Let's put this discussing into terms simple enough that even Impaler can understand them.

I have $1000. I have the choice of buying a capital good for $1000 that will return 5% ROI over the next year, or lending the $1000 to someone for a year. If I choose to make the loan, I'm giving up not just $1000 now, but $1050 a year from now. It would be irrational, all else being equal, to make such a loan for less than 5% interest.

Time preference and the general "risk-free" rate of interest are just the aggregate effects of these sorts of opportunity-cost considerations being made by all the holders of currency in the market. Most of the time the ROI is more subjective than the fixed 5% return in the example, but it is no less real for that. No one is taking advantage of anyone else; lending at interest is nothing more or less than redistributing ready capital and future income to where they are each most valuable, which is fundamentally the basis for any economic activity.