We want to suppress the basic interest, not the risk premium.
When you rent your car, it deteriorates and you get paid for that, but money lasts forever.
When you lend free-money, it deteriorates in the hands of the borrower, but you get payed the same quantity, to compensate you for the inconvenience of non being able to spend it during the loan. If you don't lend your free-money, it rots in your hands, but you can spent it when you want.
In some sense I think holding money is a privilege, because you're asking the society to wait until you decide how you want to be compensated for the value you provided earlier.
Hmm. I guess in this case I would ask, why would the producing member of society, one waiting for someone who is sitting on money, want something that deteriorates, too? I would think deteriorating money would also not be wanted by those getting it, just like it wouldn't be wanted those hoarding it? In which case, wouldn't it be inevitable that someone who is selling goods will start to refuse this free-money, and ask for something else instead (any other more durable commodity)?
Also, I would likely not rent (loan) money to someone who will just have it sit and deteriorate, and since they are able to pay back at least the same amount, they are likely increasing the worth (amount) or my money by putting it to work. So, again, what's to stop me from asking them to pay me back more (interest), besides competition from other money hoarders?
What do you think about the Tree Metaphor?
Where is that metaphor?