[rlnorthcutt]

There is a difference between inflation, which affects the entire monetary system, and money expiration which affects individual units of currency.

In the first case, there is no incentive to use the money any faster, and as long as inflation isn't too high, there could be incentives to hoard/save it.

In the second case, each unit has an expiration, and like the game of hot potato, you want it out of your hands quickly. This should heat up the economy overall, while inflation is seen as the result of an overheated system.

The trick, as noted, is who is poised to benefit? The "new" dollars would be worth more, so the people at the top of the flow would have more advantages than those at the bottom.

In order for something like this to work, it would also need to recognize the creation of value, and not just the creation of the currency. The person who turns a pile of wood into a chair is creating value, but they are usually not able to capture the true value of their time and skill.

Overall, this is an interesting idea especially in that it changes the way we think about money.

[brookst]

I’m not seeing the difference. If I have $1 that’s worth $1 today and $0 in one year, doesn’t it stand to reason that in 6 months I could exchange it for $0.50 with a one year expiration?

Taken further, every day I could exchange all of my wealth which now has 364 days left for slightly less wealth with 365 days left.

That sure sounds like inflation.

[Retric]

The important difference is the inflation rate could differ from its current value. Money 200 months left is unlikely to be worth exactly 10x as much as money with 20 months left. That difference may not be meaningful on its own but could have interesting knock on effects depending on how money enters the system.

[brookst]

That’s true, but how is it different from nonlinear rates of return on bonds of varying lengths?

Changing the way money enters the system is interesting for sure, but orthogonal to whether expiring money is just inflation by another name.

[LouisSayers]

That truly sounds like a nightmare. Imagine going to buy a loaf of bread and being asked "what's your expiry", then being told "your money is no good here" because it only has a week left.

[janalsncm]

I tend to agree but one difference is that inflation isn’t directly imposed on all goods at the same time. Businesses need to decide to change the price. Currency with a devaluation mechanism makes everything “more expensive” at the same time. This means that while there is general upward pressure on all goods, not all things change price at the same time. I’m not sure which is better, but it’s a difference.

[stickfigure]

It won't change the way people think about money, but it will certainly change the way they think about your money. That is, they'll stop using it and start using someone else's money (bitcoin, Euros, whatever) that doesn't expire.

[_0ffh]

>The "new" dollars would be worth more, so the people at the top of the flow would have more advantages than those at the bottom.

That's happening even now with inflation, even if the mechanism is less obvious.

It's called the Cantillon Effect.

[lisper]

> there could be incentives to hoard/save it

Yes -- for a while. Not forever. This is a feature, not a bug. Hoarding/saving for short periods of time (relative to human life spans) is a good thing. It helps damp out transients. Hoarding/saving for long periods of time is bad because it discourages people from taking risks by putting resources to productive use.

[tiredofleftist]

Some leftists always saied that (i'm tired of): "Hoarding/saving for long periods of time is bad." and call themselves up, "because it discourages people from taking risks by putting resources to productive use."

I think that named a problem.

Think about something like "Measurement Importance" in terms of the "level of competence in the handling of the vehicle", so to speak ?

So how is your MI as high roller ? Think some people have not only accounts for that, but alghorithms, nor ? ^^

[lottin]

The idea that people need to be encouraged to consume (consumption being the opposite of saving) I don't think is supported by economic theory.

[lisper]

> consumption being the opposite of saving

No. The opposite of saving is spending. You can spend on capital as well as consumption. Inflation only devalues cash, i.e. money you keep in your mattress. You can avoid inflation by either consuming or investing, both of which help keep the economy humming along.

[lottin]

Maybe 'spending' is a better word, yes. However, 'consumption' isn't entirely inaccurate. Investment is the production of capital goods, and the production of capital goods involves consumption.

[lisper]

Well, yeah, you can't create something from nothing. But that's not exactly a deep insight. All economic activity involves consumption if you want to cast the net that broadly.

The point is:

> The idea that people need to be encouraged to consume (consumption being the opposite of saving) I don't think is supported by economic theory.

People absolutely need to be encouraged to be productive. That's the whole point of an economy, to encourage people to produce things that others want in exchange for other people producing things that they want.

Honestly, how could anyone possibly not understand that?

[lottin]

I understand it fine, I just don't agree with it.

The whole point of an economy is NOT to encourage people to produce things. The point of producing is to satisfy a demand for consumption, and individuals choose their level of consumption according to their preferences and budget constraints. They don't need to be encouraged to consume. That doesn't make any sense.

[genman]

The question then becomes - when is the money created? Is it created when it is issued by a (central) bank or is created when an exchange (for value) takes place?

(the later has an interesting side effect as it would incentive to make transactions legal)

[alsogutalsogut]

Sorry, non native english speaker so (in german)

"Ich möchte das nochmal klarstellen, ich redete (schon was her) nicht von 'Zinsfrei' in Umlauf gebrachten Geld, aber sehrwohl und im Interesse aller Beteiligten, von Schuldfrei (i think 'debt-free money' would be the word in english, and against debt driven creation of money) in Umlauf gebrachtem Geld."

And explicit nothing from the Muzzies "economical"-stuff!

[paulddraper]

"The money keeps moving, in a circle."

- Mac McDonald, It's Always Sunny in Philadelphia