This article is translated from Noema's piece “What If Money Expired?” by Jacob Baynham, who has won the National Magazine Award and was the T. Anthony Pollner Distinguished Professor at the University of Montana's School of Journalism. The content of the article does not represent the translator's views. It should also be noted that the term "money" in the original text will be translated as "钱，" "金钱，" or "货币" in the translation, depending on the context.
A few weeks ago, my nine-year-old son Theo invented a currency to facilitate trade in his living room fortress. As a budding capitalist, he opened a fortress gift shop, selling bookmarks hastily made from folded paper and random tape. These bookmarks also featured slogans like "Love," "I Rule," and "Loot, Money, Moolah, Cash."
Theo's six-year-old brother Julian was very interested in these bookmarks, and Theo was happy to sell them to him for $1 each.
"Wait," I shouted from another room. "You can't accept real money when you sell them." (I knew this was state intervention.)
Theo reluctantly agreed. After some thought, he implemented a new scheme: his brother could print money himself using a marker and paper. As long as Julian wrote "I CAN WRITE" three times on a piece of paper, that paper could become legal tender. Any spelling mistakes would render the money invalid.
"It must have some value," Theo explained, "otherwise, you could just print a few million dollars."
Julian complained a bit, but soon used his newfound wealth to buy a bookmark. Theo pocketed the money, and thus the commercial activities of the fortress began.
What is Money, Really?#
"Half of the history of money is based on imagined coercion, and half is whimsical logical speculation," Jacob Goldstein wrote in his engaging book “Money: The True Story of a Made-Up Thing.” Before money existed, people relied on bartering—an inconvenient system because it required a "double coincidence of wants." If I have wheat and you have meat, then to make a trade, I must want your meat while you also want my wheat. It's highly inefficient.
Many cultures developed rituals for exchanging valuable items, such as weddings, atonement for murder, or sacrificial offerings. A wide variety of items were used in these exchanges—from shells to cattle, sperm whale teeth, and tusked pigs. These goods helped fulfill two core functions of money/currency:
- They can serve as a unit of account (providing a standard for measuring value).
- They can serve as a means of storing value (things that can be accumulated now and used later).
Due to the flaws in the barter system, these goods could not fulfill the third function of money, which is:
- To act as a medium of exchange (a neutral resource that can be used to easily exchange goods).
It wasn't until around 600 BC that currency fulfilling all three functions was created. At that time, the Kingdom of Lydia (in what is now Turkey) produced what many historians believe to be the first coins: lumps made of a blend of gold and silver, stamped with a lion design. This idea later spread to Greece, where people began exchanging goods for coins in public places called agoras. Money quickly created an alternative to the traditional labor system. Now, people could earn wages through short-term work instead of only working for wealthy landowners' farms in exchange for food, shelter, and clothing. This gave people the freedom to leave bad jobs but also created insecurity about finding work when needed.
Aristotle was one of those who did not believe in money. He worried that the Greeks would lose something important in their pursuit of coins. Suddenly, a person's wealth was no longer determined by labor and intellect but by cunning ability.
One summer, the philosopher Thales (who coined the phrase "Know Thyself") predicted a bountiful olive harvest in Greece. Before the olives ripened, he rented all the presses on the surrounding islands, and when harvest time came, everyone went to him to press their olives, making him very wealthy. We now call this good business sense. Aristotle called it "unnatural."
There were others who distrusted commerce. In mythology, Hermes is both the god of merchants and the god of thieves. The Bible recounts the story of Jesus overturning the tables of money changers and merchants in a Jerusalem temple. In those early days (as today), commerce meant exploitation—exploitation of natural resources and others. (On the other hand, the Incas built an entire civilization without any currency; they had a complex tribute system and structured specialization of labor.)
Nevertheless, the concept of money spread. In 995 AD, paper money appeared in Sichuan, China; at that time, a merchant in Chengdu provided beautiful receipts in exchange for their iron coins. Paper money freed people from the burden of wealth, facilitating long-distance trade.
As money evolved, it became increasingly symbolic. Early paper money functioned as a promissory note, always redeemable for various valued metal coins. But by the end of the 13th century, the Mongol emperor Kublai Khan invented paper money that was not backed by anything. It was money because the emperor said it was money. The people accepted it. In the following centuries, with the invention of stock markets, central banks, and more recently cryptocurrencies, money achieved even more remarkable leaps of faith.
Today, the physical currency in circulation amounts to about $2.34 trillion in dollars, half of which is held abroad. This only accounts for 10% of the total gross domestic product (the total monetary value of all goods and services produced in the U.S.). Total bank deposits in the U.S. are about $17 trillion. The total wealth of the country (including non-monetary assets) is about $149 trillion, more than 63 times the total amount of cash available. The difference between these values is like dark matter in the universe—we have no way to quantify it, yet without it, our understanding of the universe or the economy would collapse.
For most people in developed countries, money is just a line of data on a bank computer. Money is abstract, absurd. It is a belief system, a language, a social contract. Money is trust. But the rules are not set in stone.
"Money is always like this," Goldstein wrote, "at any given time, whatever is money seems to be the natural form that money should take, while everything else seems to be irresponsible madness."
How This Looks Through a German's Eyes#
Over a century ago, a fervent, vegetarian, free-love advocating German entrepreneur and self-taught economist Silvio Gesell proposed a radical reform plan that could completely transform the monetary system as we know it. He wanted to create money that would expire over time. He explained that our current money is an inadequate means of exchange. The wealth of someone with a bag of money is not equivalent to the wealth of someone with a bag of agricultural products, even if the market recognizes the equivalence of those products to that money.
In his groundbreaking 1915 book “The Natural Economic Order,” Gesell wrote: "Only money that becomes outdated like newspapers, rots like potatoes, rusts like iron, and evaporates like ether can withstand the test of being an exchange tool for potatoes, newspapers, iron, and ether."
Born in 1862 in what is now Belgium, Gesell was the seventh of nine children. Unable to afford tuition, he dropped out of high school and found a job in the postal service, then moved to Spain at the age of 20 to work in a trading company. Four years later, he moved to Argentina, where he established a company importing medical equipment and a factory producing cardboard boxes.
During the 1880s, Argentina's economy thrived. Using capital borrowed from Europe, the country heavily invested in railroads and other infrastructure, aiming to integrate its resources into international trade. However, the dividends from these projects arrived slowly, making it difficult for the country to repay its debts. Meanwhile, inflation was causing the national currency to depreciate, leading to a continuous decline in workers' real wages. In 1890, Argentina defaulted on nearly £48 million in national debt, most of which was insured by a British commercial bank. Argentina's GDP fell by 11% in one year, plunging the country into severe recession and political turmoil.
In 1898, the Argentine government began implementing deflationary policies in an attempt to cure the economic malaise. The result was rising unemployment, and uncertainty led people to hoard money. The economy stagnated. Gesell realized that there was enough money to circulate. But the problem was that it wasn't circulating. He believed that the properties of money (durability and storability) hindered its circulation: "When confidence exists, there is money in the market; when confidence is needed, money is withdrawn."
Those who lived off labor suffered the most. If I go to the market to sell a bushel of cucumbers, and food prices are falling at that time, shoppers may not buy them, preferring to wait until next week when they can buy them at a lower price. My cucumbers won't last a week, so I am forced to lower my price. A spiral of deflation may ensue.
French economist Pierre-Joseph Proudhon said: "You can think of money as the key that opens the door to the market. But that is not the case—money is the bolt that closes them."
Gesell wrote that the faults of money do not end there. When small businesses borrow from banks, they must pay interest on those loans, which means they must raise prices or cut wages. Thus, interest is private profit at the public's expense. In reality, the rich get richer while the poor get poorer. Such cases are rampant in our economy: the wealthy earn more (for example, the minimum investment for high-yield hedge funds is $100,000), while the poor pay higher costs (such as high-interest predatory loans).
"Merchants, workers, and stockbrokers all have the same goal: to exploit market conditions, that is, the general public," Gesell wrote. "Perhaps the only difference between usury and commerce is that the exploitation of professional usurers is more targeted at specific individuals."
Gesell believed that in our current economy, the most rewarding idea is to give as little as possible in each transaction while gaining as much as possible. He thought this would make us poorer materially, morally, and socially. He lamented: "Exploiting the needs of neighbors and using various sales tactics to prey on each other is the foundation of our economic life."
Silvio Gesell, from Wikipedia
To correct these economic and social ills, Gesell suggested changing the nature of money to better reflect the goods it exchanges. He wrote: "If we want money to be a better medium of exchange, we must make money a worse commodity."
To achieve this, he invented a currency that would expire, called Freigeld, meaning free money. (Translator's note: translated as "自由币" later in the text.) (It is free because it is exempt from hoarding and interest.) The theory works like this: the back of a 100-unit Freigeld note has 52 date-stamped boxes; to ensure it remains worth 100 units, the holder must affix a 10-cent stamp each week. If you want to hold this banknote for a whole year and keep it worth 100 units, you need to affix 52 stamps on its back—costing 5.20 units. Thus, the holder of this banknote would lose 5.2% each year. (The value of the stamps and the affixing rate can be adjusted if necessary.)
This system operates in contrast to our current system. In today's system, the money held appreciates over time due to interest. In Gesell's system, the stamps become a personal cost, and the income they generate becomes public revenue, thereby reducing the additional taxes the government needs to collect and enabling it to support those unable to work.
Money can be deposited in banks, allowing it to retain its value, as banks will be responsible for these stamps. To avoid paying stamp fees, banks will be incentivized to lend, transferring the holding costs to others. In Gesell's vision, banks could lend very freely, so much so that their interest rates would eventually drop to zero, and they would only charge a small risk premium and management fee.
Using this stamp-backed currency, the productivity of the economy would be fully unleashed. Capital would be open to everyone. Meanwhile, a Currency Office would maintain price stability by monitoring the amount of money in circulation. If prices rise, the Currency Office would destroy money. And when prices fall, it would print more money.
In this economy, the velocity of money circulation would be like people tossing around a hot potato. There would no longer be "unearned income" allowing lenders to grow rich off interest. Instead, individual economic success would be directly related to the quality of their work and intellectual capacity. Gesell envisioned this would create Darwinian natural selection in the economy: "Free competition promotes efficiency and allows free competition to spread further."
This new "natural economic order" would accompany land ownership reform, achieving "Free Land," where land would no longer be privately owned. Current landowners would receive government land bonds as compensation for at least 20 years. They would then pay rent to the government. Gesell imagined that this rent would be used for government spending and to provide pensions for mothers to help women achieve economic independence and assist them in ending relationships when they wished.
Gesell's ideas saved private, competitive entrepreneurship from what he saw as the systemic flaws of capitalism. Gesell could be described as an anti-Marxist socialist. He was committed to social justice but also agreed with Adam Smith's view that self-interest is the natural basis of any economy.
Marx advocated for the political superiority of the exploited through organization, while Gesell believed that we only needed to eliminate economic barriers to realize our true productive capacity. He thought it was possible to grow the pie and distribute it more fairly through systemic change, rather than redistributing it through revolution. He wrote: "We will not leave our heirs with an endless source of income, but the economic conditions created in this way are sufficient to ensure they receive the full labor yield, are they not?"
Although many dismissed Gesell as an anarchist heretic, his ideas received support from leading economists of the time. John Maynard Keynes devoted five pages in his book “The General Theory of Employment, Interest, and Money” to Gesell, calling him a "strange and overly neglected prophet." He believed the idea behind stamp-backed currency was reasonable. Keynes wrote: "I believe that future generations will learn more from the spirit of Gesell than from Marx."
In 1900, Gesell retired and farmed in Switzerland, where he published several pamphlets, books, and magazines on monetary reform. In 1911, he moved to Eden, a single-tax vegetarian commune outside Berlin; there he criticized monogamy and advocated for free love. In 1919, as pacifist poets and playwrights established the Bavarian Soviet Republic in Munich, they invited Gesell to serve as finance minister. Gesell devised plans for land reform, basic income, and Freigeld. The republic lasted exactly one week before being overthrown by the communists and then suppressed by the German army; the army detained Gesell and charged him with treason.
He mounted an impassioned defense. "I did not use force, strikes, or paralyze businesses and factories, nor did I engage in sabotage against capital," he said in court. "I only used the one weapon the proletariat already possesses—work. By suggesting that the masses engage in unrestrained, persistent work, I aim to topple the idol of interest."
Gesell was acquitted and resumed writing. He died of pneumonia in Eden in 1930 at the age of 67.
And Then It Happened#
That year, a mine owner near the small Bavarian town of Schwanenkirchen, seeking to restart mining, attempted to obtain a loan from a bank but was unsuccessful. After being blocked by traditional financial representatives, he turned to the Wära Exchange Association, which was founded to put Gesell's ideas into practice. The association agreed to provide the mine owner with 50,000 Wära, equivalent to 50,000 German marks, but it was a currency that would depreciate.
The mine owner then gathered some unemployed miners and asked if they would be willing to return to work, but the wages would not be in legal tender but in this new currency. They agreed; after all, any money was better than no money. The mine owner purchased food, clothing, and household goods from warehouses already using Wära. The miners who returned to coal mining could use their wages to buy these goods from the mine owner. Soon, other businesses in town wanted to use this currency to benefit from the sudden influx of cash. Since this currency depreciated by 1% each month, everyone was eager to spend it, and it circulated rapidly in the economy. Before long, Wära replaced the German mark throughout the region, raising the alarm of big banks and the government. Ultimately, the Reichsbank banned the currency, ending the experiment.
Two years later, Gesell's ideas became a reality again in the Austrian town of Wörgl. In 1932, the mayor of Wörgl, a former socialist locomotive engineer, was eager to get his constituents back to work. As a supporter of Gesell's ideas, he devised a plan to replace the Austrian schilling with a work certificate that depreciated by 1% each month.
The mayor paid wages with work certificates, hiring townspeople to improve roads, install streetlights, and build a concrete bridge. The work certificates quickly flowed from merchants to tenants, landlords, and savings accounts. To avoid paying stamp fees, people would pay their taxes early. Within a year, these work certificates changed hands 463 times, creating goods and services worth nearly 15 million schillings. In contrast, the ordinary schilling changed hands only 21 times.
This experiment was dubbed the "Wörgl Miracle." Newspapers in Vienna took notice. The French government expressed interest. 200 mayors in Austria devised similar plans for their communities. However, financial authorities grew uneasy again, believing these local stamp-backed certificates undermined the national bank's currency issuance rights. In the fall of 1933, Austria's Supreme Court banned their circulation.
Inspired by the Great Depression, similar Gesell experiments emerged in the United States and Canada. In 1932, Hawarden, Iowa, issued limited stamp-backed certificates for public works payments. That same year, Anaheim, California, deployed a similar plan. In 1933, Oregon attempted to print $80 million in stamp-backed certificates but was blocked by the U.S. Treasury. In 1936, Alberta's Premier William Aberhart, nicknamed Bible Bill, led a government that introduced a depreciating "prosperity certificate" (which people quickly renamed velocity dollar).
During that decade, 37 cities, 8 counties, and some business groups in the U.S. attempted to issue nearly 100 different types of stamp-backed certificates. All these experiments were localized, limited in scope, and short-lived. In 1933, economist Irving Fisher, who called himself a humble student of Silvio Gesell, tried to persuade President Franklin Delano Roosevelt to adopt national stamp-backed certificates. He even convinced a senator from Alabama to propose a bill to issue up to $1 billion in depreciating currency. The bill never reached a vote. Roosevelt was preparing to take the nation off the gold standard and feared that any further economic innovations would undermine stability.
Gesell had other evangelists, including Frank Lloyd Wright and poet Ezra Pound; Pound was the son of an inspector at the Philadelphia Mint. As a child, Pound had seen men sweating and shirtless in the basement vault, shoveling millions of dollars' worth of silver coins into counting machines "like picking up garbage." He later wrote that it was unnatural for financiers to profit without labor by charging interest on loans. The poet believed that our current economic order stifled present work and creative activity while incentivizing people to manipulate markets and engage in clever (sometimes even fraudulent) profit-making schemes. For Pound, the concept of money was so pervasive and unexamined that money itself had become the end rather than the tool it was meant to be.
In 1935, he wrote an article “What is Money For?” in which he passionately advocated for Gesell's idea of money that would expire. Pound wrote: "The goal of a sound and decent economic system is to solve the problem of providing decent people with food, clothing, and shelter within the limits of existing goods."
Pound referred to Gesell's ideas as "vegetable money," believing it to be a necessary balancing force that would prevent some from hoarding wealth in banks while others had rotting potatoes in their cellars. In Pound's view, a nation's wealth should not be measured by the amount of money but by the prosperity of its creative and productive skills. "When an entire nation has not or cannot obtain enough food for its people, that nation is poor," he wrote. "When there is enough food but people cannot obtain it through honest labor, that nation is rotten."
Pound believed that money is organic, subject to birth and decay, flowing freely between people and promoting generous behavior, more likely to unite society than isolate us. Money that expires would enrich the whole rather than a few. Usury (which we can understand as unrestrained capitalism) is the culprit behind the cultural decay of the post-Reformation era.
Pound eventually moved to Italy and embraced Benito Mussolini's fascism, advocating for a strong national government to implement these ideas. In the process, his artistic idealism gave way to authoritarian decrees. Pound had firm beliefs about economics but was a realist about human nature. He wrote: "In three days, a perfect and just monetary system could be established, and those mercantilists and monopolistic bastards would start coming up with schemes to deceive the people."
What This Means for Today#
Gesell's idea of money that expires "is completely contrary to our understanding of the ideal properties of money," David Andolfatto recently told me. He is a former senior vice president of the St. Louis Federal Reserve Bank and the chair of the economics department at the University of Miami. "Why would you want money to acquire that property?"
But in the economic downturn following the COVID-19 pandemic, Andolfatto recognized the potential value of expiring money during a crisis. The relief checks distributed to American households did not immediately achieve the expected economic stimulus because many people did not spend the money but saved it. Andolfatto explained this as the paradox of thrift. It benefits individuals but harms the collective.
"Well, what if we offered them money that expired over time?" Andolfatto recalled being puzzled at the time. "You give them money and say: if you don't spend this money within a certain time frame, it will disappear."
In his February 2020 paper, Andolfatto referred to this concept as "hot money credits." He noted that during economic panics, "coordination failure" occurs—people stop spending, and others cannot earn. Holding onto cash during a panic further suppresses the economy, creating a self-fulfilling prophecy. So could Gesell's idea of money that expires be a remedy?
"Whether it is feasible depends on the diagnosis," Andolfatto told me. "It's like giving medicine to healthy and sick people. You just take the medicine, and there will be side effects. If the person is very healthy, it won't make them better. It might even make them worse. But if they are sick, taking the medicine could help them recover."
Andolfatto said the problem with issuing pandemic checks with expiration dates would harm those with little savings. Those who have saved money would use the expiring money just like regular money. But those without savings might find that expiring money forces them to spend, providing little help in stabilizing their financial situation.
Andolfatto continued that since he wrote that paper, the U.S. economy has recovered quite well even without using Gesell's radical reform policies. "I admit I am very interested in this idea," Andolfatto said. "You could do this locally. I wonder if it could be done on a large scale from a practical standpoint."
Keynes considered Gesell's expiring money to be only "half a theory"—Keynes argued that it failed to successfully explain people's preference for liquid assets, of which money is just one example. Willem Buiter, former chief economist at Citigroup, told me: "As a medium of exchange, money must also be a store of value." He continued that in a Gesell-style economy, the wealthy would simply store their wealth in another form—perhaps gold bars or ships—that they could exchange for money when they wanted to trade.
Buiter does not believe Gesell-style money could truly solve severe social inequality issues, but he does point out that sometimes it is beneficial for central banks to lower interest rates below zero, especially when inflation and market rates are low, to maintain full employment and resource utilization. In a cashless economy, positive or negative interest rates could be easily applied to digital currency, which is what Buiter and others advocate. But it is hard to imagine how today's governments could practically impose Gesell's tax on hard currency. "If you don't affix stamps, you have to confiscate the money," Buiter said. "That would be quite brutal."
In 1938, psychologist Abraham Maslow spent six weeks with the Siksika people in southern Alberta. (Maslow later proposed the famous hierarchy of needs, which ranks human needs from physiological needs—air, water, food—to transcendence needs.) He discovered a community where wealth was not measured in money or property. "In their eyes, the richest person has almost nothing," he wrote, "because he has given everything away."
Today, for most of us, money is security. We live in a culture that prioritizes safety above all else. Everyone tells us to save money—for health crises, for children's college, for retirement. But can anything, including money, guarantee our lives are safe?
Activist Astra Taylor writes in her new book “The Age of Insecurity”: "Today, many of our methods for trying to make ourselves and society more secure—money, property, ownership, police, military—have contradictory effects that undermine the very security we seek and accelerate the damage done to the economy, climate, and people's lives (including our own)."
The negative consequences of unimpeded wealth accumulation are evident. In pursuit of this goal, human rights violations, corruption, and environmental destruction can all find justification. It is conceivable that many incarnations of money hold different values. Pricing carbon emissions is one way to offset the environmental damage caused by economic growth. Universal basic income and free higher education would help redistribute financial and social capital, making distribution fairer.
More radical questions arise: What if the money you accumulated over your lifetime disappeared with you? What if actuaries calculated the amount of money needed for people to live comfortably and limited people's income to that amount? What would the world look like if a person's wealth was determined by their passion for work (rather than just luck, geography, and privilege)?
Mark Sundeen, in his book “The Man Who Quit Money,” describes a man from Utah who deposited his life savings in a phone booth, completely detaching himself from the monetary system. This is an ancient tradition among devotees and nonconformists worldwide—to become hermits in order to transcend societal norms. Many of the most compelling lives are based on passions that do not earn them money but enrich their lives in ways that money cannot buy. When we find those things that sustain us (art, hobbies, devotion), the value of these activities transcends money and can satisfy us on a deeper spiritual level.
Money may be a language, a way to translate value in a manner we all understand, but money is not the sum of our discourse. The more money a person has, the less meaningful work becomes for them. Meanwhile, the most meaningful work in life (such as raising children or cooking for others) is often unpaid. Yet these are the substance of life, the things that define who we are and how we will be remembered.
Gesell believed that capitalism had defeated communism, but he also recognized the flaws in our current economic order. "Choose progress or choose destruction," he wrote. "We must continue to move forward, through the quagmire of capitalism, to solid ground on the other side."
Is his idea of money that expires more absurd than the status quo we inherit? Perhaps his greatest contribution is reminding us that the rules of money can be reinvented, as they always have been. Money is a construct of our collective imagination, influenced by our complacency, indeed, but also shaped by our quests, values, and highest aspirations. Gesell advocated for a curious, actively participatory approach to our economic systems, so that we might reimagine them to better serve the society we wish to create. He wrote: "The economic order that allows humanity to thrive is the most natural economic order." Thus, our economic order may still need to progress.