Quote from: Rassah on July 13, 2011, 05:20:07 PM

Quote from: jtimon on July 13, 2011, 04:25:10 PM

Money return is interest.

Can you elaborate on this a bit? In my understanding, interest is a return on productive business, and money can only return interest if invested in a productive business. It can't return interest just by itself, and banks/owners of money won't loan it to anyone unless they expect that someone to be productive, and thus provide the "money interest" through their own work.

I should have been more specific. I meant basic interest (or liquidity premium) as described by Gesell, that is, the interest of money when you subtract the risk and inflation premiums to the gross interest.
Money doesn't produce anything by itself, that's why it shouldn't be capital. It "steals" this basic interest from the financing costs of all other capitals.

Quote from: cartman on July 13, 2011, 05:05:53 PM

Quote from: jtimon on July 13, 2011, 04:25:10 PM

The relationship between growth and interest is not trivial for me. Can you elaborate on this?
How is this related with the time preference theory?

Its perfectly related I think:

All entrepreneurs and businessmen decide, how much capital they need and what price they are willig to pay (maximum their expected returns of investment). When there is a lot of growth in the economy - probably due to a new sector emerging - there is a lot of demand for money in the market. The price (interest) is given by supply and demand. Imagine Google offering 20% interest if you give them your money, this would convince a lot of people to supply their beloved money for some time. So some really profitable entrepreneur is always given money if he can "outbid your timepreference".
Here you can also derive the growth-interest-relation. If there are 9 companies having returns of 5% and one company having a return of 4%, the latter might be outbidden by the others when interest rate climbs towards 5%. As 5% ist reached, there is an equilibrium in the moneymarket and the 9 companies won't borrow more money, unless supply increases (and interest frate drops) or their expected return rises beyond 5%. So growth determines the interest rates (as long as central banks leave their noses out) into an equilibrium where there are only companies beyond that interest rate.

I see.
So the basic interest/liquidity premium increases with innovations and growth because more people demands money to invest in those capitals with high returns.
Thank you for the explanation.
Now I have to think deeply how growth would affect a Ripple based economy and about the implications of this for the free money theory.
I think Gesell thought that the basic interest remained approximately constant through history.