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Author Topic: Expiring currency  (Read 1553 times)
just a man
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December 26, 2010, 03:07:04 PM
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What would happen if you had a currency like bitcoin, where each coin would be produced slowly as now with the bitcoi0n system, but would only last a year, would a system like that enable 'Brakteaten' advantages of driving wealth distribution?

*Brakteaten  as in people not hoarding money that will eventually lose value, so wanting it to work for them, thus driving the economy.

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kiba
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December 26, 2010, 03:31:33 PM
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No incentive to save = no capital formation.

Everybody's time preference will be short, and that means problem.

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December 26, 2010, 07:45:16 PM
 #3

What would happen if you had a currency like bitcoin, where each coin would be produced slowly as now with the bitcoi0n system, but would only last a year, would a system like that enable 'Brakteaten' advantages of driving wealth distribution?

*Brakteaten  as in people not hoarding money that will eventually lose value, so wanting it to work for them, thus driving the economy.

Expiring currency does not prevent hoarding. In fact, it hurts the people that work for a wage more and benefits speculators.

Thinking that an expiring currency will avoid hoarding is extremely shortsighted (another discussion would be if hoarding needs to be avoided). The argument is similar to people saying that producing inflation avoids hoarding. Both are utterly ridiculous and for a very simple reason: People dont save all their wealth in money.

For example, nowadays a lot of people have their savings for retiring in the stock market. Or most rich people have their fortunes in the stock market as well, in commodities, etc... So in reality, devaluating the currency benefits them because their actives go up in price.

If people know that the money is going to lose value, they spend it and hoard something else that they think is going to keep its value.

And it hurts the people that work for a wage because wages are the last thing that gets actualized. So consumer prices go up, and then, some time later, wages actualize. During the time where your wage is not actualized you have lost purchasing power. This purchasing power that is being stolen, goes to the people that has active that get apreciated by inflation, basically the rich.

So it not only does not prevent hoarding, but it benefits the concentration of wealth, because its a lot easier to defend from debasing money for a rich guy than for someone that earns a wage.

PS: Then you have the problems of distortion in the price signals, leading to malinvestments and less economic growth for everyone.
just a man
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December 27, 2010, 02:33:09 AM
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Thanks for that, I've no argument in response at all, as in fact the concept is intendsed for dystopian fiction, so sounds like the concept (the "cycle", as in 10c for an apple) fits the bill. Smiley

I see our hero bestriding a barbwired wall, surveying the scene, angry crowds kept in check by armed uniform-wearers while loudpeakers bark orders and riot tanks charge by.

On a side note thoughg I don't agree there'd be no capital formation withmoney that had a half-life though, as it becomes a matter of volume of revenue, or streams paid into funds, loaned out again. Every time the money changes hands its revived for another year or whatever. The halflife just keeps things moving.

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December 27, 2010, 04:19:36 AM
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On a side note thoughg I don't agree there'd be no capital formation withmoney that had a half-life though, as it becomes a matter of volume of revenue, or streams paid into funds, loaned out again. Every time the money changes hands its revived for another year or whatever. The halflife just keeps things moving.

Human necessities keeps things "moving". Why do you want to force consumerism?
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December 27, 2010, 05:05:27 AM
 #6

This is interesting to me. I think we are using an expiring currency right now. The difference is that the expiry date is unknown and probably the same for all bills.

I think one with a known expiry date won't work. Is $1 that expires in 15 seconds worth anything to you? Maybe you could be "forced" to take it, but the sucker who keeps getting stuck will find a way to only take money he can turn over before expiry or else go broke. The least adept at avoiding dying bills will continually stop transacting until they find a better way and the equilibrium should be that no one takes them ever. Human psychology will probably mean that people will take very far dated notes, but that willingness should diminish over time since people do learn.

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December 27, 2010, 05:20:58 AM
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What would happen if you had a currency like bitcoin, where each coin would be produced slowly as now with the bitcoi0n system, but would only last a year, would a system like that enable 'Brakteaten' advantages of driving wealth distribution?

*Brakteaten  as in people not hoarding money that will eventually lose value, so wanting it to work for them, thus driving the economy.

At first I thought this was an interesting idea to discourage hoarding.  But then I realized that the hoarders would just use brains to figure out how to launder money back to themselves to avoid expiration.  Or even worse simply find alternatives stores of wealth Smiley as is described here http://p2pfoundation.net/Brakteaten_Money:

Quote
Brakteaten money, by Margrit Kennedy
“Between the 12th and the 15th century in Europe a money system was used called "Brakteaten." Issued by the respective towns, bishops and sovereigns, it not only helped the exchange of goods and services but also provided the means of collecting taxes. Every year the thin coins made from gold and silver were "recalled," one to three times re-minted and devalued on an average about 25 % in the process. Since nobody wanted to keep this money, people instead invested in furniture, solidly built houses, artwork and anything else that promised to keep or increase its value. During that time, some of the most beautiful sacred and profane works of art and architecture came into existence. "For while monied wealth could not accumulate, real wealth was created." We still think of this time as one of the cultural culmination points in European history. Craftsmen worked a five-day week, the "blue" Monday was introduced and the standard of living was high. In addition, there were hardly any feuds and wars between the various realms of power. However, people obviously disliked the money which lost so much at regular intervals. Finally, towards the end of the 15th century, the "eternal" penny was introduced and with it came interest and accumulation of wealth..." (www.margritkennedy.de)
See also information on the above author at http://userpage.fu-berlin.de/~roehrigw/kennedy/english/

So you would probably see people dump a brakteaten-bitcoin currency.  Or you could enforce mandatory use of such a brakteaten-bitcoin currency with a violent monopoly.  Wink

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Governments are good at cutting off the heads of a centrally controlled networks, but pure P2P networks are holding their own."
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