Thought experiment: Resetting spendings each month; what would happen?

[TiagoTiago]

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:



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.



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.

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?

[kiba]

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.

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.

[Gluskab]

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.

[Gluskab]

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.

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.

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

[rezin777]

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.

[benjamindees]

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.

[rezin777]

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!   

[NghtRppr]

What if the governament imposed a system like the following:

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.

[rezin777]

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!

[FreeMoney]

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.

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.

[NghtRppr]

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 baby!

[MoonShadow]

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!

Blade Runner, anyone?

[markm]

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...

--
"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

[Alex Beckenham]

Whoever trades goods for stateCoins loses.

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.

[FooDSt4mP]

Whoever trades goods for stateCoins loses.

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.

[Alex Beckenham]

Whoever trades goods for stateCoins loses.

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.

[FooDSt4mP]

Whoever trades goods for stateCoins loses.

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.

[Alex Beckenham]

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?

[FooDSt4mP]

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.

[Alex Beckenham]

if the money were doubled and distributed equally, not proportionally

Ah, I messed that up, sorry.

Definitely nothing fair about equal distribution though.