[P2P-F] Freicoin - Bitcoin with Demurage (Kevin Flanagan)

Fri Jun 29 16:11:05 CEST 2012

First of all, I wish that freicoin succeeds int its goals. But here some
arguments that show that it might not work.

1.The only reason for investment in a capitalist economy is  the
maximization of profits. When you put demurage, you increase the difference
of possible profits between holding your money and investing.
That doesnt explain though why the profitability of Banks or of investments
in general decreased in the first place.
That banks dont lend is a byproduct of the crisis and not the other way
around.

2. There are other assets other than production that they could invest
their money in ,avoiding the demurrage. The ollar and euro have a form of
"demurrage" right now. Their value drops in comparison to Gold.

3. There are many equivalent economic policies that have been used in the
past and failed to increase investments in production. Taxes on money for
example might not make money to disappear but it creates the same incentive
as demurrage.

2012/6/29 Kevin Flanagan <kev.flanagan at gmail.com>

> Hi,
>
> The reasoning behind demurrage is to discourage hoarding and encourage
> investment in real assets and economic exchange ie to keep money flowing.
> One of the problems of the current crisis is that money is not flowing.
> No matter how much the banks are bailed out they still refuse to lend.
> If it is too costly to hoard then the only thing to do is invest in
> tangible assets.
>
> It's a stretch to imagine the rich using such a currency by choice.
> At what point would a demurrage currency out compete traditional
> currencies?
> For the poor it is a political choice to use a demmurage currency.
> Since the poor live paycheck to paycheck and their income is usually spent
> quickly on necessities then a demmurage won't effect them as much as it
> would the rich who always have the problem of what to do with their money.
> If enough people used a demurrage currency instead of traditional
> currencies then the value of traditional currencies would start to fall. It
> is possible that traditional currencies could loose value faster than a
> demmurage currency. The rich would have no choice but to choose to use the
> demmurage currency.
>
> One of the things that I don't get about the Freicoin is that there is a
> discussion on what to do with that negative interest. As if the interest is
> charged and that it should go somewhere or to someone. Of course this would
> make it just like a tax.
> In my understanding the interest should not go anywhere or to anyone it
> should just disappear.
>
> Regards
>
> Kevin
>
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-- 

Sincerely yours,

     Apostolis Xekoukoulotakis
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