No. VAT is what you would consider to be fiscal policy. It would be a tax that the government imposes on you. The transaction fees would be money that ends up in the government’s coffers, which the government would put to use somewhere. Increasing/decreasing VAT wouldn’t decrease/increase the amount of money in circulation. It would just increase/decrease the amount of money that is in the government’s control.
The transaction fees that I’m proposing here would be monetary policy. There would be huge tanks of money that noone uses. They would be filled up/emptied depending upon how above/below the current amount of money in circulation is from the target.
More money in circulation? Transaction fees increase, more money gets pulled out from circulation and gets put in the tank. Less money in circulation? Transaction fees get lowered (mostly negative) to get money from the tank into the economy.
This is possible only using an online only currency with a predefined algorithm controlling the transaction fees.
Doing this with hybrid currency (like we have now) would be an absolute bureaucratic nightmare. Imagine having to pay 1.00023 dollars every time you get a bag of chips. Imagine being a business where you have to manually input, document and pay the daily changing VAT to the government. The current system of changing interest rates for the federal reserve funds reserves this tedious calculation to the banks instead of all businesses.
Isn’t it possible with a VAT-like system, where a collecting agency returns the collected money to the central bank?
Imagine being a business where you have to manually input, document and pay the daily changing VAT to the government.
This actually doesn’t seem too bad. Most points of sale are digital.
Imagine having to pay 1.00023 dollars
Instead of changing it daily, only change it monthly/quarterly/… when the accumulated change is large enough to make a one dollar change on a 100dollar purchase? Isn’t the decision to change the interest fork currently only made after gathering macro-economic indicators anyways?
I understand that insantly changing the transaction cost has an even faster reaction. But monthly might be good enough?
No. VAT is what you would consider to be fiscal policy. It would be a tax that the government imposes on you. The transaction fees would be money that ends up in the government’s coffers, which the government would put to use somewhere. Increasing/decreasing VAT wouldn’t decrease/increase the amount of money in circulation. It would just increase/decrease the amount of money that is in the government’s control.
The transaction fees that I’m proposing here would be monetary policy. There would be huge tanks of money that noone uses. They would be filled up/emptied depending upon how above/below the current amount of money in circulation is from the target.
More money in circulation? Transaction fees increase, more money gets pulled out from circulation and gets put in the tank. Less money in circulation? Transaction fees get lowered (mostly negative) to get money from the tank into the economy.
This is possible only using an online only currency with a predefined algorithm controlling the transaction fees.
Doing this with hybrid currency (like we have now) would be an absolute bureaucratic nightmare. Imagine having to pay 1.00023 dollars every time you get a bag of chips. Imagine being a business where you have to manually input, document and pay the daily changing VAT to the government. The current system of changing interest rates for the federal reserve funds reserves this tedious calculation to the banks instead of all businesses.
Isn’t it possible with a VAT-like system, where a collecting agency returns the collected money to the central bank?
This actually doesn’t seem too bad. Most points of sale are digital.
Instead of changing it daily, only change it monthly/quarterly/… when the accumulated change is large enough to make a one dollar change on a 100dollar purchase? Isn’t the decision to change the interest fork currently only made after gathering macro-economic indicators anyways?
I understand that insantly changing the transaction cost has an even faster reaction. But monthly might be good enough?