risk investments slowly lost value to inflation. It incentivized everyone to put their money into something. Either an investment or spending. If the economy gets overcooked the policy makers just make it more enticing to keep money on hand.

Money already slowly loses its value, theres no reason to make money expire.
 
theprestige said:
Apparently the proposal in the OP is just for fiat currency specifically. I'm including "money in the bank" as part of this.

But I think you have a good point. The whole thing gets really bizarre really fast, if you start to think about it.

I have a line of credit with a credit card company. I use the card for pretty much every transaction I make, because it gives me airline miles with my preferred airline.

Is that line of credit money? Would I need to pay interest on it, or see it dwindle, month by month? If I set up an automatic pipeline, from my payroll direct deposit to my checking account to my credit card bill, is there ever any money hanging around in my account long enough to expire?

What about my retirement funds? I'm not saving a lot of money in a savings account. Rather, I put it into diversified investment portfolios and whole life insurance policies. When I need to extract money from those things, I'll take what I need, and spend it immediately on the things I need it for. Would I need to pay interest on the nominal dollar value of my 401(k)? Would I need to pay interest on the current buying price of the company stock I'm acquiring through my employee stock purchase program?

---

Would I need to pay interest on the land I invest in?

Actually, that happens already. It's not called interest, it's a property tax. But the principle is broadly similar: You can't just sit on it, you have to use it. Either spend it or invest it. Or lose money on it.

So maybe "tax" is a better word than "interest" in this case. You pull out a ten dollar bill at the cash register, but it's two years old. So now, in addition to the sales tax, a separate "freshening" tax is assessed, based on how old the bill is when you tender it as payment.

---

I keep thinking about the idea, but it keeps not seeming any less crackpot.
Click to expand...

At least one version of the proposal is that money in the bank would be refreshed by the bank itself, presumably negating some portion of the interest, and encouraging the bank to make more investment. As if that were not what banks already do, often failing because they fail to maintain sufficient reserves. So one either has negative or diminished interest while the bank, if it's to bother to go on, makes the only profit there is to be made. One might suspect that a wise or sufficiently well connected investor might just find a different way to shelter income, leaving the poor ordinary schmucks putting relatively small money in the bank in hope of getting a house or a new car or a trip to Disneyland to take one for the team.

I think part of the problem is in the perception. The idea expressed is that there's jillions and skillions of money sitting unspent, and that this is somehow a bad thing for the economy because we presume a hole is to dig and money is to spend. Maybe it is, but if the sum total is largely dependent on jillions of ordinary people putting aside a few grand for a rainy day, making this impossible or impossibly complicated will not address the issue of a small minority swinging around a hugely disproportionate amount of wealth.

I read something the other day that the CEO of some large corporation (might even have been a composite or average), if he pisses four times a day for five minutes at a time, makes more in a year of pissing than his employees do in a year of working. Making the employees even poorer (I am not sure in this case why some people have such a problem with your notion of relative poverty here - maybe too few have had to live frugally in recent memory) will not solve that.

I get the feeling that for many it comes down to the fact that we can't seem to implement fair taxation and fair inheritance laws and other complicated stuff, so let's just blow the whole system up. It's kind of like a "kill all the lawyers" solution to injustice. Gaetan with a better thesaurus and spell checker.
 
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