Sorry, your money just expired
Sorry, your money just expired
Money with an expiration date: The story of the forgotten Argentine economist Silvo Gessel
I believe that the future will learn more from the spirit of Gesell than from that of Marx. The preface to "The Natural Economic Order" will indicate to the reader, if he will refer to it, the moral quality of Gesell.
John Maynard Keynes, General Theory of Employment, Money and Interest (1936)
If Argentina is one thing, it is a fertile ground for monetary and currency experiments, combined with a healthy dose of corresponding defaults and hyperinflations.
One Argentine who has recently resurfaced now that WEF-led governments are all drooling over China’s CBDC and would like to launch their own dystopia coin as soon as possible, is Silvio Gesell (1862-1930).
Gesell, the founding father of timestamped money
Silvio Gesell, in addition to being the father of the founder of beach town "Villa Gesell", is the world's best-known economist from Argentina, even though most probably have not heard of him.
He was cited by Keynes in "The General Theory", and is viewed as a predecessor of macroeconomic (Keynesian) thought.
Now that CBDCs (Central Bank Digital Currencies) are high on the priority list to make sure the Nation State can exert its full control over the monetary wealth of its citizens, the world's leading universities and international financial organizations have renewed their interest in the monetary ideas developed in his work.
Gesell came up with “timestamped money”, and not in the good way Satoshi envisioned Bitcoin’s time chain of tick-tock, next block, but in the sense of: your money is worthless after this expiration date.
Round trip Germany-Argentina-Weimar
Gesell was born in Sankt Vith (then part of Germany, currently Belgium). For economic reasons, he decided to emigrate to Argentina in 1887, back when Argentina was a top 3 GDP per capita country and growth rates were at steady 8-10% YoY levels.
With the help of his brother Paul, he opened a branch of what would be the beginning of Casa Gesell, where he began selling surgical and pharmacy material, later specializing in baby products. Back then this was the equivalent of WiFi money and selling whatever works, so props for that.
In 1889, as a result of one of the first big international crisis Argentina had to deal with after many years of growth (Baring Crisis), Gesell begins to do what so many immigrants do after being established in Argentina for a while: he starts to analyze the monetary system in order to find a solution to the crisis.
After observations and conclusions, Gesell finishes his first theoretical treatise on finance in 1891, entitled Die Reformation des Münzwesens als Brücke zum sozialen Staat (The reform of the monetary system as a bridge to a welfare state). That title alone should give you goosebumps and not in a pleasant way, let alone when you see it written down in German.
In 1898 Gesell returned to Germany with his family and left his brother in charge of the business in Argentina. Of all places, they settle in Weimar. Seems like there is no such thing as a coincidence.
He did revisit Argentina multiple times afterwards, but left most of his local businesses in the hands of his brother and kept working on economic theories in Germany. In 1916 he published his best know work, titled "The Natural Economic Order". This book was the genesis block for the infamous idea of timestamped money.
Autist history note: In 1919, Gesell accepted a position in the Socialization Commission from the Bavarian Soviet Republic (an unrecognized separatist socialist fork of a part of Germany, which is a WILD and bloody story if you’re interested). In this role, Gesell immediately drafts a law for the creation of free money or Freigeld, but his stay in office only lasted for a mere 7 days. After the bloody end of the Bavarian Soviet Republic, Gesell was detained for several months until he was acquitted by a Munich court, thanks to his own defense speech alleging that he only exercised the mandate of minister out of duty, and not because of any ideological affinity with the Bavarian Soviet Republic, wink wink. Mara would say that even thinking about accepting an official post in a forked Bolshevik administration is a sign of ideological affinity, and as you will see in the next part where we dive a bit deeper into Gesell’s economic thought, that is probably closer to the truth.
Gesell, Keynes and the "euthanasia of the rentiers"
The concept of timestamped money is that of a currency that would depreciate over time, at scheduled intervals, in which portions of the user’s stake would automatically be discounted, nowadays called negative interest money or “oxidizable currency”. Every central banker holds a bit of Gesell in his core.
Keynes loved the idea, and he mentions it multiple times in his General Theory of Employment, Money and Interest (1936), and explains the main principle in a concise enough way to repeat it here (emphasis added) in its entirety:
According to this proposal currency notes (though it would clearly need to apply as well to some forms at least of bank-money) would only retain their value by being stamped each month, like an insurance card, with stamps purchased at a post office. The cost of the stamps could, of course, be fixed at any appropriate figure. According to my theory it should be roughly equal to the excess of the money-rate of interest (apart from the stamps) over the marginal efficiency of capital corresponding to a rate of new investment compatible with full employment. The actual charge suggested by Gesell was 1 per mil. per week, equivalent to 5.2 per cent per annum. This would be too high in existing conditions, but the correct figure, which would have to be changed from time to time, could only be reached by trial and error. The idea behind stamped money is sound. It is, indeed, possible that means might be found to apply it in practice on a modest scale.
— John Maynard Keynes
To be fair, Keynes did mention that Gesell’s theory was “incomplete”, but to call stamped money “sound” comes across as a joke to most hard money fans. Then again, it’s Keynes doing the talking here, so it shouldn’t be too surprising. Just imagine the amount of government bureaucracy involved in that stamping industry! Basically the holy grail for any central planner.
The ideas that Keynes took from Gesell defined a central point of Keynesian thought: “the euthanasia of the rentier”. This theoretical, political and historical point of Keynes' thought is spun up in the same book, and can be summarized as the belief that once high interest rates become a thing of the past as a result of expansionary monetary policy, the people who live off their savings would gradually and quietly disappear.
CBDCs, also known as Gesellcoins
It would’ve pleased Keynes and Gesell to learn that most of their theories and ideas are being that sounded so plausible in theory, are being put into practice by our central planning overlords at an accelerating pace.
As Keynes predicted, these policies are wrecking people who want to live off their savings. He probably wouldn’t agree that this not just due to loss in percentage returns on those savings, but also due to the loss in purchasing power thanks to persisting inflation tied to the expansionary monetary policies.
We’ve seen the indirect implementation of Gesell’s brainchild by central bankers at the ECB in the EU: depositors with more than a certain amount of euros in a European bank account would get hit with negative interest rates automatically. There, the modest scale proposed by Keynes went right out the window.
An even more direct implementation of timestamped money would be possible with a CBDC, where every instance of money is controlled and checked on a centralized ledger.
In a cashless CBDC society, Governments only need to check the individuals ID, social security number or whatever other bar code they decide to use to tag their citizens, and within a blink of an eye they would have the total $ amount tied to that individual.
This makes it very easy to visualize the total wealth in “cash” tied to any individual, and proceed to compound negative interest rates accordingly, or to have a percentage that has been timestamped as useless every x couple of months. Just imagine you have 30 days to spend your money, otherwise it becomes useless. Pure central banker joy!
Some notes
If you would like to learn more about CBDCs, I recommend signing up for BowTiedScholar, who’s work on this subject is of very high quality.
In addition I can also recommend reading Cashless: China’s Digital Currency Revolution, since it explains in great detail in which ways countries can set up the framework for a digital currency, and how this is done specifically in China.
It is also a good way to see the CBDC world through a no-coiner / statist lens (the author is of the opinion that China has done a great job and is lightyears ahead of the West - probably true in terms of cross-referencing literally everything from social scores, medical records to movement analysis of their citizens.
If you dig those things, the CCP panopticon sounds like a great plan. If you prefer a more sovereign individual approach to your personal finances and want your coins to be your coins, it is the equivalent of future hell on earth.
See you in the jungle, frens!
Thanks for highlighting Gesells. As you noted, he’s not a mainstream figure taught in most US economics courses.
I definitely agree that this is a few steps away in the govt playbook. It’ll in fact be sold as a benefit since cash is “such a hassle, we’ll just get rid of it and now you can have all your money instantly available all the time through CBDC.”
Most will believe this without critical thinking until it’s too late.