Someone explained this to me last year with an example, and it 'clicked'. The idea is to let the government control the 'velocity of money'. For example, the US is giving out stimulus checks for COVID - the clear goal is to keep business afloat and people spending, but what if they just put the money into savings or crypto? The government did not achieve their goal.
To achieve their goal, they program the money with "must be spent on consumer goods and/or rent in the next 6 months." Then they put a "smart contract" on the money and say "can only be spent if you are drug free and looked for a job in the last 6 months."
It's scary and I am against it, but above is the upside, from a certain perspective.
Japan tried this in the 90s with expiring vouchers, results were subpar.
The bailwick of Jersey sent citizens a prepaid card with £100 expiring in 6 monhts which was also disabled for ATM withdrawls during 2020. Again moderate results.
Money is a unit of account, if you mess with it people adjust quickly, there is no free lunch.
It's not the same as giving Wellbutrin+Ritalin to somebody who is depressed.
Then they must have be doing something wrong?
Obviously people would not be foregoing free money if it was easy to get.
You are arguing that people would not spend "free" 100 usd on their rent if the money/voucher was directed towards rent.
"How bad things must be if the government resorts to giving us free money with an expiration date to force us to spend? I'll spend my 100$ card before it expires but I'll save extra 200$ of my salary compared to before. I have to brace for the worst that it's yet to come, it's going to be really bad before it gets better, especially given that the Government is resorting to giving us free money "
The more you use extreme measures to force people to do what they don't want, the more they'd refuse to do so.
When people are scared and paralyzed by fear, messing with the unit of account won't calm their worries, if anything given how out of the ordinary it is, it could be argued that it makes things worse.
Money is external, people pick the scheme apart rather quickly and you end up worse than before because now you look desperate to force them to do what you want
Right. Push this insanity too much and people will start bartering using gold/silver/crypto and such. Then the gov is forced to ban the use of assets and things get complicated.
Whether this is good or bad on the long run is debate-able, but it would shake things up globally.
I think the key to what ObserverNeutral is saying has a strong point - "People will try to sell their fake, expiring "crypto-dollars" for real money, instead of following the rules.
Even if they can't see the "crypto-dollar" for less "real dollars", they will just go through some medium of exchange. I.e. buy toilet paper for crypto dollars, and sell it at a discount.
Taiwan tried a variant of it during Covid too-- they issued a bunch of vouchers that you could buy for NT$200/500/1000, and stores agreed to take them at three times face value, until the end of 2020.
I tried to get one for my banknote collection, but it got lost in the post. :/
To achieve their goal, they program the money with "must be spent on consumer goods and/or rent in the next 6 months." Then they put a "smart contract" on the money and say "can only be spent if you are drug free and looked for a job in the last 6 months."
It's scary and I am against it, but above is the upside, from a certain perspective.