The Light Side To Inevitable Decay

Why deterioration is a really good thing.

Things rot.

Metal rusts.

Looks fade.

Game of thrones makes Season 8.

Things inevitably become worthless over time. Sorry to say it, but its true. The nihilistic goth at your school was right. Thankfully, there is one thing that doesn’t degrade over time and that is Gold. Spandau Ballet’s second greatest song.

Also… the metal element… I guess.

Gold never rusts, it never tarnishes and it never leaves you for a more successful Australian economics blogs like Economics Explained.

More than it pretty colour, this is the reason why gold attracted so much attention over the years. It was a store of wealth that kept its value. If your great grandpappy gives you a nugget of gold when he passes, its gonna keep being a nugget of gold long after you decide to join him.

Nowadays, we use money instead of gold as a store of wealth, but the principle remains the same.

You can’t save a bag of tomatoes till your retirement, but you can save your money.

Don’t get me wrong. Saving is an admirable quality in a person, even if your girlfriend starts calling you cheap… but there is a dark side to saving.

You see, money isn’t just used for saving. You can also buy stuff with it.

… that’s the kind of hard-hitting, factual bombshells that you get with quality articles like mine. Like and subscribe down below.

More specifically, people need to buy things for businesses to continue running, people to stay employed and the entire worldwide economy to function. As we all have found out, its rather hard to keep everything going when everyone is sitting inside, not doing anything and not spending their money.

So, like Shaggy, let’s review the situation that we caught up inna.

People want to save as much money as they can for a rainy day and yet things go directly to dumpster fires on the streets if people don’t spend their money.

How do we fix these two opposites?

This problem, as you can guess, isn’t a new one. It has been playing itself out for as long as people have been using money and it scares the ever-loving sticky stuff out of your local economist.

So why is it that you haven’t really noticed this problem? I mean, you haven’t been struggling to keep food on the table just because your neighbour has been putting his loose change in a piggy bank.

Well, for the last few decades, our system has been propped up by a couple factors. Thanks to globalisation, it has been easier than ever for rich people to invest their money around the world and reap the benefits. This meant that rich people weren’t ‘saving’ their money so much as they were ‘investing’.

It also meant that people who were previously destitute could now afford to buy things like, I don’t know, food. That certainly helps.

But for everything else, there is Mastercard.

Credit cards and extra spending by the working and middle classes has pretty much put kept the system together since the 1980s. Since some people spend more than they have, they have offset other people saving their money.

As you can guess, that can only go on for so long before the people with credit card debt can’t buy anymore. We need a better solution.

Enter Silvio Glessel: The Man. The Myth. The Maverick. By all accounts (since this blog is written by one person… my account), the man was god dammed genius and could not have been more prescient if he was the Oracle of Delphi.

You see, Silvio knew that this problem would keep going because people just love hoarding things that don’t degrade: Land, Gold, Books, Mint condition Pokémon cards.

So long as it didn’t become worthless, people would continue to hoard their money, taking it out of the economy and causing businesses to collapse… causing people to panic and hoard more money… causing more businesses to collapse… causing people to panic and hoard more mo- you get my point.

As he saw it, this caused huge groups of people to become destitute, and caused major famines all while food was still plentiful. The people who could save money, hoarded it and those that didn’t have any savings starved because they started losing jobs.

Poverty amid Plenty as he called it. This was only possible because, as we said earlier, money could be stored and didn’t degrade. If those same rich people kept their wealth in bananas, it would make more sense to spend it as soon as possible, because otherwise it would just go off.

Thus, he invented the first ever money with an expiration date. His newly created banknotes would officially become worthless by the end of the financial year. The only way to prevent this would be to take them to a post office and have them stamped for another year, paying a fee for the privilege.

In one fell swoop, he incentivised people with money to spend it as quickly as possible and made post offices relevant again. Sucked in, Amazon!

People hate being taxed for nothing, so they would only hoard the absolute minimum they thought they needed for a rainy day. The added money would bounce around the economy and inevitably make everyone wealthier.

These days, we know this idea as a Negative Interest Rate (discussed in a previous article) and we see this as banks charging us for holding our money. As we saw however, this would only work with digital money like CBDC’s in which it was impossible to trade it for real cash. We could only get Negative Interest Rates if we let computers run the world.
Silvio figured out how to beat this system 70 years before Bendy-dict Bandersnatch even created the first computer in The Imitation Game… Learn your history.

Originally published at https://quantitativepleasing.substack.com.