GOVERNMENT STRINGS ATTACHED

Recently I noticed an interesting policy innovation in the news. Some countries in Asia are experimenting with stimulus payments that have strings attached. It’s an interesting development, and I feel wary about it coming to America.

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The idea is to distribute digital cash that has an expiration date, or other restrictions on how and when that money can be spent. This has only become possible in recent years, as fintech has made huge progress.

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Economists love clever ideas like this one because they seem to offer new problem-solving tools to policy-makers. But I am concerned that this approach can cross a line.

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People know much better how and when to spend their money than the government does. Attaching strings to stimulus money sends a subtle message that the government knows better, and I think that’s a risky signal to send.

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It’s best to trust people to spend money in their own best interests. People are generally pretty good at this, although more financial education would help too. Americans aren’t nearly as financially literate as they could be, and improving this situation is one of the best ways we can help people to help themselves.

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I love technology and innovation and I want to see more of it in the world. When private companies create something valuable, they get rewarded by the market. If their innovation fails, investors lose their capital and that’s the end of the story.

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Government innovation can look a little different. Governments don’t go bankrupt the way private businesses do. If an innovation is unhelpful, coercive, or otherwise disliked by people, it might still persist for a long time, and cost people in a variety of ways.

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Policy makers may have all the best intentions in the world, but unintended consequences are as old as time. Government has a lot of power already, so we should be careful with new technologies that will tip the balance even further away from individuals.

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Frequently  Asked Questions (FAQs) 

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What Is Programmable Digital Currency?

Programmable digital currency is money issued in digital form with embedded rules that determine how, when, or where it can be spent, enabling a new level of government control over money. Unlike physical cash, programmable money can expire or be restricted by design, increasing the scope of government control over economic behavior. These policy shifts matter to investors because they influence inflation, liquidity, and valuation assumptions such as residual value. Long-term tangible assets depend on predictable monetary frameworks to support disciplined underwriting.

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What Does the Government Control in a Traditional Economy?

In a traditional economy, governments influence outcomes through interest rates, taxation, regulation, and fiscal spending rather than direct control of individual transactions. These tools shape credit conditions and pricing, which directly affect asset valuation inputs used in commercial real estate appraisals. Unlike programmable digital currency, traditional systems preserve consumer choice while managing macroeconomic stability. This distinction is critical when evaluating long-duration investments exposed to policy cycles.

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How Do Governments Control the People?

Governments typically influence behavior through incentives, regulations, and monetary policy rather than direct coercion. Programmable money introduces a more direct mechanism by embedding conditions into currency itself, expanding the reach of government control. For investors, this raises concerns about predictability, capital mobility, and systemic exposure outlined in real estate investment risks. Assets backed by essential demand and conservative capital structures tend to perform better under shifting policy regimes.

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What Is Programmable Digital Currency Used For?

Programmable digital currency is often proposed as a tool to deliver targeted stimulus, enforce compliance, or accelerate spending during economic slowdowns. While proponents argue it improves efficiency, critics warn it amplifies government control of money beyond historical norms. These dynamics affect inflation expectations, financing conditions, and asset pricing, particularly in sectors discussed in how inflation affects commercial real estate. Experienced investors account for these macro risks by prioritizing durable cash-flow assets and long-term fundamentals.