what's to stop me from asking that when you pay back the loan, you add a few extra stamps or bills to the money you return, i.e. charge you interest on the loan?
The fact that if you don't find no one that wants to accept that trade, you will actually lose money by demurrage. If you want to save, you better lend your free-money or do something else with it.
But, again, that's no different from current inflationary fiat currency, isn't it? What is being described is actually a real a problem for large companies and banks now, who are sitting on large piled of degrading cash, and can't find people to lend it to (more specifically invest in). What am I missing here?
No, apart from the operating costs of the bank, the inflation/deflation premium and the risk premium, you pay
basic interest I should probably stop linking you chapters because you can get confused by jumping around through the book.
I'm trying to understand what this basic interest is. In this article is feels as if Gesell somehow keeps forgetting that "money" itself is a commodity, too, also subject to laws of supply/demand (USD is same as sugar, oil, etc. People just don't think of it that way). In which case, wouldn't "basic interest" be the same as charging someone a premium for a rare commodity that may otherwise have lower use/production value? (I have a special tool that's fairly cheap to make, but because only I have it, I can charge you a bit extra due to your high demand for it, simply because I know you'll be willing to pay for it)
interest rates are not driven down by monetizing debt and printing but simply by demurrage.
But USD and gold also have very high demurrage costs. What will stop someone with hoards of depreciating money from just charging interest that is higher than their demurrage costs, if they are the scarce holder of a lot of funds (i.e. no other competing lenders)? I guess on an inflationary scale you can get to a point where EVERYONE will not want to hold money, and will run to the bank to cash in checks, and run to the store to buy goods, as soon as they get any. Which is what happened in Germany. But, isn't that what we already have with out inflation-driven economy?
By the way, just remembered, this would also put a large strain on society as a whole because a lot of work/time/money will also be wasted just to keep this type of money going. In Germany, during their high inflation period, banks had to hire a lot of skilled people just to run their teller windows, due to huge influx of people wanting to cash out, and that pull of skilled people from the rest of the economy actually ended up hurting them, too...
However, there's a part that you won't like in the book (I don't like it neither). He says the central issuing authority could control prices levels.
A free-money central bank (yes, sounds weird) would have it easier to because the velocity of free-money would be more predictable.
He doesn't talks about stimulus packages or nothing similar, his central issuer would just provide stable prices and if there's price instability, is the fault of the central issuer, because the absence of liquidity in the market cannot be blamed due to built in incentive in free-money to circulate.
Only way I can see that such a bank can control price levels is by creating or destroying this free-money, thus keeping it's supply relatively even with the supply of goods it's pegged to. That's also pretty much what our central bank already does, though they sometimes do it in the roundabout ways...