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In case you didn't know saving currency isn't saving. Thomas Mun of East Indies company had to convince that hoarding gold in a country was equally stupid when it could be used to purchase productive capital.
Guernsey was not the only place a people freed themselves from banks, interest, and money hoarding. Hoarding a medium of exchange is NOT saving. Stuffing grain into a tower or turnips in the cellar is saving. Investment is saving.
The traditional money of the time only had value due to scarcity. Saving money to keep "more" of it is of no real value at all. While we all hoard money the value will appear to increase due to scarcity alone.
The most abundant mines either of the precious metals or of the precious stones could add little to the wealth of the world. A produce of which the value is principally derived from its scarcity, is necessarily degraded by its abundance. A service of plate, and the other frivolous ornaments of dress and furniture, could be purchased for a smaller quantity of labour, or for a smaller quantity of commodities; and in this would consist the sole advantage which the world could derive from that abundance.
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The poor inhabitants of Cuba and St. Domingo, when they were first discovered by the Spaniards, used to wear little bits of gold as ornaments in their hair and other parts of their dress. They seemed to value them as we would do any little pebbles of somewhat more than ordinary beauty, and to consider them as just worth the picking up, but not worth the refusing to anybody who asked them.
-Adam Smith, Wealth of Nations.
I had a similar idea of an Internet age public money supply that would be a disincentive to hoard since everyone would see you hoarding it. If you want to hide wealth then buy assets. Banks would also be forbidden to create it. Money is a medium of exchange. Money hoarding does not produce wealth but is a source of monopoly, manipulation and bubble creation.
It turns out this was already tried and gulp... successfully. Its Worgl Money that created its own disincentive to hoard.
Worgl money was a stamp script money. The Worgl Bills would depreciate 1% of their nominal value monthly. To prevent this devaluation the owner of the Bill must affix a stamp the value of which is the devaluation on the last day of the month. Stamps were purchased at the parish hall. Because nobody wanted to pay a devaluation (hoarding) fee the Bills were spent as fast as possible.
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Worgl Success
Over the 13-month period the Worgl money was in circulation, the mayor carried out all the intended works projects. The council also built new houses, a reservoir, a ski jump, and a bridge. The people also used scrip to replant forests, in anticipation of the future cash flow they would receive from the trees.
Six neighboring villages copied the system successfully. The French Prime Minister, Eduoard Dalladier, made a special visit to see the 'miracle of Wörgl'. In January 1933, the project was replicated in the neighboring city of Kirchbuhl, and in June 1933, Unterguggenburger addressed a meeting with representatives from 170 different towns and villages. Two hundred Austrian townships were interested in adopting the idea.
The Central Bank
The Central Bank panicked, and decided to assert its monopoly rights by banning complimentary currencies. The case was brought in front of the Austrian Supreme Court, which upheld the Central Banks monopoly over issuing currency. It then became a criminal offence to issue “emergency currency”. Worgl quickly returned to 30% unemployment. Social unrest spread rapidly across Austria. In 1938 Hitler annexed Austria and many people welcomed Hitler as their economic and political savior.
So another example of interest free money along with a disincentive to hoard was successful. Seems like simple, local, interest fee currencies work great. Its also why gold standards are a horror. They have been hoarded countless times to rape the productive economy.
So if your politician sees nothing wrong with bank credit or that banks would hoard our medium of exchange in lieu receiving of treasuries, he or she isn't really your politician now are they? Consider Hitler was the banker's gift to the world.
Question about this, what do you say to the argument that technique of using 1% mandatory periodic devaluation can never work on a global scale involving trillions upon trillions of currency units?
Question about this, what do you say to the argument that technique of using 1% mandatory periodic devaluation can never work on a global scale involving trillions upon trillions of currency units?
Hi sheenie2000,
It would actually be easy with an interest free treasury note system. All it would need to do is create slight inflation of 2-3 % a year. It would essentially just be an inflation tax available to the treasury. We don't necessarily need that money system. What it does do is recognized that money as a conceptual commodity slants things in favor of the capital and money hoarder over that of the producer of real goods. It also shows what is possible without the monetary manipulation, debt instruments and bank credit.
Yea. The more I think about how things are now, there are so many people who want to be productive and do things, but can't...all because of a piece of paper.
We're just at standstill or going in a downward spiral.
The idea of making money earn a negative return is not entirely new. In the late 19th century, the German economist Silvio Gesell argued for a tax on holding money. He was concerned that during times of financial stress, people hoard money rather than lend it.
Again, its really a simple observation that real capital requires maintenance. Why should a fictitious representative capital be exempt? Money should act as an aggregate of the capital is represents and it happens to be in a state of deterioration now.
People would spend money, but what is worth buying right now that has not been bought already and burned the buyers? People bought houses, cars, educations, gifts for their spouses, boob jobs, second homes, etc. All that aggregate spending over the years has rewarded us some how? You can balance your checkbook and try to keep your job but if you get a reduced paycheck or no paycheck one day, are you expected to keep taking it for the team?
People would spend money, but what is worth buying right now that has not been bought already and burned the buyers? People bought houses, cars, educations, gifts for their spouses, boob jobs, second homes, etc. All that aggregate spending over the years has rewarded us some how? You can balance your checkbook and try to keep your job but if you get a reduced paycheck or no paycheck one day, are you expected to keep taking it for the team?
Hi ExcellentFudge,
Spending currency may be spent towards investment. The solution to mis allocating resources inherent during inflation is not solved by having it sit idle. It has nothing to do with consumerism which is a completely different subject. There is simply a better way than bank credit which inflates and deflates by design.
The value of saving money is that it is meant to communicate an opportunity for another one to consume output which may indeed be even more investment. However when money itself is hoarded this is not whats going on. No resources are put to use and sits idle.
The fundamental problem is of course bank credit is inherently unstable as a money supply. When inflation starts, times are good and people go into debt making even more inflation. When times are bad, people hoard and no one wants to go into debt, causing deflation which of course causes even more. We get all the wrong things at the wrong time. We should be creating money during deflation and removing it during inflation. This system does just the opposite. Speculators are rewarded during inflation by mis allocating resources and during the deflation phase sitting on cash is rewarded which is essentially doing nothing which was the point of Silvio Giselle.
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