Matt Levine noted a few months ago that the US dollar is already a digital currency (you don't pay the rent with a sack of coins), it just isn't a cryptocurrency.
If the bank starts "taking away your money" in a way that makes numbers visibly go down, people will convert to cash.
In a cashless society, the central bank has a lot more control and room to maneuver.
Demurrage is nothing but a continuous debt jubilee.
By the way, demurrage has been implemented by ancient egypt and in medieval times and in wörgl and it has brought more prosperity to everyone not less.
The masons that built the cathedrals had much shorter work weeks than us.
Generally interest rates negotiated between lender and borrower take expected (or even actual) inflation into account, so that only works when inflation runs well above expectations, or interest rates are artificially suppressed through subsidized lending.
> incentive not to rent seek
In the literal sense I'm not sure this is the case either. Inflation drives up the value of income-yielding assets, which is why people are scrambling to buy real estate and stocks.
> incentive not to hold money
This is also questionable, because making money a hot potato drives people into hoarding other things like gold and then bartering with them (defeating the purpose of money), and investing in highly speculative assets like, err, Evergrande.
Hold up. You are correct in that demurrage does not affect the spread between loan rates and the "risk free rates. But that does not mean the absolute rates of interest are neutral!
Consider, if money halves annually, but the loan obligation is 55% (-45% interest), I cannot just sit on my loan and get richer. But I can run a very unprofitable business and still pay back my loan!
From a financial standpoint, you might say "no you hold up, what's 'profitable' mean now?" And financially, yes, one would wonder. But there still is intended to be price stability, which means roughly that a steady state business should still be running roughly break-even. (You could still do a the Sraffa or Leontief input-output stuff too.)
From a quantity of money standpoint, less money ==> no price stability, so the above is a contradiction! But money should be increasingly injected into the system too.
Basically at the end of the day, this is a surplus recycling mechanism to try to create a financial steady state corresponding to a real world steady state, so leverage is only needed for actual societal-self-modification.
I wish I could explain/understand better. Hopefully I will end up taking a class with these things.
> This is also questionable, because making money a hot potato drives people into hoarding other things like gold and then bartering with them (defeating the purpose of money), and investing in highly speculative assets like, err, Evergrande.
Yes, that ways Keynes's critique in the end. The question is whether the state is strong enough to just enforce that debts must be payable in the demurring currency. For Keynes the answer is no, but he probably would have said the same thing about pure Fiat currency. Looking at the Russia sanctions, Chinese social credit system, etc. I think it's easy to argue "yes" today.
It's difficult to organize a bet, but if it were easy and you were offering even money, I'd take that bet.
Ironically one of the use cases I advocate blockchain for is how difficult bets are with strangers without smart contracts, albeit for this one I'm not sure we'd be able to agree on the data source as input :P
If by “blockchain” you only meant the Merkle tree ledger part but without any kind of mining, well, that gets rid of the absurdly inefficient part, but it would still be a rather surprising design.
Ok that one was a joke, but I am honestly curious about your literature review since all I see are banks trying to upgrade old databases, yet relying on the same old economic principles.
Right now, all the programming bits is handled by banks and merchants. For example, if a bank wants you to purchase something from amazon - they will give you a cashback on transaction. Similarly, amazon gives vouchers for you to spend only on their site.
If countries could directly program money so no matter where you move it, you cannot spend it on things they don't like or expire it - it gives central banks way more leverage.
There will be no need for welfare vouchers when you can give money that is only spendable on grocery and not reedemable to cash or transfer.
Countries could add complex TDS (taxation at source) rules to their programmable currency any time to influence the economy and spending.
They could control supply which isn't easy today with all the parties involved.
The tools central banks have today are too blunt.