07/05/18

In Japan, too, borrowers are scarce. Private non-financial companies, which ought to play the role, have instead been lending to the rest of the economy, acquiring more financial claims each quarter than they incur.

At the end of September 2017 they held ￥259trn ($2.4trn) in currency and deposits. Gesell worried that hoarding money in this way perverted the natural economic order.

It let savers preserve their purchasing power without any of the care required to prevent resources eroding or any of the ingenuity and entrepreneurialism required to make them grow. " Our goods rot, decay, break, rust, he wrote, and workers lose a portion of their principal asset- -the hours of labour they could sell- with every beat of the pendulum'.

Only if money depreciated at a similar pace would people be as anxious to spend it as suppliers were to sell their perishable commodities. To keep the economy moving, he wanted a money that rots like potatoes and rusts like iron.

The BoJ shuns such language (and, in the past, has at times seemed determined to to keep the yen as hard as a ship's biscuit). But in imposing a negative interest rate in 2016 and setting an inflation target three years before,

it is in effect pursuing Gesell's dream of a currency that rots and rusts, albeit by only 2% a year.