Anyway back to demurrage. With the above system, its like a big box store / warehouse type of place, and many different products (think food products) are subject to types of spoilage and/or have a best before date. Things could be discounted as they approach their expiry dates to encourage quicker sale. This discounting is where the demurrage would come into play. Can’t just go discounting products when you’ve already issued receipts of a set value for them without making that up elsewhere. Well you certainly can apply it to the value of other products in the warehouse, could even spread it completely even across the entire inventory. So then its not even really like demurrage either, its just a way to absorb spoilage-prevention-discounting. Also any costs to operate the network can be recovered directly from network particpants via their accounts. And of course every input and output from the whole system can be made publicly available.

I could see myself involved with managing such a thing as a line of work and programming the software to allow it on the side ha ha.

http://www.transaction.net/money/cc/cc03.html#hand

‘The conceptual key to understanding this shift involves changing the “arrow of time” in the investment process. Under the present system, the discounted present value of any investment has to be higher than the interest rate of a risk-free government bond. This implies that anything that produces value more than twenty years in the future is basically worthless today, thus providing a systemic incentive not to care about the long-term consequences of our actions. Under the proposed system, the incentive works in the opposite way: income in the future would become more valuable than income today, thereby automatically prioritizing the long-term implications of today’s actions.’

I suppose you’ve read this. I’m curious about your thoughts about this sort of prioritizing of long-term investment. Do you think there’s a better way to ‘reprogram the invisible hand?’

“…banks taking TARP funds and not loaning them out.”
Of course, in the existing regime the banks can, and do restrict the supply of credit money to the productive sector, but that’s not what demurrage is intended to remedy. The owner of the credit (the “depositor”) is not able to prevent its circulation.

“…we need to consider more ideas about different systems.”
Sure, and, I might add: implement the best ones. We’ve been arguing about these things for years now. We know how to design exchange systems that are capable of achieving significant results.

Later you advocate a ledger based system, which would likely be implemented electronically. Why use ‘stamp script’ when the same technology is available here?

“The problem with money as we’ve known it, is not so much the slow velocity of its circulation, but the lack of adequate supply of money going to the productive sector. ”

Sounds like six of one, half a dozen of the other to me. Increased velocity allows a population to get by with a smaller numerical amount of currency to promote the same amount of business. But stated that way I don’t really see how it’s different.

“…but account (ledger) balances cannot be hoarded, and they comprise the bulk of the money supply.”

One example of ledger-based hoarding leaps readily to mind: banks taking TARP funds and not loaning them out. How is that not hoarding? Perhaps under credit clearing it couldn’t, if that’s what you mean. Though I’d need some explanation as to how.

I’m not saying demurrage is the right answer. But it’s an approach that has had success in the past and deserves consideration.

I think one of our bigger problems is intellectual monoculture about money. For deeper systemic robustness, we need to consider more ideas about different systems. I think as people develop more knowledge and creativity about how they transact, they’ll invent ways to construct economic systems ad hoc to solve problems. Check out metacurrency.org for some ideas.

I wouldn’t build an entire economic system with demurrage. But it deserves a place in the toolbox.