Demurrage-Based Money System by Brian Swichkow

"A gift must be passed on or it will stagnate and eventually become a curse." ~ Lewis Hyde

In a demurrage-based money system, currency—called "free money" by @Silvio Gesell—bears a form of negative interest called @Demurrage. In this system, a stamp costing a tiny fraction of the currency’s denomination must periodically be affixed to it, in effect a “user fee” or a “maintenance cost”; another way to look at it is that the currency “goes bad”—depreciates in value—as it ages. Demurrage currency—a kind of @Living System—subjects @money to the same laws as natural commodities, whose continuing value requires maintenance. In this system, money as a medium of exchange is decoupled from money as a store of value. Whereas interest tends to concentrate wealth, demurrage promotes its distribution. In @The Natural Economic Order, Gesell writes:

"Only money that goes out of date like a newspaper, rots like potatoes, rusts like iron, and evaporates like ether, is capable of standing the test as an instrument for the exchange of potatoes, newspapers, iron, and ether. For such money is not preferred to goods either by the purchaser or the seller. We then part with our goods for money only because we need the money as a means of exchange, not because we expect an advantage from possession of the money. [...] In this system, friends and acquaintances assist each other mutually as a matter of course with loans of money. No one keeps, or can keep, reserves of money, since money is under compulsion to circulate. But just because no one can form reserves of money, no reserves are needed. For the circulation of money is regular and uninterrupted."

@One Economy will have a demurrage component for non-living assets(@Financial Capital).

Application

Although demurrage was applied as long ago as Ancient Egypt, the best-known example was instituted in the town of Worgl, Austria, in 1932. To remain valid, each piece of this locally issued currency required a monthly stamp costing 1% of its face value. Instead of generating interest and growing, accumulation of wealth became a burden—much like possessions are a burden to the nomadic hunter-gatherer. People, therefore, spent their income quickly, generating intense economic activity in the town. The unemployment rate plummeted even as the rest of the country slipped into a deepening depression; public works were completed, and prosperity continued until the Worgl currency was outlawed in 1933 at the behest of a threatened central bank. ~ @After@Charles Eisenstein, @The Ascent of Humanity

Application

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