Make No Mistake: Programmable Digital Currencies Are Weaponizable Money

• Make No Mistake: Programmable Digital Currencies Are Weaponizable Money
  by Peter C. Earle, April 24, 2021, https://www.aier.org/
  Earlier this year, China began to roll out a project that had long been in the works––a digital version of its currency, the yuan, is now being used in four Chinese cities. The Chinese government sees two major potential benefits to the experiment: a tangible challenge to the U.S. dollar’s global ubiquity, and a way to control how Chinese citizens spend their money.
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  As a government-issued currency, the digital yuan can be manipulated and monitored in a number of ways. Importantly, it is programmable. Writes The Wall Street Journal, “Beijing has tested expiration dates to encourage users to spend it quickly, for times when the economy needs a jump start.”
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  Although the concept of a currency which is artificially inflatable/deflatable on demand seems novel, it has its roots (as do so many concepts) in the theorizing of a long-dead economist. A German entrepreneur by the name of Silvio Gesell witnessed Argentina’s 1890 financial crash firsthand. The ensuing unemployment, poverty, and economic stagnation convinced him that something needed to change. Such crises occurred, he theorized, because people hoarded money out of fear and brought business to a halt, argued Gesell––this he dubbed “poverty amid plenty.”
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  To encourage quicker spending, disincentivize saving, and therefore avoid more catastrophic financial crashes, Gesell proposed money with an expiration date. “Currency Reform as a Bridge to the Social State,” his first published work, detailed a system in which paper bills would expire unless they were stamped––renewed––for a fee. This ultimately meant that holders of money incurred a demurrage cost, which is the cost of holding a given currency. Because of Gesell’s proposed renewal fee, savings had a negative interest rate. 
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