This has been talked about.

It is a fine way to keep people spending, but is not very good for encouraging saving.

If all currency was the same as this 'depreciating' currency, savings rate would go to zero - although more likely people would just start using gold/silver.

The thing to keep in mind is that paper/fiat money is not a historical accident nor an evil plot. It is a logical evolution based on the idea of representation of value - one which ends badly like lemmings and cliffs, but one which, like Pandora's box, is already released.