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It's a few years in the future and society in general is fed up with hoarders; people who have a lot of money lying around that they don't use. Motivated by the rule that money should roll, they overhaul the (by now fully digital) money-system and add these new rules:

  • Any money you obtain has a 1 year lifetime.
  • If you have not spent that money after 1 year, it will simply vanish from the system.
  • The system is a simple "first in/first out" queue, so if you earn 100 [money] today, that means you need to spend at least 100 [money] in the coming year, or it will start going away
  • Simple loopholes are closed. You can't trade money for money. Buying something and then later selling it back to the same guy means the money returns with a shorter timer; if you bought something 4 months ago and then sell it back to the same person today, you will get money with an 8-month timer on it.
  • Your bank account has a timer on it that shows when and how much of your money will go away, so it won't suddenly vanish.
  • The rule only applies to money, never to goods. This includes goods with only artificial value. However; the buyback rule still applies; if you buy an artificial good and then sell it back to the same entity more than a year later, the money will vanish immediately.
  • The rule applies to both people and institutions. That includes pensions and insurance companies.

Due to the stack system, it should be possible to maintain an effective savings-account of roughly one years' income. But anything beyond that is impossible.

What would happen to society and the economy under these added rules? How does this impact regular people and how does it impact the super rich?

Assume that "people move somewhere else" is not an option as the system will be implemented globally.

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They system already operates in Greece; people are so frightened that any bank deposits will be devalued that they spend the money as quickly as possible. – Ian Ringrose Jan 13 at 13:19
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How are loans treated? Does the money still "belong" to the lender, and will vanish from whoever has it in hand a year after the lender obtained it? Is this implemented for cash, or only digitally? – Karen Jan 13 at 16:29
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The mark of a good businessman/woman matters not how much money they hold but rather the amount of money which flows through them. Everyone would either become a really good businessman/woman or more realistically they would abandon "money" and hoard something else of value. – MonkeyZeus Jan 13 at 19:26
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This sorta happens in the United States in a very specific way. There's a health benefit with many health insurance plans called flexible spending accounts. Until recently, any money in a FSA had to be used by the end of the year or you would lose it. – Ellesedil Jan 14 at 3:31
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The restriction on not being able to buy something back isn't workable, as there are too many legitimate uses of this. Also, it's easily worked around, instead of buying back from one person, it goes through intermediaries. Were this not possible there would be nothing to store value - not gold, not land, nothing, and trade would be difficult to impossible. – Michael Jan 14 at 15:57

18 Answers 18

This move replicates the effects of very high inflation. Money is still a medium of exchange but no longer a good store of value. There is one small respect in which this system is less harmful than inflation: at least the rate of loss of value is predictable.

People's savings are wiped out. With the loss of business confidence, no long term projects can be embarked upon. People demand both to pay and receive1 money upfront when anything is sold, including labour, so wages and prices rise, probably adding real and unpredictable inflation to the artificial steady inflation of the currency scheme.

Lenders lose badly. Existing borrowers gain by being able to (in fact, more or less forced to) pay off their mortgages and so on. Those wanting to borrow now, however, cannot do so since no one will lend to them.

You do not state whether "pots" of money held by banks and other institutions from which pensions are paid would be subject to the same rules. If they are, pensions become worthless.

Hoarding of physical goods, for barter as well as for personal use, replaces hoarding of money. This disproportionately impacts the poor, who have not got the money to buy in bulk, the space to store in bulk, or the security to keep safe whatever officially or unofficially takes the place of money.

If I recall correctly Hugo Chávez once floated a proposal to replace the Venezuelan currency with some sort of coupon that would expire after a few months, but it was never enacted.


1 Added later after second thoughts: It is obvious why an employer or purchaser would want to pay someone quickly - the whole idea of the system is to make money "radioactive". At first sight you might think that the employee or seller would benefit from having their payment deferred, effectively forcing someone else to hold the money for them in a system where holding money is penalised. However I think there would also be another effect in the opposite direction which might dominate. The new system would mean that everyone's held money was decreasing in value at a rate which was highly irregular and known only to them (because it follows the exact pattern in which they had earned money a year ago). Everyone would have their own personal inflation rate. I think that the general effect would be that all money loses value and that all long term transactions would be discouraged, because of the unpredictability. If that effect dominates, better take your money now. After all, there would still be many circumstances in which it was better to have money in the bank than not! But I must admit thinking through all the ramifications is making my head spin, so I might be wrong.

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While true on the short term, hyperinflation doesn't always crash everything. npr.org/sections/money/2010/10/04/130329523/… – Vogie Jan 12 at 16:25
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Actually I understood the described system as that the clock is "reset" when you get the money (so if you give me 100\$, then I can keep that 100\$ for a year even if it would have vanished in the next hour if you had kept it). In such a system, I'd expect anyone to want the money as late as possible, so that it lasts longer. – celtschk Jan 12 at 22:18
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Actually this is wrong. It does not replicate high inflation at all. As far as I can see if from OP's post, if I borrow 100 dollars I have to spend those 100 dollars, but the lender is safe and I will need to repay him at some point. This is different from inflation, where the value of the dept would decrease. – Taemyr Jan 13 at 8:13
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@celtschk, and Taemyr, I think the biggest problem with Erik's scenario is that it doesn't specify how debt is handled. If, for instance, lending out money counts as spending it but having borrowed money does NOT count as having earned it then the entire system could be instantly subverted by everyone lending to everyone else. If, to counter that, the government decrees that if you borrow money the clock DOES start clicking, then the borrower is in a bad position because unless he pays back the loan in less than a year he ends up losing his borrowed money and still owing it in full. – Lostinfrance Jan 13 at 9:22
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I am puzzled by how many votes my rather confused answer is getting. Maybe they like the fact that I am confused because they are confused as well. – Lostinfrance Jan 13 at 9:31

If it vanishes when not spent, then it's not money. Money is:

  • A medium of exchange
  • A unit of account
  • A store of value

If it vanishes when it's not spent, then it's not a store of value, and so it's not money. What happens in a society without money is that people invent money.

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Money is still a store of value, just not an indefinite one. – abcde Jan 12 at 18:09
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Agreed. The very first thing people would do would be to simply turn their money into tangible assets (gold, gems, etc) and use those instead. After a while, someone will have the bright idea of offering those as a store of value, backed by a piece of paper guaranteeing the bearer that sum of gold/gems/whatever. – Richard Jan 12 at 19:23
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If that is the case, then current money isn't money. Inflation means that it doesn't act as a store of value. – Shane Jan 13 at 22:23
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@Shane Inflation impairs its ability to function as a store of value, but doesn't prevent it. 100% loss after a year would mean that it stores no value at all. – Mike Scott Jan 14 at 8:19

Funnily enough, this was already done. Prior to the transition of Fiat Currencies, a common form of currency in the dark/middle ages was Grain Receipts. Farmers would deposit their grain in a silo, get a series of receipts and then exchange them for goods & services, and the recipients of those receipts could exchange them again for grain. Being grain, it does go bad over time, so the receipts were dated and could "go bad" and become worthless. However, this limited the influence of nobility, who couldn't really use grain receipts to fill coffers or have taxes, so the creation of the feudal states also came alongside the introduction of currency based on precious metals... something the nobles had in abundance.

The impact of the two systems were very different. While a fiat currency would be accepted everywhere in a certain realm, Grain Dollars were highly localized based on the location of the grain storage silos, and while they could potentially be traded further away, there was a risk for anyone receiving that currency that the amount of grain would be worthless if they waited to long to retrieve. This created a very diverse economies that were segregated from each other, still operating on a bartering principle for people passing through, or going between townships. Because there was no single bank in the middle, each township would rise or fall depending on their own behest, not the influence of outsiders, nor were there much by way of faceless syndicates controlling things because everything is hyperlocalized.

Some differences to our economy: Savings are only good for hard assets - Stocks could still function, but bonds would not. Real estate, education and heirlooms would be more powerful as investment vehicles. Pensions would be replaced by things like REITs, CMOs, and profitsharing/dividend investments. Credit would be de-emphasized or be in a different execution than what we have now.

If you would like to do some research on systems such as this, you can look at the Ithaca Hour, an existing hyperlocal currency, as well as research on the ancient Jewish economy, which was based on 7-year cycles where all debts were cancelled, and all lands were returned to their original owners.

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Interesting... could you give a more precise example of historical use (time/location)? – SJuan76 Jan 12 at 16:42
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It depends on which one you want. There's evidence of grain banks and something similar going back to 300BC Egypt to the Tally sticks in 12th century England to the koku (based on rice rather than grain) in Japan in the 13th century. It's a really common system all over prior to the introduction of a nobility- or government-enforced bank. – Vogie Jan 12 at 17:54
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I'd like to mention the "Freigeld" concept: en.wikipedia.org/wiki/Freigeld. From the link " (a scheme is put in place to ensure that the money is returned into the cash flow – for example, by demurrage – requiring stamps to be purchased and periodically attached to the money to keep it valid)" – ThorngardSO Jan 12 at 18:42
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Actually a credit, even if interest-free, could be an excellent way to invest your money: "I give you 100\$ now so you can buy this, and you give me back 100\$ in two years." That way you can "save" your money for a longer time (with the usual risk of not getting your money back). – celtschk Jan 12 at 22:14
    
@ThorngardSO This theory of currency was realized in the Wörgl Experiment: en.wikipedia.org/wiki/W%C3%B6rgl#The_W.C3.B6rgl_Experiment – user151841 Jan 14 at 17:37

Nothing Much

The problem is that these rules have an impact that would be hard to detect in our economy. For example:

  • Any money you obtain has a 1 year lifetime.

Oh no! My money is loosing its value after a year of no transactions. Luckily... I don't actually have that much money - my main asserts are my property and the debt the bank owes me (in return for my deposit)... but not actual money.

The only 'money' that could lose in value would be my coin collection (which's value is not tied into face value) and notes lost in the couch - not relevant in a system that is fully digital.

But how do banks store value you ask? Well beyond trading debts/credits a bank could invest in assets - which is entirely permissible:

  • The rule only applies to money, never to goods. This includes goods with only artificial value. However; the buyback rule still applies; if you buy an artificial good and then sell it back to the same entity more than a year later, the money will vanish immediately.

I do note that you add the rule of not selling back to the same entity... but in a market (like the fish market, gold market, stock market, or pretty much any market) you'd expect there to be a plethora of buyers and sellers, so this would be a non-issue. The small risk of collision could be handled by banks.

Again, this is what banks do already today - they invest money in assets (e.g. my neighbors house) so they don't have to keep 'money' sitting around. In summary, rather than an arbitrary 1 year rule, banks today are concerned with the far more real losses of having money sitting around doing nothing! As such they've developed systems to solve this problem and we use them every day without thinking!

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That's very true - with the exception of outliers like Apple having millions in uninvested cash lying around, 90+% of global market already does this. The bulk of people and companies already have a system in place so there isn't money lying around. Money comes in, gets paid to workers, debts & materials. The workers use the money for consumables and services. Pensions aren't cash sitting on shelves, they are various investments in other companies. Bravo. – Vogie Jan 12 at 16:06
    
@Vogie and this law would impact apple because A) they are using international laws to find loopholes, larger than one countries currency laws and B) I suspect they don't have money just sitting there - it's got to be invested in 'something' though I've not heard any details of what. – NPSF3000 Jan 12 at 16:14
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"like Apple having millions in uninvested cash lying around" - Apple doesn't have a room filled with millions (or billions) in cash just lying around. This money is always invested. It's just invested in a lower earning, more secure, cash-like instrument (such as savings bonds or money market funds). These are generally considered "cash" on the prospectus. "Investments" are usually bonds, stocks, or other less readily available forms of wealth. – Jim2B Jan 12 at 18:59
    
I feel this answer is based on confusing "money" and "cash". – R.M. Jan 13 at 22:58
    
@R.M. feel free to post an answer that, within the bounds of the question, lead to a different outcome. Maybe what I refer to is money (depending on your definitions) but if so then what the OP would be changing would be currency... leading my answer intact unchanged. – NPSF3000 Jan 14 at 3:29

Such forms of money have existed in the past. But the money isn't destroyed, just 'taxed'. It is called a demurrage currency.

The ancient Egyptians used such a system with grain deposits. The demurrage was used to pay for loss from rats, for the granary guards, etc.

Middle Ages Europe had a system where the local lord would demand everyone turn in their silver coins for new silver coins, minus a 20% 'fee'. This usually happened once every two years or so. The value of older coins not redeemed would automatically lose 20% of their value.

And Silvio Gesell invented a system of stamp currency that worked very well in the two instances it was tried in a German town and an Austrian one back during the Great Depression. In both cases, you had to buy stamps to keep the value of your script from devaluing over time. The stamps were sold by the organization that issued the script in the first place. Unstamped notes of course were calculated as being worth less.

Today, a local complementary demurrage currency in Bavaria called the Chiemgauer is in use.

And in Canada, there's the Salt Spring Dollar.

In all cases, such a currency enjoys high velocity rates. That is, the rate of exchange over time. Higher currency velocity means more trade is going on. People had an incentive to unload the currency... especially before it reduced in value than they do with regular currencies. So, a lot of investment in hard assets happened -- land, artwork, productivity enhancements, etc. People also donated more money for long term projects like the building of the great cathedrals in Europe. Employment levels are generally higher too. And taxes are paid earlier as well.

All of which died down when the kings took control of currency system in collusion with bankers to institute the debt-based currencies we know today or when the Romans did the same to the Egyptians.

For the two towns in Germany/Austria they were a tremendous success. So much so that the central bank of Austria panicked and declared the currency to be illegal in the case of the Austrian town Wörgl.

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It looks like there's a major difference: in these systems, the timer doesn't reset when the note changes hands, right? – Ben Voigt Jan 13 at 15:48

Your idea is just a tax on non-use and is not new.

In many countries with scaling tax systems, receiving taxable cash is bad, because you could be taxed up to 90% if it is income or you hold it as taxable income for a tax year. That's actually worse than your vanishing cash idea.

Therefore, you either immediately transform it into something "protected" or in a lower tax bracket.

Example: In the US from WWII up until about the 1980s - much of the money owned by the rich was tied up in assets only taxed when profit is taken. When the tax structure was changed, the durable goods were translated back into cash and cash began to flow back through the economy.

Therefore, in your world, people would immediately translate cash into something durable that would not suffer the non-use tax. People would own more "things" rather than cash, and those things would be valuable and tradable.

This would probably lead to more crime because forcing people to physically hold their reserves (i.e. life savings) makes every house a very juicy target.

It would also inflate the value of whatever durable good was used in the place of the vanishing cash. This would cause inflation on that durable good.

It would slow the movement of money, slowing innovation, commerce and your economies.

Lastly, unlike a real tax, where the money eventually does wind up back in the economy, in yours you are removing people's work from the economy.

To really wildly speculate, if it gets out of control - people can't trade it for something durable to hold on to for the future (like to feed themselves if they lose their jobs) - you may see your population growing desperate and fearful of the future - combined with the likely increased in crime, one possible outcome is rioting and possible revolution --or-- the rise of a fascist state or slave system that promises people future food in return for current work.

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Surely inflation is a tax on non-use. Cash in a safe declines in value with the passage of time. So there is an incentive to invest it in something that will generate an income. Most people do this by lending it to a bank.... – nigel222 Jan 13 at 21:17

I can't see it changing much besides maybe banks having a bit more power.

The way I see it, banks would offer plans where they move around your money.

They buy good for you with your money from another bank (or any entity), who will sell them to somebody else through another bank, and so on.

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"The way I see it, banks would offer plans where they move around your money." you know, kinda like the business they do right now. – NPSF3000 Jan 12 at 15:23
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@NPSF3000 True, that's why I find it pretty obvious that it'd keep happening. In this case, though, that would make sure you can keep the money. – Albert Masclans Jan 12 at 15:42
    
I think we can assume that this scheme would be illegal, since the entire spirit of the law is to force people to spend money. – Jon Story Jan 12 at 15:58
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@JonStory The spirit of real-world law is also to force people to pay taxes proportional to their income, but the wealthy and big businesses do a very good job of undermining that intent. If banks can't figure out a way to legally "refresh" money, then we've added another part to the question that amounts to either "What if banks were really stupid?" or "What if financial laws were way more airtight than they are today?" – Ninety-Three Jan 12 at 18:04
    
True but most loopholes in the current system are leftover from centuries of incremental changes to the law, mostly for (the government's) convenience or to add additional taxes. The OP is proposing a dramatic change for ideological purposes which we can expect to yield a much tighter system - at least until we start tinkering with it again – Jon Story Jan 12 at 18:06

That form of money will not be used.

Even though you state that it is not allowed, it would still happen. The free market would create another form of currency. This may be illegal, but people would want a item that could hold its value so they would still do it.

The creators of the currency would have different responses to this: they could ignore it which could lead to more people using other money, or they could harshly respond with force which would scare others into using the 1 year currency.

Either way though, it likely at least a few people would use a new currency to allow their money to exist.

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Actually, a form of this is currently in use.

Government agencies and company departments are given a budget, usually for a year. One form that this budgeting takes is that if you don't spend it all, then you obviously don't need so much in your budget for the next year. You don't get to save any of one year's budget for the next year, and if you don't spend it all, your budget may be reduced for the next year.

So there is no incentive to not spend every last cent.

On a more personal note, you would work until you drop dead, because there would be no way to save up for retirement.

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Using the rules as proposed, couldn't one simply buy valuable assets as a way to sign up for retirement? – NPSF3000 Jan 12 at 16:16
    
Good point! I would think that the system fed up with people saving money would also target any kind of wealth accumulation though. – Michael Richardson Jan 12 at 16:22
    
but that's not what the OP proposes, he even deliberately leaves purchasing assets as a means to preserve wealth. – NPSF3000 Jan 12 at 16:26
    
Then there would be little difference in how it currently works. Very little money actually sits still for any length of time. That said, there is another form of currency that is actually very close to this. I'll edit and add. Actually, I'll add a different answer, as it is very different from this answer. – Michael Richardson Jan 13 at 2:13

Here is an actual currency with a value that deliberately loses value.

Chiemgauer : A German regional currency

1 Chiemgauer = 1 Euro

When you purchase a Chiemgauer, 3 cents goes to a charity of the purchaser's choice and 2 cents goes to the issuing organization.

The Chiemgauer is only valid currency within the Rosenheim region, so they keep the money local.

Every 3 months the Chiemgauer certificates (it is a strictly paper currency) expire and whoever is holding the certificate at that time must pay a 2% fee to reactive the certificate.

The Chiemgauer apparently circulates at a rate 2.5x that of the Euro.

You may convert the Chiemgauer to a Euro and receive 95 cents, which encourages a business paid in Chiemgauers to spend them on local suppliers rather than converting them and spending the money elsewhere.

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I don't see the purpose of this, really. Why would people want a currency that costs money just to change hands? – cst1992 Jan 14 at 7:59
    
(it is a strictly paper currency) is wrong. There is an an electronic form — the 'eChiemgauer'. Both throug electronic accounts and the 'Regiocard'. According to Wikipedia, two third of the turnover is electronic. – Ghanima Jan 15 at 0:03
    
My source for "strictly paper" must have been out of date. The purpose is too encourage spending locally rather than saving or sending the money away. In the 3 month window before the 2% payment becomes due, a Chiemgauer could change hands any number of times. The 2% isn't on each transaction. – Michael Richardson Jan 18 at 15:07

I would say that most people would not approve of this and switch to another system. They would buy things of real worth, for example, gold. Then maybe they'd make their own currency (which is legal in the US) and base it off this. Other people might just go back to bartering for things. I don't think this is a realistic scenario, though. What about the millions of people who save up for retirement?

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Well yeah, "What about the millions of people who save up for retirement?" is basically the kind of question I'd want answered :) – Erik Jan 12 at 14:59
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They're also the reason this wouldn't happen, though. I need a good reason why these laws would be made. They would probably buy gold and retire with that. – XandarTheZenon Jan 12 at 15:02
    
That's kind of the point of a "What if" question though - this is Worldbuilding, not Politics. The assumption is that people have gotten so fed up with a few hoarding wealth that they want to do something dramatic about it. – Jon Story Jan 12 at 18:10
    
I know, but you have to have situations in books that make sense, or people get turned off. Regardless of the reason, the question is still valid. – XandarTheZenon Jan 12 at 18:18
    
This is the first answer that came to my mind. "Money" used to be a note backed by some physical object of value, the gold standard. So the first thing that springs to mind in the scenario is that people would simply "save" their money by purchasing items of value that can then be sold or bartered away as some point in the future when they have the need to make a large purchase. In reality, its not a much different system than exists currently in things like stocks and commodities markets. – Prof. Bear Jan 14 at 14:54

People will turn the money into more permanent forms and find other ways around it.

Buying something and then later selling it back to the same guy means the money returns with a shorter timer; if you bought something 4 months ago and then sell it back to the same person today, you will get money with an 8-month timer on it.

OK, so you can't buy and sell between two people. What about three? B buys from A and sells to C twelve months later. C sells back to A another twelve months later.

Perhaps you can never sell anything to someone who has previously owned it -- ever. So you are constantly selling forward. After one hundred fifty sales, you have entirely new people from the beginning. Not a big problem in a world with seven billion people.

It's also unclear to me what happens when you buy securities like stocks or bonds. Are these money that expires? Or goods? If goods, then I guess this adds an extra level of complexity to trading. You can't sell to the immediate previous owner under the original rules. So you'd have to track that for every security.

If securities are money that expires then you could never hold long term. You'd have to sell your shares annually and buy different ones (possibly from the same company). Of course, unless you own enough shares that you eventually run out and have to switch to a more diversified portfolio.

I think that "banks" or whatever replaces them would find ways to handle this for you. You'd invest your money. They'd handle making it persist.

Eventually, someone would point out that the whole system is just a waste of time and end it. Then things would become more like they are now.

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“Eventually, someone would point out that the whole system is just a waste of time and end it”— oh I really wish that this was true in our world. However, being nonsense, even being acknowledged to be nonsense, doesn’t necessarily stop something… – Holger Jan 14 at 9:35

A Polish friend told me how Poles got around the currency problems in the Soviet Union; they were not allowed to own more than x amount of money. Poles are not dumb, so they would share it out among family members, and get it back as needed.

So would your system notice if the same dollars were being passed around? Are they tagged somehow? It might be quite legitimate for family members to give each other money for whatever reason. Anyway the nephew might give his uncle not the same dollars the uncle gave him, but ones he got from his auntie. So a clever family could keep up a merry-go-round of cash and never lose any. Whatever rules you make, they will be surmountable.

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Whatever currency operated by these rules would not be long for the world. People invest and trade in the normal course of their lives. One of the principal roles of money in an economy is as a store of value (medium of exchange and comparative index being the other two.) Businesses like Amazon required a great deal of startup capital and were not profitable for the first few years. The need for durable capital will not disappear, therefore the market will invent other ways of storing value that will not involve this perishable currency which will quickly fall into disuse.

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It looks cool, but one year is a very short period. I mean, I need from three- up to five years to put away enough money to get a loan for buying a flat. Would that mean, in your system I would live my life in a rent? Also - I think - there should be a lower limit of the money disappearance. I mean like statue artists typically can't sell their works very often, in your system they would starve to death.

Edit: Oh, and I forgot about banking. What can you do about banks moving money around and paying an interest rate higher than the disappearance rate?

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A properly implemented demurrage-based system would lead to a vast increase in consumption. After all, unspent money loses value, so we need to spend now and not tomorrow. As others have pointed out, that is exactly what happens with the Chiemgauer.

An improperly implemented system would change nothing at all, as people would find ways around it (indeed, your bank does not hold your money, it just holds a promise to issue you money when you ask). This too has been pointed out by others.

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Companies and high worth individuals, governments and other institutions rarely keep large amounts of cash - they usually invest or if they know they'll need it, they put it in liquid short term bonds (assuming money market accounts are same as cash and subject to expiration rules).

Yields on those short term loans will fall, resulting in very low borrowing costs.

There will be a big incentive to invest in real estate and durable goods - anything that you can store value in. Oil, coal, heavy equipment (airplanes, ships etc), buildings, metal will see initial price hikes.

With low borrowing costs and high prices for durable goods there will be a big incentive to build more buildings, extract more natural resources, invest in intellectual property etc, etc.

Regular people who don't have much savings will not be affected that much but might be forced to rent due to the high real estate prices.

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+1. Basically, the OP's idea would create three economies: 1) the day-to-day, small-change, poor-people economy of decaying cash, 2) a bartering (of goods and services) economy that'd be full of IOUs (I fix your car, you give me some corn next harvest), and 3) the large-scale investment in real estate, etc, that would render it unobtainable by the masses. – Wayne Jan 15 at 17:48

You could actually do this with bitcoin.

When a bitcoin is transferred, the sender ID, receiver ID, and the time the transaction took place is all logged to the ever-growing block-chain. If the bitcoin community decided to implement a new rule - that a coin which remains in the possession of a single owner for over a year cannot be traded - this could take effect immediately, right now, in our actual world.

And I can foresee at least two interesting outcomes:

1) Bitcoins that are due to expire have their value diminished to less and less until it expires. I could buy other people's coins for less than 100th of its value if its just about to expire, because I know they either sell it or lose it. I have leverage. Conversely, "fresh" coins have the maximum relative value. This situation wouldn't just create an environment where commerce is encouraged - it creates an environment where wealth is generated by commerce. In a trade, worthless money becomes valuable money. In fact the amount of money is essentially irrelevant. 1 fresh coin is worth a lot more than 100 soon-to-expire coins. You bank balance would not be a number, because the amount doesn't really matter. What matters is how long until your last coin is purged. It would be a histogram of expiration dates. Reminds me somewhat of the Justin Timberlake movie "In Time".

2) Money is destroyed, so it must also be created to prevent all the money running out. In bitcoin we have miners who make money at a given rate. Assuming the government created money at a given rate, it still has to give that money to someone. For bitcoin its the miners. If we lived in a world where bitcoins could expire, the miners who scored the freshest coins would become the richest by a long, long margin.

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