4 ms·

Silvio Gesel and demurrage, look them up. All the good parts of inflation (incentive not to hold money / rent seek nominally, shrinks debts) without the bad par

Silvio Gesel and demurrage, look them up. All the good parts of inflation (incentive not to hold money / rent seek nominally, shrinks debts) without the bad parts, because price stability is preserved.

randomhodler84 5y ago
Demurrage is an evil concept. When you steal the time value saved of a man’s labor, you rob him of his future. There is no reason the unit of account should change day to day or year to year. Saving is good. For most of human history things were relatively stable, we didn’t need these games to amplify, leverage and drain.
- Ericson2314 5y ago
  Well find, then I counter "store of value" is a largely evil concept :D. Unit of account != store of value.
- Ericson2314 5y ago
  Also read some Graeber on debt. Even when materially society seemed pretty stable, financially things were more complex, hence the debt jubilees and whatnot. Demurrage is nothing but a continuous debt jubilee.
- imtringued 5y ago
  Demurrage prevents the unit of account from changing precisely because the real world is an endless chain of growth and decay. Money that doesn't die akin to an immortal cancer that spreads until the host dies. By the way, demurrage has been implemented by ancient egypt and in medieval times and in wörgl and it has brought more prosperity to everyone not less. The masons that built the cathedrals had much shorter work weeks than us.
jbay808 5y ago
> inflation... shrinks debts Generally interest rates negotiated between lender and borrower take expected (or even actual) inflation into account, so that only works when inflation runs well above expectations, or interest rates are artificially suppressed through subsidized lending. > incentive not to rent seek In the literal sense I'm not sure this is the case either. Inflation drives up the value of income-yielding assets, which is why people are scrambling to buy real estate and stocks. > incentive not to hold money This is also questionable, because making money a hot potato drives people into hoarding other things like gold and then bartering with them (defeating the purpose of money), and investing in highly speculative assets like, err, Evergrande.
- Ericson2314 5y ago
  > Generally interest rates negotiated between lender and borrower take expected (or even actual) inflation into account, so that only works when inflation runs well above expectations, or interest rates are artificially suppressed through subsidized lending. Hold up. You are correct in that demurrage does not affect the spread between loan rates and the "risk free rates. But that does not mean the absolute rates of interest are neutral! Consider, if money halves annually, but the loan obligation is 55% (-45% interest), I cannot just sit on my loan and get richer. But I can run a very unprofitable business and still pay back my loan! From a financial standpoint, you might say "no you hold up, what's 'profitable' mean now?" And financially, yes, one would wonder. But there still is intended to be price stability, which means roughly that a steady state business should still be running roughly break-even. (You could still do a the Sraffa or Leontief input-output stuff too.) From a quantity of money standpoint, less money ==> no price stability, so the above is a contradiction! But money should be increasingly injected into the system too. Basically at the end of the day, this is a surplus recycling mechanism to try to create a financial steady state corresponding to a real world steady state, so leverage is only needed for actual societal-self-modification. I wish I could explain/understand better. Hopefully I will end up taking a class with these things. > This is also questionable, because making money a hot potato drives people into hoarding other things like gold and then bartering with them (defeating the purpose of money), and investing in highly speculative assets like, err, Evergrande. Yes, that ways Keynes's critique in the end. The question is whether the state is strong enough to just enforce that debts must be payable in the demurring currency. For Keynes the answer is no, but he probably would have said the same thing about pure Fiat currency. Looking at the Russia sanctions, Chinese social credit system, etc. I think it's easy to argue "yes" today.

randomhodler84 5y ago

Demurrage is an evil concept. When you steal the time value saved of a man’s labor, you rob him of his future. There is no reason the unit of account should change day to day or year to year. Saving is good. For most of human history things were relatively stable, we didn’t need these games to amplify, leverage and drain.

Ericson2314 5y ago
Well find, then I counter "store of value" is a largely evil concept :D. Unit of account != store of value.
Ericson2314 5y ago
Also read some Graeber on debt. Even when materially society seemed pretty stable, financially things were more complex, hence the debt jubilees and whatnot. Demurrage is nothing but a continuous debt jubilee.
imtringued 5y ago
Demurrage prevents the unit of account from changing precisely because the real world is an endless chain of growth and decay. Money that doesn't die akin to an immortal cancer that spreads until the host dies. By the way, demurrage has been implemented by ancient egypt and in medieval times and in wörgl and it has brought more prosperity to everyone not less. The masons that built the cathedrals had much shorter work weeks than us.

jbay808 5y ago

> inflation... shrinks debts Generally interest rates negotiated between lender and borrower take expected (or even actual) inflation into account, so that only works when inflation runs well above expectations, or interest rates are artificially suppressed through subsidized lending. > incentive not to rent seek In the literal sense I'm not sure this is the case either. Inflation drives up the value of income-yielding assets, which is why people are scrambling to buy real estate and stocks. > incentive not to hold money This is also questionable, because making money a hot potato drives people into hoarding other things like gold and then bartering with them (defeating the purpose of money), and investing in highly speculative assets like, err, Evergrande.

Ericson2314 5y ago
> Generally interest rates negotiated between lender and borrower take expected (or even actual) inflation into account, so that only works when inflation runs well above expectations, or interest rates are artificially suppressed through subsidized lending. Hold up. You are correct in that demurrage does not affect the spread between loan rates and the "risk free rates. But that does not mean the absolute rates of interest are neutral! Consider, if money halves annually, but the loan obligation is 55% (-45% interest), I cannot just sit on my loan and get richer. But I can run a very unprofitable business and still pay back my loan! From a financial standpoint, you might say "no you hold up, what's 'profitable' mean now?" And financially, yes, one would wonder. But there still is intended to be price stability, which means roughly that a steady state business should still be running roughly break-even. (You could still do a the Sraffa or Leontief input-output stuff too.) From a quantity of money standpoint, less money ==> no price stability, so the above is a contradiction! But money should be increasingly injected into the system too. Basically at the end of the day, this is a surplus recycling mechanism to try to create a financial steady state corresponding to a real world steady state, so leverage is only needed for actual societal-self-modification. I wish I could explain/understand better. Hopefully I will end up taking a class with these things. > This is also questionable, because making money a hot potato drives people into hoarding other things like gold and then bartering with them (defeating the purpose of money), and investing in highly speculative assets like, err, Evergrande. Yes, that ways Keynes's critique in the end. The question is whether the state is strong enough to just enforce that debts must be payable in the demurring currency. For Keynes the answer is no, but he probably would have said the same thing about pure Fiat currency. Looking at the Russia sanctions, Chinese social credit system, etc. I think it's easy to argue "yes" today.