Bitcoin Forum

Lots of people here seem to have a head for understanding how economies and the people running them tend to behave, and enjoy talking about this. So i offer this idea for you guys to chew on, lemme know what you think:

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What if the governament imposed a system like the following: at the beggining of each month, each citizen will own a fixed amount of "money", a virtual currency infinitly divisible, they can spend the money as they want during the month, there would be no enforcements for prices, wages etc. But at the beggining of the next month everyone's bank accounts would be reset, so that once again everyone owns the same amount of "money".

The "money" would need to be a virtual currency (instead of somthing with physical representations like coins paper bills that people can hide) to make it easy for the governament to enforce the monthly reset.

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I have the impression this would pretty much extinguish poverty, and the prices of things would quickly reach an optmal value. But without actually doing away with having rich people; the rich would be those that develop means of offering things lots of people want in a big enough quantity so that lots of people can afford to pay for that thing (product, service etc).

I'm not quite sure how things would work when dealing with foreign tourists and busyness people outside the country etc though.

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How do you expect things would go with a system like this?

And has anything similar to this idea been tried before in a big enough scale? If yes, how did it go and what were the differences and similarities?

The cause of poverty is not that some have more than others, but the fact that there isn't enough  goods and services to go around.

A new currency (more likely currencies) would arise almost instantaneously.

What you described isn't money, and unless people were forced to use it for certain things, wouldn't ever be used for anything.

and this... currency is the least important part of an economy (except when it's manipulated on a large scale).

Wait a second. The money resets every month. Yet you claim there will be "rich" people selling stuff in order to make money? What is the motivation to exchange tangible goods for money when the money will be reset every month?

We both have 1000 stateCoins.
I sell you my TV for 500 stateCoins.
You have a TV and 500 stateCoins. I have 1500 stateCoins.
In a month you have my TV and 1000 stateCoins and I have 1000 stateCoins.

Whoever trades goods for stateCoins loses.

As Gluskab said, no one in their right mind would use it. Force would be required.

Someone would start a business based around petitioning the government to seize assets by eminent domain at the end of every month and selling them for stateCoins at the beginning of every month.  It would be like Christmas twelve times a year.

Christmas in hell!   :D

I stopped reading there since everything that follows is going to be immoral. What if the government reinstated slavery? Well, that would be wrong, just like whatever it is you're suggesting.

Unless the slaves were sexy robots!

Yeah, this money isn't money because it doesn't have durability.

What would happen if every day your money was reset to the highest it had ever been, but at the same time all accounts were divided by whatever coefficient was necessary to maintain exactly the same total balance?

I guess the strategy would be to make a run at getting really high and then take a break until you wanted to make another big run. Does this have any implications? Is this currency dumb enough that it will take lots of force to keep people using it or just a little force? It certainly doesn't seem to be to be something that would emerge on it's own.

Yeah baby!

Blade Runner, anyone?

This so called money or currency you describe sounds more like votes than like money or currency.

You only get so many votes per timespan, depending on how many elections take place you are eligible to vote in.

Naturally we congresspeople vote ourselves higher salaries oops no wait, its the riff-raff who vote themselves bread and circi...

-MarkM- (Yeah yeah I know (or at least suspect) circi isn't quite correct Latin...)

P.S. how much do votes cost in your area? Around here different political parties harvest different numbers of votes per dollar spent on {|trying to get} votes...

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"Control the coinage and the courts—let the rabble have the rest." Thus the Padishah Emperor advises you. And he tells you: "If you want profits, you must rule." There is truth in these words, but I ask myself: "Who are the rabble and who are the ruled?"
-Muad'Dib's Secret Message to the Landsraad from "Arrakis Awakening" by the Princess Irulan

Hence it won't eliminate poverty, because no matter how many statecoins you get each month, the baker still won't want to sell you any bread.

What if instead of a reset, everyone got 1000 new coins every month.  If we're going to have inflation, it might as well be equally distributed initially.

Then if a poor person has debt to a rich person for example, that 'initially' might only be 4.2 nanoseconds, before the wealth is redistributed.

Also, the only way 'inflation' could be equally distributed, would be if everyone had exactly the same amount of cash at the time of minting new money. Because if I have $10,000 in cash, and you have $6000 in cash and a $4000 widget, then when new money gets minted it affects me more than it affects you, even if we both get the same $ amount from the government.

Good points... I was grasping at straws to push this thread a little further :).  However, I think it might be a little more fair than what happens today if the only way to introduce new money was to split it among every citizen.

If that really were the case, then I absolutely can't see any reason to increase the money supply.

Let's say the entire population consists of:

Alice who has $10
Bob who has $10
Ben B. who has $5

Ben decides to double the money supply, distributing equally as you have suggested.

Alice now has $20
Bob now has $20
Ben B. now has $10

They all have exactly the same purchasing power as before, so the whole exercise was pointless.

The only reason I can see for Ben B. to increase the money supply is to increase his (or his friends') percentage of the total purchasing power (Which is basically a tax on Alice and Bob).

Why else would he do it?

I don't want there to be a reason to increase the money supply ;).  I would prefer it being pointless to the current state of affairs where the Fed can tax Alice and Bob freely.

Also, if the money were doubled and distributed equally, not proportionally, it would be more like:

Alice now has 18.33
Bob now has 18.33
Ben B. now has 13.33

25/3 ~= 8.33

The absolute gap between the rich Alice and Bob and the poor Ben B. is the same, but the percentage difference has narrowed from 20% to 10% of the total economy.

Ah, I messed that up, sorry.

Definitely nothing fair about equal distribution though.

Why not?  Is unequal distribution more fair?

Most definitely, yes.

When in your example Ben B distributed equally, he stole a little bit of Alice's and Bob's purchasing power (their money), to keep for himself.

If he had distributed unequally in a proportional manner, he wouldn't have taken anything from anyone.

This is one thing bitcoin can do by adding a fixed multiplier to each block such that at the end of the day the output value of each block 24 hours old is doubled. The client would do this when calculating the value of a block that is buried n blocks deep in the chain.

You have 10 bitcoin today -> tomorrow you can spend 20 bitcoin.

A recipe for hyperinflation for sure :-)
  

Here's an example, let's say:

A owns $100
B owns $1
C owns $1
D owns $1
E owns $1
F owns $1
G owns $1


So A is 100 times richer than everyone else through hard work or sheer luck, whatever... for argument's sake let's say that's his rightful position in society.

Now G decides to distribute some new money equally and gives $1000 to everyone.

A now owns $1100
B now owns $1001
C now owns $1001
D now owns $1001
E now owns $1001
F now owns $1001
G now owns $1001

How is that 'fair' to all but obliterate A's purchasing power and position in society that he worked so hard to achieve?

This is interesting because it's inflation due to an automatic process not human decisions (subject to greed).

Think of a goal to increase or decrease the available bitcoin based on trying to make the level of transaction activity follow a fixed path - say 5% growth per year after the initial 20 year period (when most mined bitcoins will have already been mined).

                If the total of all transactions is below the goal (over the last week say) then the multiplier is slightly more than 1
                If the total of all transactions is above the goal then the multiplier is slightly less than 1.

This second bullet is novel to bitcoin.

Because if that were the situation, I really doubt A's purchasing power was achieved through anything other the forceful coercion.  How does 1 out of 7 people manage to gain 93% of the wealth in a free market?  I don't think it's possible.  Unfortunately, that example is remarkably similar to the stratification that exists today in America... not because of hard work, or sheer luck, but because of abuses of power and legalized corruption.

I guess that is ultimately where our disagreement arises from then, and I have nothing further to add.

I suppose your argument would still hold for a more reasonable disparity.  And I agree it's not fair.  However, I believe the only reason poverty exists today is because of greed.  There is plenty to go around, and it is hoarders of capital that prevent it from being shared.  I don't really believe such a system should be put in place... welfare is a huge sinkhole that grows, especially when what you get increased income with how many children you produce.  However, I think the world would be a better place if there was some sort of robin hood tax on the top 1% that hold 99% of the wealth.  Let people be successful, but eliminate the extreme cases where one man's decisions effect whether thousands of people will have a stable financial situation.  To that man, it's simply about maximizing profits, a very clean decision.  To the people he just put out of a job, it's about survival.  The insulation of the rich from the realities the poor face every day will be the downfall of this country unless it is addressed.  But I don't have high hopes for that.

Sorry, which country? I must have missed the part where you said which country you're from.

I mentioned America, but to be specific, the United States of America.

I can't see how it could work.  If I knew my LunaCoin balance was going to be reset at midnight and it is 1 minute to midnight, I'd be crazy to accept them.  Reason backwards from there and I don't see how you could possibly have a stable economy, at least not in the last few days leading up to the reset.  People would try like crazy to get rid of their LunaCoins, and it would get harder and harder to find somebody willing to take them.

TiagoTiago asked if anything like "reset everybody's balance at the beginning of every month" has ever been tried, and it reminds me of historical debt relief (http://en.wikipedia.org/wiki/Debt_relief), where all debts are forgiven every N years, usually by people of a certain religious background.

If I recall correctly, people were very creative about finding ways to get around it, but I don't have any references handy.

That would result in the opposite of what those who currently inflate are trying to achieve.

Then what is the point of inflating when nothing changes except store owners have to spend extra time figuring out new prices every month?

That's what happens with any of these schemes.  If it's not backed up by force, people will ignore it and do what makes sense.  If it is backed up by force, it still happens, but transaction costs go up (and usually in more than just monetary terms).

what would happen... if people stopped imagining new ways to rule over their neighbours and simply let others live in peace, building up a society through voluntary exchange and freedom?

Exactly!

There's no point whatsoever in printing new money unless it is being used as a taxing mechanism.

Money would be the lube for the exchange of goods and services, people who can gather it faster will be able to aquire more goods and hire more service for the duration of the month. The rich would be those that can easilly accumulate more than what everyone starts the month with, so their buying power would be greater than the average citizen.


I expect it would stimulate people to try to find ways to give others what they want, and to do it at a price they can afford.

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With this system i thought of, with a cyclical predictable reset of spendings,  everyone would have a predictable buying power; i would expect the offer and demand balancing of prices would flow smoother, reaching an optimal level quicker, experimentation with creation of new products and services would be cheaper etc; and with the virtual money being infinetly divisible, the system would be capable of handling any number of targets of spendings, and if by the end of the month most people got only a fraction of what they started with, prices would drop to adapt so people could still aquire the services and products they need.

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What am i overlooking?

I think it's pretty clear that people would prefer to take any other kind of money over this evaporating kind, but overlooking that now, what about things that people need to save up for? 

The ground would crack and a shivering Satan emerge to collect firewood?

I think either prices would get scaled so everyone can afford the more expensive things, or only the people who can figure out how to earn lots of money before the reset, or more likelly somthing between.

Things that people need to save up for would either be gov't subsidized (mortgages) or they wouldn't exist since there would be no credit for them (nuclear power plants).

You don't think people would deal well with the idea of floating value and adjusting prices down untill their intended customers can afford the productvservice?

There's no need for a thought experiment.  Just look at Zimbabwe, or Germany after WWI.  Your money was worthless by the end of the month (or even sooner), so everyone reset by then.  Everyone ended up being trillionaires or more.