11 ms·

Monetagium – monetary extortion in feudal Europe

128 points by jpkoning 2y ago

lifeisstillgood 2y ago
[flagged]
- epicureanideal 2y ago
  Although there are other things we can do, like simplify regulations for truly small businesses so people have a chance to start something without needing legal expertise, lots of paperwork, etc.
  - nradov 2y ago
    One of the other factors preventing people from starting small businesses is lack of affordable health insurance. They can buy coverage through state exchanges but those are still more expensive that group health plans offered by large employers.
    - g15jv2dp 2y ago
      Is your comment still about Europe...?
      - jeltz 2y ago
        Starting a small business is hard in some European countries but not others. Here in Sweden it is trivial. In e.g. Malta and I believe Poland it is hard. Personally I am not sure any of this discussion is relevant to Europe, especially not as a whole.
  - carom 2y ago
    I think about this a lot. It should be really beneficial to have a progressive legal system for corporations where laws become more strict based on size or revenue.
- yowlingcat 2y ago
  How would a wealth tax solve a problem caused government management of interest rates and active management of money supply?
  - lifeisstillgood 2y ago
    This is likely a problem of the differences in your and my mental models - so let’s start with Modern Monetary Theory (MMT) which I think has huge explanatory power. So starting with MMT - money is a token granting allocation of a portion of future productivity. Over COVID the UK printed 1 trillion dollars of extra furlough-like cash, the USA something like 10 trillion, the western world as a whole something like 25 trillion. This was necessary and a Good Thing, but when the nurse or the waitress took the cash, stayed home and paid her rent the landlord got the cash, then his bank got the cash then their shareholders got the dividend and the trillions worked their way up to the richest wealthiest 0.1% So now while productivity is still the same as it was 4 years ago, the amount of tokens representing that productivity is up by 25 trillion. This has lead to enormous inflation pressure especially In assets. So ignoring any other fairness / redistribution issues, MMT says take those tokens out of circulation - the tokens represent the future production of factories and farms - unless those factories got more productive, the amount of money in circulation should not chnage. So tax the wealth to remove about 25 trillion dollars globally. Weirdly a stock market crash or a world war would have a similar effect. But wealth tax seems a much better solution And then We talk about annual wealth taxes, taxing loans as income, CGT chnages or whatever - the goal is to stop money accumulating in one place for too long - blood circulates around the body - having it stop and gather in the kidneys is bad for the body, and eventually bad for the kidneys
    - mndgs 2y ago
      "tax the wealth to remove about 25 trillion dollars globally." And what do you think happens once the tax is collected by the government? It is spent. And the money goes back into market, which will earn its returns and will be taxed again. Rarely a government has enough willpower to terminate the money supply collected in the form of taxes...
- thaumasiotes 2y ago
  You'd think Piketty might have addressed the masses as if there was more than one person in them. And maybe used a second-person form of the verb. He's French, not Spanish.
  - lifeisstillgood 2y ago
    “Thou est” ? - honestly I thought it was fake “medieval” language - like “ye apothecary tables of yore”. But bonus points for off-topic pedantry - I love it. It’s why we are here.
tempodox 2y ago
Today's feudal lords plaster you with advertising and enshittification. Paying a ransom fee doesn't help any more.
- c22 2y ago
  The ransom is the 8 dollar a month subscription that turns the ads off.
  - immibis 2y ago
    It turns the obvious ads off, and the quality still goes down the drain.
  - nerdponx 2y ago
    When it's even available. But then they start cranking the ratchet, increasing the no-ad price and introducing a with-ads tier at the old no-ad price, or cutting quality, or cutting corners on customer service and security, etc etc. We've seen this play out many many times and it's a fundamental outcome in even the most basic econ 101 models: an oligopoly with high switching costs is more profitable for suppliers than a free market, made all the moreso by tacit collusion. An unregulated free market is essentially doomed to fail whenever an opportunity to establish such an oligopoly arises. In extreme cases it does start to look like a protection racket, especially when important services like broadband Internet are involved.
  - nehal3m 2y ago
    The wanton surveillance ads are based on stays though! Can’t give up that revenue.
  - aziaziazi 2y ago
    Great, I can pay a ranson to avoid debasement to avoid tax !
- hliyan 2y ago
  A 100 years from now, someone is going to write an article about the insanity of today's advertising models that is going to be immediately obvious to anyone from that era, while we, much like the feudal vassals, are unable to see it, having experienced no alternative.
readthenotes1 2y ago
"democracies have not resorted to modern version of debasement as a revenue source due to the unpopularity of rising prices." The USA got rid of silver in its coins in 1964 and I believe copper in its pennies recently. The modern version of debasement is in the feds balance sheet, they've gotten so efficient there's no need to affect the physical substance.
- Arainach 2y ago
  The US penny switched to copper-plated zinc in 1982, so not that recently (and it still contains a small percentage of copper).
- pavlov 2y ago
  Some democracies in the 20th century have tried a form of cash debasement to fight inflation. The example I’m familiar with is from Finland in 1946, when the most popular and largest circulating bills were required to be physically cut in half and lost 50% of their upfront value. The Wikipedia article seems to be only in Finnish: https://fi.wikipedia.org/wiki/Setelinvaihto https://fi.wikipedia.org/wiki/Setelinvaihto The idea was that the left half of the bill remained valid cash (although not for long — you needed to exchange it for a new type of bill within a few months). The right half of the bill became effectively a treasury note with three-year maturation: in 1949 you could present it to a bank and get your money back from the government, but no sooner. The operation was expected to reduce inflation, but apparently it didn’t work out that way. It did provide the Finnish government with about half of the funds loaned that year, but it was very unpopular among voters and never repeated.
  - xandrius 2y ago
    That's just such an interesting idea and approach. It's one of those things you'd never think someone would go from ideation to actual implementation, and yet it happened.
    - ptsneves 2y ago
      Honestly it feels like a good idea in principle. Of course people are not rational economic actors and ignoring it has bad outcomes. 1. This is actually a politician’s job, to explain. If you don’t explain well you get kicked out and your electorate doesn’t buy your ideas. Don’t complain about the people being stupid, they are real and wishing they were different or demeaning the people is totally useless. 2. The idea of fostering savings in a time of inflation is really cool, and an original way getting people to buy in your policy. That it did not work sounds like a great topic for research, including experiments.
Mistletoe 2y ago
Bitcoin fixes this for the first time in human history. I’m excited about a future without monetary debasement. How many wars have been started by the “print more money until it is worthless, oops I have to start a war to fix it” spiral? https://en.wikipedia.org/wiki/Debasement https://en.wikipedia.org/wiki/Debasement
- tomrod 2y ago
  Almost. Because Bitcoin is highly energetic compared to currency, it isn't all the way there. And novel attacks exist for digital currency that are not present in physical currency. Currency has to be tradeable with marginal cost nearly zero (will never be exactly zero), and in my view digital currency has this as an issue. The analogue for digital currency, when appropriately crafted and not a sh*tcoin, is gold. Hard to get, limited in volume, costly to secure and appropriately manage. Gold can be used for currency, but it is awfully insecure to hoarding and banditry. Fiat currency solves a _lot_ of problems while also having limitations broadly railed against by digital currency advocates.
- MadnessASAP 2y ago
  It doesn't in any way fix things. The underlying point of debasement and other schemes outlined in the article was to generate revenue for the government. Now governments use taxes to generate revenue and inflation to encourage circulation. While taxes and inflation are generally unpopular they are also vital to the functioning of society and the economy. BTC and many other token schemes implicitly or explicitly stand in the way of that. Breaking a system you don't like doesn't automatically get you a system that's better.
  - TacticalCoder 2y ago
    > Breaking a system you don't like doesn't automatically get you a system that's better. At this point the US debt is growing by 1 trillion every... 100 days. The system is breaking by itself, not because of Bitcoin. > While taxes and inflation are generally unpopular they are also vital to the functioning of society and the economy. Some taxes and some inflation. We're way past these.
deleted 2y ago
[deleted]
OriPekelman 2y ago
For those interested, the practice of debasement actually predates the middle ages by, a lot. By 301 inflation was so bad Diocletian had to put out a price fixing edict. It didn't work. It took Constantine's Solidus (basically solid gold coin - that will stay stable for almost a thousand years) to stabilize the currency. By the early fourth century the denarius that used to have 50% silver contained almost no silver at all (something like 1 to 5%).
- thaumasiotes 2y ago
  Between the years 150 and 100 BC, the Seleucid tetradrachm went from 95% silver to 65%. As the name suggests, it continued to weigh four drachms. Debasement occurs any time the government runs out of money and can force people to take the debased money. The previous ~150 years of the same government minted tetradrachms that were all silver, probably because their main use of the silver was paying foreign mercenaries. > By the early fourth century the denarius that used to have 50% silver This is already a heavily debased coin. Nobody starts by adulterating their coins down to 50% monetary content. > It took Constantine's Solidus (basically solid gold coin - that will stay stable for almost a thousand years) to stabilize the currency. This isn't plausible; gold coins barely transact (gold is too rare). Minting coins that nobody uses won't affect the currency that people do use. Wikipedia notes that, on issuance, Constantine's solidus was worth 275,000 denarii. The denarius was debased, but it was also a coin that people carried around and used to buy things. Think about the number of transactions that might plausibly have involved one or more solidi. If we underestimate the 4th-century denarius as being roughly as valuable as a US penny... how much use would you have for a $2,750 coin?
  - qwytw 2y ago
    > This isn't plausible Why? Of course it wasn't accessible or particularly useful for the majority of people but it was central to the Byzantine economy/financial-system functioned. Soldiers were paid in gold (every 6 or 12 months so that simplified things) and taxes were also collected in gold whenever feasible. Relying on gold as your primary currnecy of course wasn't ideal since the outcome was a partially demonetisation of the wider economy. However while it was was basically entirely unavailable in Western Europe and there were almost no gold coins in circulation until the 13th or so it was much more widespread in the Eastern Mediterranean.
imtringued 2y ago
Ah yes, taxes on money holding and land, two of the most evil taxes ever invented. The average citizen prefers paying income taxes, payroll tax and sales tax and VAT to the government and paying the land tax aka rent to land holders and the money tax aka interest to money holders to maximize the dead weight loss. Then they complain that the government is bankrupt and is doing inflation. The average citizen is incorrigible.
- lomase 2y ago
  You are above all.
big-green-man 2y ago
It's just a way to bypass the cantillion effect and hoard the benefit of debasement for the lord. That's why he exempted the aristocracy, he had to cut them in to maintain his power. So, suppose the ruler begins a debasement. You have a lot of coins. You take them into the mint and exchange them for debased coins but more coins than you had minus a cut to the king, go buy some asset that can't be debased like salt, wait and then sell it on the market after price inflation occurs. You benefit from the cantillion effect because you got the fresh minted money before prices rose to compensate. Now with the extortion scheme, you lose that. The revenue goes straight to the king in the form of the tax, the king might make do with the same revenue as before, thus significantly reducing the inflation that occurs, or maybe raises his revenue to the match the cost to the economy before but now the aristocracy get nothing. To compensate, he had to exempt them or they would overthrow him, and now they get benefit in that regular people get directly fleeced, price deflation occurs but regular people don't gain purchasing power because it was their money taken from them out of circulation, but the rich people don't have that problem so their purchasing power increases.
RachelVander 2y ago
[dead]

128 points by jpkoning 2y ago

lifeisstillgood 2y ago

[flagged]

epicureanideal 2y ago
Although there are other things we can do, like simplify regulations for truly small businesses so people have a chance to start something without needing legal expertise, lots of paperwork, etc.
- nradov 2y ago
  One of the other factors preventing people from starting small businesses is lack of affordable health insurance. They can buy coverage through state exchanges but those are still more expensive that group health plans offered by large employers.
  - g15jv2dp 2y ago
    Is your comment still about Europe...?
    - jeltz 2y ago
      Starting a small business is hard in some European countries but not others. Here in Sweden it is trivial. In e.g. Malta and I believe Poland it is hard. Personally I am not sure any of this discussion is relevant to Europe, especially not as a whole.
- carom 2y ago
  I think about this a lot. It should be really beneficial to have a progressive legal system for corporations where laws become more strict based on size or revenue.
yowlingcat 2y ago
How would a wealth tax solve a problem caused government management of interest rates and active management of money supply?
- lifeisstillgood 2y ago
  This is likely a problem of the differences in your and my mental models - so let’s start with Modern Monetary Theory (MMT) which I think has huge explanatory power. So starting with MMT - money is a token granting allocation of a portion of future productivity. Over COVID the UK printed 1 trillion dollars of extra furlough-like cash, the USA something like 10 trillion, the western world as a whole something like 25 trillion. This was necessary and a Good Thing, but when the nurse or the waitress took the cash, stayed home and paid her rent the landlord got the cash, then his bank got the cash then their shareholders got the dividend and the trillions worked their way up to the richest wealthiest 0.1% So now while productivity is still the same as it was 4 years ago, the amount of tokens representing that productivity is up by 25 trillion. This has lead to enormous inflation pressure especially In assets. So ignoring any other fairness / redistribution issues, MMT says take those tokens out of circulation - the tokens represent the future production of factories and farms - unless those factories got more productive, the amount of money in circulation should not chnage. So tax the wealth to remove about 25 trillion dollars globally. Weirdly a stock market crash or a world war would have a similar effect. But wealth tax seems a much better solution And then We talk about annual wealth taxes, taxing loans as income, CGT chnages or whatever - the goal is to stop money accumulating in one place for too long - blood circulates around the body - having it stop and gather in the kidneys is bad for the body, and eventually bad for the kidneys
  - mndgs 2y ago
    "tax the wealth to remove about 25 trillion dollars globally." And what do you think happens once the tax is collected by the government? It is spent. And the money goes back into market, which will earn its returns and will be taxed again. Rarely a government has enough willpower to terminate the money supply collected in the form of taxes...
thaumasiotes 2y ago
You'd think Piketty might have addressed the masses as if there was more than one person in them. And maybe used a second-person form of the verb. He's French, not Spanish.
- lifeisstillgood 2y ago
  “Thou est” ? - honestly I thought it was fake “medieval” language - like “ye apothecary tables of yore”. But bonus points for off-topic pedantry - I love it. It’s why we are here.

tempodox 2y ago

Today's feudal lords plaster you with advertising and enshittification. Paying a ransom fee doesn't help any more.

c22 2y ago
The ransom is the 8 dollar a month subscription that turns the ads off.
- immibis 2y ago
  It turns the obvious ads off, and the quality still goes down the drain.
- nerdponx 2y ago
  When it's even available. But then they start cranking the ratchet, increasing the no-ad price and introducing a with-ads tier at the old no-ad price, or cutting quality, or cutting corners on customer service and security, etc etc. We've seen this play out many many times and it's a fundamental outcome in even the most basic econ 101 models: an oligopoly with high switching costs is more profitable for suppliers than a free market, made all the moreso by tacit collusion. An unregulated free market is essentially doomed to fail whenever an opportunity to establish such an oligopoly arises. In extreme cases it does start to look like a protection racket, especially when important services like broadband Internet are involved.
- nehal3m 2y ago
  The wanton surveillance ads are based on stays though! Can’t give up that revenue.
- aziaziazi 2y ago
  Great, I can pay a ranson to avoid debasement to avoid tax !
hliyan 2y ago
A 100 years from now, someone is going to write an article about the insanity of today's advertising models that is going to be immediately obvious to anyone from that era, while we, much like the feudal vassals, are unable to see it, having experienced no alternative.

readthenotes1 2y ago

"democracies have not resorted to modern version of debasement as a revenue source due to the unpopularity of rising prices." The USA got rid of silver in its coins in 1964 and I believe copper in its pennies recently. The modern version of debasement is in the feds balance sheet, they've gotten so efficient there's no need to affect the physical substance.

Arainach 2y ago
The US penny switched to copper-plated zinc in 1982, so not that recently (and it still contains a small percentage of copper).
pavlov 2y ago
Some democracies in the 20th century have tried a form of cash debasement to fight inflation. The example I’m familiar with is from Finland in 1946, when the most popular and largest circulating bills were required to be physically cut in half and lost 50% of their upfront value. The Wikipedia article seems to be only in Finnish: https://fi.wikipedia.org/wiki/Setelinvaihto https://fi.wikipedia.org/wiki/Setelinvaihto The idea was that the left half of the bill remained valid cash (although not for long — you needed to exchange it for a new type of bill within a few months). The right half of the bill became effectively a treasury note with three-year maturation: in 1949 you could present it to a bank and get your money back from the government, but no sooner. The operation was expected to reduce inflation, but apparently it didn’t work out that way. It did provide the Finnish government with about half of the funds loaned that year, but it was very unpopular among voters and never repeated.
- xandrius 2y ago
  That's just such an interesting idea and approach. It's one of those things you'd never think someone would go from ideation to actual implementation, and yet it happened.
  - ptsneves 2y ago
    Honestly it feels like a good idea in principle. Of course people are not rational economic actors and ignoring it has bad outcomes. 1. This is actually a politician’s job, to explain. If you don’t explain well you get kicked out and your electorate doesn’t buy your ideas. Don’t complain about the people being stupid, they are real and wishing they were different or demeaning the people is totally useless. 2. The idea of fostering savings in a time of inflation is really cool, and an original way getting people to buy in your policy. That it did not work sounds like a great topic for research, including experiments.

Mistletoe 2y ago

Bitcoin fixes this for the first time in human history. I’m excited about a future without monetary debasement. How many wars have been started by the “print more money until it is worthless, oops I have to start a war to fix it” spiral? https://en.wikipedia.org/wiki/Debasement https://en.wikipedia.org/wiki/Debasement

tomrod 2y ago
Almost. Because Bitcoin is highly energetic compared to currency, it isn't all the way there. And novel attacks exist for digital currency that are not present in physical currency. Currency has to be tradeable with marginal cost nearly zero (will never be exactly zero), and in my view digital currency has this as an issue. The analogue for digital currency, when appropriately crafted and not a sh*tcoin, is gold. Hard to get, limited in volume, costly to secure and appropriately manage. Gold can be used for currency, but it is awfully insecure to hoarding and banditry. Fiat currency solves a _lot_ of problems while also having limitations broadly railed against by digital currency advocates.
MadnessASAP 2y ago
It doesn't in any way fix things. The underlying point of debasement and other schemes outlined in the article was to generate revenue for the government. Now governments use taxes to generate revenue and inflation to encourage circulation. While taxes and inflation are generally unpopular they are also vital to the functioning of society and the economy. BTC and many other token schemes implicitly or explicitly stand in the way of that. Breaking a system you don't like doesn't automatically get you a system that's better.
- TacticalCoder 2y ago
  > Breaking a system you don't like doesn't automatically get you a system that's better. At this point the US debt is growing by 1 trillion every... 100 days. The system is breaking by itself, not because of Bitcoin. > While taxes and inflation are generally unpopular they are also vital to the functioning of society and the economy. Some taxes and some inflation. We're way past these.

deleted 2y ago

[deleted]

OriPekelman 2y ago

For those interested, the practice of debasement actually predates the middle ages by, a lot. By 301 inflation was so bad Diocletian had to put out a price fixing edict. It didn't work. It took Constantine's Solidus (basically solid gold coin - that will stay stable for almost a thousand years) to stabilize the currency. By the early fourth century the denarius that used to have 50% silver contained almost no silver at all (something like 1 to 5%).

thaumasiotes 2y ago
Between the years 150 and 100 BC, the Seleucid tetradrachm went from 95% silver to 65%. As the name suggests, it continued to weigh four drachms. Debasement occurs any time the government runs out of money and can force people to take the debased money. The previous ~150 years of the same government minted tetradrachms that were all silver, probably because their main use of the silver was paying foreign mercenaries. > By the early fourth century the denarius that used to have 50% silver This is already a heavily debased coin. Nobody starts by adulterating their coins down to 50% monetary content. > It took Constantine's Solidus (basically solid gold coin - that will stay stable for almost a thousand years) to stabilize the currency. This isn't plausible; gold coins barely transact (gold is too rare). Minting coins that nobody uses won't affect the currency that people do use. Wikipedia notes that, on issuance, Constantine's solidus was worth 275,000 denarii. The denarius was debased, but it was also a coin that people carried around and used to buy things. Think about the number of transactions that might plausibly have involved one or more solidi. If we underestimate the 4th-century denarius as being roughly as valuable as a US penny... how much use would you have for a $2,750 coin?
- qwytw 2y ago
  > This isn't plausible Why? Of course it wasn't accessible or particularly useful for the majority of people but it was central to the Byzantine economy/financial-system functioned. Soldiers were paid in gold (every 6 or 12 months so that simplified things) and taxes were also collected in gold whenever feasible. Relying on gold as your primary currnecy of course wasn't ideal since the outcome was a partially demonetisation of the wider economy. However while it was was basically entirely unavailable in Western Europe and there were almost no gold coins in circulation until the 13th or so it was much more widespread in the Eastern Mediterranean.

imtringued 2y ago

Ah yes, taxes on money holding and land, two of the most evil taxes ever invented. The average citizen prefers paying income taxes, payroll tax and sales tax and VAT to the government and paying the land tax aka rent to land holders and the money tax aka interest to money holders to maximize the dead weight loss. Then they complain that the government is bankrupt and is doing inflation. The average citizen is incorrigible.

lomase 2y ago
You are above all.

big-green-man 2y ago

It's just a way to bypass the cantillion effect and hoard the benefit of debasement for the lord. That's why he exempted the aristocracy, he had to cut them in to maintain his power. So, suppose the ruler begins a debasement. You have a lot of coins. You take them into the mint and exchange them for debased coins but more coins than you had minus a cut to the king, go buy some asset that can't be debased like salt, wait and then sell it on the market after price inflation occurs. You benefit from the cantillion effect because you got the fresh minted money before prices rose to compensate. Now with the extortion scheme, you lose that. The revenue goes straight to the king in the form of the tax, the king might make do with the same revenue as before, thus significantly reducing the inflation that occurs, or maybe raises his revenue to the match the cost to the economy before but now the aristocracy get nothing. To compensate, he had to exempt them or they would overthrow him, and now they get benefit in that regular people get directly fleeced, price deflation occurs but regular people don't gain purchasing power because it was their money taken from them out of circulation, but the rich people don't have that problem so their purchasing power increases.

RachelVander 2y ago

[dead]