[edit] I found in another thread that it is assessed at the time of transaction based on how long it has been held. What is to stop someone from simply holding it indefinitely as a backing for another currency like for instance, phycical bitcoin? If everyone did that, it would be a nightmare knowing how much a physical coin would be worth.
Although the coins "are still there" accounted in the chain, not all of them will be spendable. For example, if an output contains 10 fcn but has been frozen for a year, anybody (not only the owner) can know that the owner will spend at most 9.5 fcn (considering 5% demurrage). So anybody can know at any given time how many freicoins can be spent. Lost wallets can be ignored after all the funds have been consumed through demurrage, effectively recyclign them.
Wow, really interesting read, though I have the impression I have read much of it before or read some other stuff maybe that says much of the same.
I am guessing that he is not of the/an "Austrian" persuasion? If not (as seems to me a reasonable guess), can anyone point me to the most apropos, direct, pithy, and relevant "Austrian" counterargument (or "debunking", maybe, they might say imply or imagine)?
I've been asking for this many times in the deflation thread (locked in the economic subforum, interesting discussions about it there), but it seems that no austrian has really taken Gesell seriously enough for a formal critique. The few times you find it is to say something like "Keynes listened to him, but he was even crazier". Followed by some stupid thesis that didn't really belonged to Gesell.
I think Mises, Gesell and Keynes were more or less contemporary, but I don't think that Gesell and Mises knew each other's theories. Keynes and Gesell talked to each other through letters and
Gesell predicted the failure of "Keynes-money" (actually he wasn't the first to propose it).
Although Gesell was mostly libertarian, he believed that money was a natural monopoly and thus one of the few legitimate functions of the state.
I like E.C. Riegel critique to statist money, I have to end his "The new approach to freedom" and his other books.
I've been trying to synthetize austrian theory with Gesell's theory on interest and I've come to the conclusion that an elastic money supply is not necessary (or desirable), only demurrage. You don't need to maintain stable prices, just avoid runaway deflation caused by hoarding. Well, just discourage hoarding through demurrage. Thanks to all the bitcoiners that have been (and currently are) discussing it with me in the deflation thread, it has been really useful and instructive for me.
The demurrage fees go to miners, the people that maintain the security of the network. What's wrong with that?
Why transaction fees are so much more legitimate?
You want something like 4% to 5% of the market cap per annum to go to securing the network?!?!?! Sheesh, consider merged mining or something, please! Such a percent seems a ridiculously expensive proposition.
EDIT: Bear in mind too that if you do in fact stimulate greater "velocity" that likely also means more transaction fees? Or is the plan to have no fees just the demurrage?
Please do make it merged-mineable, if you must give 4% to 5% to miners each year, it might really help small miners who scrounge up the cash for a Jalapeno coffe-warmer to cover their coffee-warming costs once everyone and their dog has at least a few Jalapenos and maybe a larger unit or few in the family (footwarmers and such, y'know...)
Take into account that 5% of the market cap is not the same with velocity 1 that with velocity 20. Velocity pushes prices high, so the coins that miners get are worth less. The percentage of the economy that are the miners is lower with a higher velocity, and we expect a high velocity.
5% of the money supply with V=20, would be 1/400 of the GDP (well, not really the GDP, as the austrian Jesús Huerta de Soto tells us, that's not gross at all, it's focused in final consumption instead of production). I'm making up the numbers, it's just an example.
Of course, we also rely on merged mining. That allows all chains involved to save resources at no cost, not having it would be wasteful.
Transaction fees are allowed but since miners are already rewarded, they won't be as sensible to fees as bitcoin (after the whole base is issued).
I expect low fees and many transactions without fees at all (after all, users are already paying demurrage fees).
The reason for the number is an historical analysis made by one authout I don't remeber and that Gesell cites to have an estimation of the "basic interest", discounting inflation and risk premiums somehow. Of course, that analysis excludes after-Keynes money, in which rates are directly manipualated by the issuing authority.