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Re: [Taler] Money with capabilities

From: Jacob Bachmeyer
Subject: Re: [Taler] Money with capabilities
Date: Wed, 25 Aug 2021 21:59:04 -0500
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Sebastian Javier Marchano wrote:

    The problem with "just-for-food money" notionally denominated in the
    same currency as "general" money is that it will exacerbate food price
    inflation for everyone:  money that can only be spent on food has no
    other value, therefore rational (and probably most irrational) actors
    will be less reluctant to spend it on food, including paying higher
    prices for the same food, squeezing people who do not have
    "just-for-food money" and who must make trade-offs to balance
    their own
    I believe that this is the fundamental issue behind the "steak on food
    stamps" problem.

Thanks Jacob, I think that the problem you describe is for a situation where there is a just-for-food currency. Having 1 currency and a payment system that allows you to configure restrictions is different. In some sense, it will be like buying stuff like 18+ where you need your id: * merchants gets the normal currency, no food currency that needs to exchange
 * money supply is different, since there are only 2 currencies
Although I share with you the concern about what it would mean to add this kind of configurable restrictions.

There is a difference between subaccounts in a wallet app that provide softly enforced budgeting (the user can decide to transfer money from one subaccount to another, but the wallet refuses to spend tokens in excess of the allotment for that purpose; this adds merely an extra step if the user reconsiders the budget) and hard restrictions bound to the user's tokens.

We see the "steak on food stamps" problem with just-for-food currency because that is the only such "special-purpose money" that has been seriously used. Any kind of restriction on purchasing power has this effect of making restricted currency less valuable to its holder and therefore increasing the holder's price tolerance for the items they *can* spend it on. This is basic microeconomics: supply (of money in your wallet) and demand (for money to make your desired purchases) govern your perceived value of the money. Money with limited demand (because it can only be spent on some items) is less valuable to its holder and therefore *more* likely to be spent frivolously.

Yes, even age restrictions: minors (who already have less understanding of the value of money, which is one of the reasons we put limits on them in the first place) will be more likely to spend larger amounts more readily, thus driving inflation in items purchasable by minors. There Is No Free Lunch Here.

Lastly, there is a "thin end of the wedge" here. Today it is minors, tomorrow it is people with addictions, somewhere down the line it is disfavored ethnic groups. There are some things that should *not* be made easy. This ethical principle used to be well-understood.

-- Jacob

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