
Paper Money with an Expiration Date - jcarpio
https://www.npr.org/sections/money/2019/08/27/754323652/the-strange-unduly-neglected-prophet
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antasvara
What concerns me about his idea is that businesses would be less incentivized
to take payments if your money was closer to expiration. This could lead to
situations where my dollar is worth significantly less near expiration than
someone else's dollar that just got stamped. In this respect, businesses get
screwed because the money that they just accepted is slowly deflating in
value.

Expiring money basically incentivizes short term thinking over long term
goals. Businesses won't save for improvements, retirement won't exist, etc.

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kn100
I have not thought about this too much but what if the expiry date resets when
it changes hands and there is some tx fee to discourage passing money around
unnecessarily?

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goldcd
I quite like that idea.

If you receive a dollar and pay tax on it due to the work you undertook to
receive it, it gets 'refreshed' and increases in value.

If you get a 'stale dollar' (e.g. gifted from a parent) it depreciates until
you use it constructively.

If you're an advocate of "trickle-down" economics, you should be lapping this
us, as it's rewarding people for what you believe already happens.

Of course a much simpler approach would be to simply flip the outrageously
stupid system most of us have, where income from passive investments is taxed
at a lower rate than income from providing work.

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ISL
That system is essentially what we have now, but less subtle. A 2% inflation
target means that the purchasing-power of held currency is halved in 36 years.

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unchocked
Yes, it's essentially the same as inflation. Although this scheme does open
the possibility of having some lesser dollar that's statutorily inflated while
perhaps the greater dollar retains its value. That might make it possible to
throw a massive slug of stimulus into the economy without increasing the money
supply.

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toomuchtodo
I would think the "easier" way of doing this is Federal Reserve dollars,
issued (in Fed issued deposit accounts) at the start of a calendar period with
the explicit and clear understanding to accountholders that these funds
evaporate at the end of the calendar period (EBT/food stamps come to mind;
depending on the state, your EBT/food stamps funds expire after about a year
if unused).

I'm unsure how you get around folks who will launder this money into assets to
counter the inflationary mechanism, unless you're means testing in some
capacity, or you just don't care about the cohort who does this (which is a
reasonable approach imho).

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ISL
Who would want to be left holding the bag with the expired "dollars" at the
end of the period? I imagine they would trade at a substantial discount from
the beginning, being dollars in name only.

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toomuchtodo
I think you'd find most people would spend every penny before the funds
expire. Anyone who doesn't is likely not too concerned about the funds
expiring.

I don't think we can say for sure without a proper experiment (although if
anyone can get their hands on EBT account spend data in aggregate, that would
seem like a path to some signal, considering the financial condition of those
who rely on those benefits).

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cortesoft
So what is to stop someone from depositing the near expiration date money into
a bank and then withdrawing it right away?

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Thervicarl
In France, when people deposit more than 10k€, the bank has to notify Tracfin,
the service of the French Ministry of Finances that fights money laundering.
And you have to be able to explain where the money is coming from.

Most of the time, people with large amounts of cash are workers (skilled
construction workers...) that are able to get a significant part of their
income in cash and do income tax avoidance. Or criminals (drug dealers...).

Having to deposit their hidden savings all-at-once is not good news for them.
This is basically what happened when France switched to the Euro.

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cortesoft
Sure, but if this scheme was implemented, then the people depositing and
withdrawing their money are going to be people who would normally keep their
money in banks and are NOT trying to launder or avoid taxes.

If they have to explain where the money came from, they can just say “it is
the cash I withdrew a few months ago, here is the transaction number”

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WarOnPrivacy
Isn't most wealth hoarded in non-currency investments? How might this effect
those?

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tharne
yup, this type of "expiring money" would just lead people to store wealth
elsewhere. You could argue that this has already happened with long term low
interest rates. I think a big part of the continued stock market and real
estate bubbles is that interest rates are so low that there's a real
disincentive to store cash in the bank, so folks put their wealth into houses
and stocks.

Also, since when did "saving" become "hoarding"? Saving is a very important
part personal financial wellness and business investment. Our goal should not
be incentivizing people to spend money as quickly as they make it.

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WarOnPrivacy
>when did "saving" become "hoarding"?

The systemic vaulting of fungibles (in the amount of scores of multiples
beyond reasonable needs) may result in the same outcomes as hoarding does.

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tharne
I don't think any one of us is in an intellectual or moral position to dictate
what another person's "reasonable needs" are.

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WarOnPrivacy
Ah. Trying to leverage a tangent into a tool to invalidate the overall point
on a technicality.

A bold move.

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JohnDeHope
If people know when the money will expire, they'll accept it at a lower and
lower value as it approaches its expiration. Money that will expire tomorrow
will be worthless. I think a better way would be to continually reduce all
(digital) accounts by some rate. Say you want 1% depreciation per year. At the
end of the year, every bank account balance is multiplied by x0.99. The
"money" evaporates equally for everyone at the same time. In any case though,
while technocrats might like the sound of all of this, the plebs (aka those of
us without political power) are likely to be less enthusiastic.

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dnautics
They probably won't notice, since that's what happens now. Not even smart
people with econ phds notice.

But whether or not anyone notices, the math is simple: it will be very bad for
lower income levels. If you have 1% depreciation over a year, and you are
spending 90% of your money on day to day expenses, the relative loss in margin
of survival is far worse than if you are spending 20% on day to day expenses.

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burlesona
The fed has recently said they aren’t going to try and prevent inflation any
longer - they think that acting aggressively to prevent inflation before it
hits has actually hurt the economy. So, perhaps there is something to this
logic.

But I will say, in many ways we have the opposite problem right now. Too much
money chasing too few good opportunities for a return has led to things like
SoftBank, WeWork and many others.

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bsanr2
The most obvious answer would be to give money to people who need it to make
rent, go back to school, buy porn, etc. Compared to the complete collapse of
the economy, pretty much any stimulative use is preferable.

