What if money expired? (opens in new tab)

> 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.

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.

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).

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.

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.

It's remarkable how many problems seemingly come back to Land Value Taxation.

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.

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.

Yeah but inflation also affects rich people you see. With this we can have selective inflation but only for proles

No, inflation (as the name suggests), inflates then money supply and as a result, each person's holdings reduce in value. Here the value gets transferred in small blocks through purchase of stamps.

> 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?

Land cannot be owned! There is property tax.

> People will always try to store their wealth in inperishable goods.

Exactly this. This is how money came to be, "organically", in the first place. Because of modern fiat currency people tend to think that money is some sort of invention, but it doesn't take much to realize that if you're a dairy farmer then barter is completely untenable. How do you save and store enough milk to buy a car, and who has a car for sale and wants to trade it for a ton of milk anyway?

Throughout history everything from salt to spices to metals has been used as currency. There are 5 properties that make for a good currency:

- Easily divisible

- Relatively light weight / easy to store

- Difficult to counterfeit / fake

- Other people are highly willing to trade for it (high market value)

- Durable / non-perishable

You need all of the above, which is why precious metals became so common.

If fiat currency "expired" then people would just replace it with something that satisfies durable / non-perishable.

> 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...

I feel like homes should not be taxed, or at least the first $X dollars of your first home should not be.

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.

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.

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...

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.

> 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

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.

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.

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.

"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 :(

Too late - these ideas have, in a backward sort of way, been implemented in the form of quantitative easing, aka inflating away your savings.

Collecting compounding interest on capital isn't planning for the future, it's robbing from the future, that was Gesell's point. Inherent to his notion of perishable money is that what improves the future is work, investment, economic activity, and exchange. Perishable money wouldn't make you more dependent on your boss or a lender but less, because people would be pretty eager to actually hand you money for your work or business idea, rather than accumulating it.

A tax on money costs the people who hold it, and benefits the people who primarily use it as a medium of exchange.

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.

>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”.

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.

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.

This also reminded me of the “Aaand it’s gone” meme from South Park https://youtu.be/jEBnrzNuUSA

This is honestly the winning comment. Water flows through the path of least resistance.

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.

Do you have a study showing EBT cards are more effective and reduce fraud compared to direct cash subsidies?

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 Bürkliplatz, 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 Bünzli 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.

Inflationary expiration is not guaranteed though. Deflation is always a possibility.

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.

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.

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.