[ranprieur]

This article fails to mention why the currency circulated so fast. It was depreciating: it was defined as gradually losing value, so hoarding didn't work, and the people with money had a strong incentive to spend it. The article makes it sound like these currencies worked because they were local. They worked because they depreciated, and it's possible to do this on a national level.

Other writings about this: A book chapter, The Currency of Cooperation: https://ascentofhumanity.com/text/chapter-7-02/

And a short piece about Brakteaten money: https://wiki.p2pfoundation.net/Brakteaten_Money

[em-bee]

it was defined as gradually losing value

isn't that the same as a high inflation rate?

[Ygg2]

Free geld is a deflatory value, if you don't produce 1% of all value monthly there is less currency available, which means less currency has to cover same assets.

But each month you are being taxed, on your liquid assets.

[mihaic]

Modern inflation punishes wage earners much more than capital earners, as the second category is closer to the money printing machine, and benefit better from it.

A deflationary policy would hit capitalists a lot more than wage earners, since it's basically a wealth tax.

[Thorrez]

I don't understand how deflationary policy is a wealth tax. The wealthy wouldn't lose anything, would they?

Inflation + capital gains tax is effectively a wealth tax, but deferred until the gains are realized. And it's possible to avoid realizing gains, e.g. by dying.

[mihaic]

> I don't understand how deflationary policy is a wealth tax. The wealthy wouldn't lose anything, would they?

Wage earners would always receive "fresh" money, so their relative purchasing power grows compared to someone that just sits on their shrinking money. The money supply is a zero-sum pie. You actually can get richer if you're income stays the same but others have their net worth shrinking.

[Thorrez]

I still don't think it's a wealth tax. I guess you could say deflation is less good for the wealthy than inflation, but it still doesn't result in the wealthy losing anything, so I wouldn't call it a tax.

If the deflation rate is lower than typical stock market returns, the wealthy would keep their money in stocks, and their wealth would increase faster than a wageearner's wage. If the deflation rate is equal to or higher than typical stock market returns, the wealthy would keep their money in cash, and their wealth would increase at the exact same rate as a wageearners' wage.

The big downside of deflation is it discourages spending and investing. In "The Miracle of Worgl" it sounds like it solved their problem by encouraging spending and investing. If spending and investing is discouraged, the economy grinds to a halt, and unemployment rises. Instead of using some money to create a new business and hire people (aka investing in a new business), people are encouraged to just hold the money in the bank. That's why unemployment rises.

[gus_massa]

> They worked because they depreciated, and it's possible to do this on a national level.

It's quite easy. Hi from Argentina!

Now the inflation is only 3% mom, but 2 years ago it used to be 10% mom.

[nine_k]

In the neighboring Germany during 1920s the inflation went into triple digits, if not more. Did it help Germany restore faster? In Zimbabwe about 30 years ago, the inflation figures were ridiculously high, and daily expenses required banknotes denominated in billions. Did that help? A few other things must be present to make money circulation go brrr in a beneficial way.