Hacker News Reader

Comment by droopyEyelids | Hacker News Reader

What pushes the bank of england to such an aggressive and obnoxious policy?

Is there massive, perfect counterfeiting of existing banknotes?

I think it's more to prevent you from sitting on a mountain of cash the government is unaware of. Generational money, laundering and the like. Forces you to admit to all your cash or lose it. It smells pretty evil and totalitarian to me.

It's similar to the demonization in India in 2016 where the goal was to force people to declare their piles of black money. People don't always declare things correctly for tax purposes, and black money leads to other parallel economies (terrorism, trafficking, etc). In modern times it also encourages people to switch to digital payments rather than handling cash, something which makes tracing money easier in general.

Note that it didn't end very well for India. The initial claims are conveniently forgotten and people just suffered. More than 99% of the currency got returned anyway, contradicting government's claims.

Note that I didn't comment on the outcome, only the intended purpose. I suggest reading the demonization wikipedia article for more examples if the India example doesn't satisfy you.

https://en.m.wikipedia.org/wiki/Legal_tender#Demonetization

It has little in common with the Indian situation, since the Bank of England will exchange these notes indefinitely. Other banks will usually also accept them (at least for their customers) for several years.

It's routine, it's happened to 13 notes since 1990: https://en.wikipedia.org/wiki/Bank_of_England_%C2%A320_note

It smells pretty evil and totalitarian to me to force people to wait generations until they get to work again. Imagine if we just did away with the handwaving and just wrote "ownership of this bill turns another human into your debt slave for eternity until you spend it". Maybe then it would occur to people why there is e.g. inflation rate targeting.

Inflation hurts the poor the most, or is that what you are saying?

Inflation hurts people who are least able to negotiate wage increases the best, yes. This is why it tends to be bad for the less well off. It's great for professionals with mortgages; it also tends to be great for people with hereditary wealth, since that's often tied up in land and businesses.

However this has a lot more to do with the supply of oil and gas than the number of banknotes in circulation.

There are a lot of things that might be considered totalitarian about the UK, but this isn't one of them.

Since apparently they've done it a number of times before I assume everyone's used to it, and yes, I suspect counterfeiting is the main drive.

The US hasn't felt the need to enact that measure even with things like the supposed North Korean "superdollars".

https://en.wikipedia.org/wiki/Superdollar

I think the notes don’t last that long. I kept a 10 pound note in my wallet for a few years and it got destroyed far more quickly than US dollar bills. The paper just isn’t as good. I think the notes age out quite quickly.

American "paper" money is almost a cloth, and surprisingly durable.

I didn’t actually realize that old 10 GBP paper note is now worthless except to the BoE until reading this. Sigh.

Another example of physical savings in fiat paper being demonetized away by the state.

> Another example of physical savings in fiat paper being demonetized away by the state.

This is the reason why people joke about storing money in your mattress. You aren't supposed to do it.

You aren't supposed to do it because the state can't exercise veto power over cash transactions without due process.

Cash is useful and powerful, so it benefits bankers and politicians to render stockpiles useless periodically.

Actually the reason is much simpler. The government borrows money into existence. It has to eventually pay that money back. If you keep your cash under a mattress for all eternity then those debts can't be paid back because money is not returning from the private sector to the public sector. This also true for private debt, but it is particularly comical with public debt as all the money stored under a mattress has to be replenished to maintain a sufficient amount of currency in circulation.

Imagine it as if you are the government and acting as a dairy farmer and your cows are constantly fleeing onto private land. You can't get those cows back, instead you breed new cows. Since no cows return from the private lands and there is a constant stream of escaping cows, private lands are being flooded by cows. People complain about the government printing too many cows, devaluing the value of their existing cows.

You can see, this whole scheme is just a very backwards implemented debt jubilee in an environment where an actual debt jubilee would lead to pitchforks coming from the rich.

Eg system requires rehypothication of private debt to sustain itself.

If there are 'too many' of my cows on your land, my cows magically get smaller and the size of your cows on my land get bigger.

You can see, car analogies are bad enough.

It's value is to the person accepting it. £1 notes are worth more than £1, at least the last time I looked.

As mentioned in the article, these notes can be exchanged at a bank or post office. Those out of circulation can be exchanged at the BoE.

That’s great if you are in the UK, which I am not.

How does it make a difference? Presumably they've always been near worthless where you are anyway?

But that doesn't explain why they would put an expiration date on the existing bills.

They want to know who has the cash.

Reply on news.ycombinator.com