Post
Topic
Board Economics
Re: Interest and Bitcoin - Impossible?
by
Impaler
on 22/04/2013, 23:21:06 UTC
making less durable goods better investments than just holding on to your money.
Yes, what's wrong with less durable goods as long as they're based on sustainability of the whole (which they currently aren't)?
Well, that's just the problem. Inflation and demurrage both encourage buying cheaper, disposable items, rather than saving up for one that will last longer. They encourage needless consumption.


Mathematically disprovable, it is fact exactly the opposite from what you propose, interest causes short-term thinking and consumption of disposables.  
Again I'll do a Net present Value calculation using a Hypothetical 'Consumer Joe' who is faced with the choice of buying a cheap disposable product repeatedly or a durable one.  Let's say they can both provide the same utility and the durable version will cost $50 dollars upfront and last 10 years.  The disposable version will cost $6 per year.  Without interest the cost of the durable good simply amortizes out to $5 per year and is thus more cost effective then the disposable.  But under 5% interest future costs are also reduced and a $6 expenditure per year over 10 years actually has Net Present Value or -$46.33 (I complex bit of math that I used this tool for http://www.investopedia.com/calculator/netpresentvalue.aspx) making it cheaper by around $7 over the duration to buy and use disposable products rather then the durable one.

These net present value calculations are all very standard business math that any business person knows and they in no way created by me or demurrage advocates.  They simply show your understanding was completely backwards, the detrimental effects you disdain are actually caused BY interest and the system you purport to endorse.  You have a significant test of your intellectual integrity, do you admit your error and renounce belief that interest is good?