Post
Topic
Board Economics
Re: Growth, Interest and Wage Inequality - To the austrian economists here
by
Rassah
on 13/07/2011, 19:35:47 UTC
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.

Sorry, I tried reading that, but it's rather convoluted. It sounds like it's "interest" that the lender charges only because they expect the borrower's product prices to grow, so the lender wants a chunk of that profit, too? Can you maybe give a simpler example of this interest?
From my perspective (and I guess biased business college training), I charge interest for taking on risk and for selling my money's time (money worth more in my hands now than later), and I'm competing with others based on their level of risk tolerance and worth of money. So... I am just having a really hard time wrapping my head around this.