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While technically interesting, this project is riddled with fallacious economic ideas that undermines its credibility. I do appreciate it that new kinds of mone

While technically interesting, this project is riddled with fallacious economic ideas that undermines its credibility. I do appreciate it that new kinds of money are being developed though! A few particularly ridiculous notions from the about page: - that money-hoarding is the primary cause of wealth disparity - that the role of money as both a savings instrument and a transactional instrument is problematic and leads to financial crises - that demurrage would benefit working class people If governments adopted a currency like this (or if it otherwise became forced upon us), banks or other institutions would issue alternatives and people would flock to them. http://freico.in/about/ http://freico.in/about/

acous 14y ago
Maybe I'm naive but they don't sound too ridiculous to me... could you point out some specific fallacies?
- jamespitts 14y ago
  To elaborate: - that money-hoarding is the primary cause of wealth disparity There are many causes of wealth disparity. But consider what factors are leading to wealthy people getting wealthier: technological advances, leveraged financial speculation, high education costs, corporate subsidies. And then consider what factors are leading to working class people not accelerating their wealth at the same rate: high medical costs, skill irrelevancy, overexposure to credit. Money sitting in banks is not causing the disparity. If anything, people using money in the economy in order to invest is causing much of the disparity. - that the role of money as both a savings instrument and a transactional instrument is problematic and leads to financial crises The durability and reliability of a particular kind of money is the reason people use it for transactions. This also makes it useful for storing value. Why would this dual use lead to financial crises? Some of the greatest financial crises are actually related to money becoming un-savable (due to inflation). - that demurrage would benefit working class people Making money more complex would not happen in a vacum. In terms of storing wealth, who would really be in a position to protecting and growing their wealth in an economy running on a financial complexity like demurrage? Educated elites. By default, the little savings that working class people could set aside would dwindle, and they would begin to place trust in more reliable means of wealth storage like hoarded commodities. Of course, savings instruments could also be made available to working class people, but educated elites would still hold the upper-hand.
DennisP 14y ago
Apparently it worked for Worgl, Austria during the Great Depression.
- Steko 14y ago
  Demurrage, not freicoin mind you, worked over a very short term in Worgl, and there are questions about whether the success there was sustainable[1]. Demurrage on it's own doesn't operate very differently than the mildly inflationary currencies used in the real world (dollars, euros, etc.). Freicoin on the other hand is promising all sorts of other things. [1] Quoting at length from: http://bionicmosquito.blogspot.co.uk/2012/11/more-on-worgl-velocity-of-money.html http://bionicmosquito.blogspot.co.uk/2012/11/more-on-worgl-v... "So, would this be sustainable? If not, why not? I believe the activity would not have been sustainable. I believe that once the taxes in arrears were completely paid and once the people paid in advance to the degree they felt sufficient (one year in advance? Five years in advance? I don’t know, but at some point they would stop), the scrip would lose a key part of its attractiveness. One way a government can ensure the demand for its currency is to demand (or accept) that taxes are paid in the subject currency. The other way is through monopoly legal tender laws. Wörgl obviously could not legislate or enforce monopoly legal tender, so the demand for the scrip could certainly be attributed to the need to pay taxes. The demand could certainly not be attributed to the demurrage – not when there was the national schilling available – paying interest, and at a one-for-one exchange (setting aside the conversion fee). Once this tax need was satisfied, what would happen to the desirability of a depreciating-value scrip vs. currency that did not come with a 1% monthly penalty? The answer to me is clear, not that we have to agree. I suspect the depreciating scrip would begin trading at a discount, and sooner than later would be regularly returned to the bank for the national currency, even with the 2% loss. Two percent might be too big a loss when one owes taxes and can satisfy these taxes with the depreciating scrip at full face value. However, when there is no benefit to holding a depreciating currency to the national one, I suspect many would eat the one-time 2% charge to avoid paying the recurring 1% charge. In my opinion, this is exactly the situation that was immediately in front of Wörgl when the national government put an end to the experiment. Depending on which estimate of taxes in arrears used (see the discrepancy as pointed out in my first article), within one month, but not more than six, all taxes in arrears would have been paid. At that point, I suspect demand for the scrip would have fallen – resulting in the exchange for national currency that I described above."

acous 14y ago

Maybe I'm naive but they don't sound too ridiculous to me... could you point out some specific fallacies?

jamespitts 14y ago
To elaborate: - that money-hoarding is the primary cause of wealth disparity There are many causes of wealth disparity. But consider what factors are leading to wealthy people getting wealthier: technological advances, leveraged financial speculation, high education costs, corporate subsidies. And then consider what factors are leading to working class people not accelerating their wealth at the same rate: high medical costs, skill irrelevancy, overexposure to credit. Money sitting in banks is not causing the disparity. If anything, people using money in the economy in order to invest is causing much of the disparity. - that the role of money as both a savings instrument and a transactional instrument is problematic and leads to financial crises The durability and reliability of a particular kind of money is the reason people use it for transactions. This also makes it useful for storing value. Why would this dual use lead to financial crises? Some of the greatest financial crises are actually related to money becoming un-savable (due to inflation). - that demurrage would benefit working class people Making money more complex would not happen in a vacum. In terms of storing wealth, who would really be in a position to protecting and growing their wealth in an economy running on a financial complexity like demurrage? Educated elites. By default, the little savings that working class people could set aside would dwindle, and they would begin to place trust in more reliable means of wealth storage like hoarded commodities. Of course, savings instruments could also be made available to working class people, but educated elites would still hold the upper-hand.

DennisP 14y ago

Apparently it worked for Worgl, Austria during the Great Depression.

Steko 14y ago
Demurrage, not freicoin mind you, worked over a very short term in Worgl, and there are questions about whether the success there was sustainable[1]. Demurrage on it's own doesn't operate very differently than the mildly inflationary currencies used in the real world (dollars, euros, etc.). Freicoin on the other hand is promising all sorts of other things. [1] Quoting at length from: http://bionicmosquito.blogspot.co.uk/2012/11/more-on-worgl-velocity-of-money.html http://bionicmosquito.blogspot.co.uk/2012/11/more-on-worgl-v... "So, would this be sustainable? If not, why not? I believe the activity would not have been sustainable. I believe that once the taxes in arrears were completely paid and once the people paid in advance to the degree they felt sufficient (one year in advance? Five years in advance? I don’t know, but at some point they would stop), the scrip would lose a key part of its attractiveness. One way a government can ensure the demand for its currency is to demand (or accept) that taxes are paid in the subject currency. The other way is through monopoly legal tender laws. Wörgl obviously could not legislate or enforce monopoly legal tender, so the demand for the scrip could certainly be attributed to the need to pay taxes. The demand could certainly not be attributed to the demurrage – not when there was the national schilling available – paying interest, and at a one-for-one exchange (setting aside the conversion fee). Once this tax need was satisfied, what would happen to the desirability of a depreciating-value scrip vs. currency that did not come with a 1% monthly penalty? The answer to me is clear, not that we have to agree. I suspect the depreciating scrip would begin trading at a discount, and sooner than later would be regularly returned to the bank for the national currency, even with the 2% loss. Two percent might be too big a loss when one owes taxes and can satisfy these taxes with the depreciating scrip at full face value. However, when there is no benefit to holding a depreciating currency to the national one, I suspect many would eat the one-time 2% charge to avoid paying the recurring 1% charge. In my opinion, this is exactly the situation that was immediately in front of Wörgl when the national government put an end to the experiment. Depending on which estimate of taxes in arrears used (see the discrepancy as pointed out in my first article), within one month, but not more than six, all taxes in arrears would have been paid. At that point, I suspect demand for the scrip would have fallen – resulting in the exchange for national currency that I described above."