Is not immoral to charge interest on money lending, is just the way money works as it is today.
But money is not a product, is more like a contract between all its users. And that contract can be flawed and lead to undesirable effects.
Money is a product because it produces a service. Just like a bus ticket allows me to take the bus, money allows me to trade with other people. Money is just a product. The fact that the product raises from social interaction as a kind of implied contract or agreement does not change the fact that money is a product.
Ok, let it be a product then. But the bus company produces the tickets, its value (by giving a service) and takes the profits from selling it.
Money, on the other hand can be produced by nature (gold), by a state (national currencies) or by a free software program (bitcoin). Is the whole community of users who "produces" the value of money (by offering goods and services in exchange) but only the money owner takes the profits from it.
Money provides the service of finding a path (of value transfers) between the buyer and the seller. By by the implied contract of accepting money, all its users can be directly connected.
Money, as you said, serves as a substitute for direct barter. But the capitalist doesn't produce anything of value by lending money, he just gets the yield of a capital "produced" by the society as a whole.
Well, that's not very accurate. The banker provides a services and must charge to, at least cover his costs of operation. This includes the risk premium, that can be reduced with collateral.
But lenders take the liquidity premium without providing any service to society. The money holder has the power to enable commerce and he will exploit this advantage in his favor.
The mistake was for the society to tell the money holder when he received it: "You have a certificate that the society as a whole owes you something. You can redeem it for whatever you want and
whenever you want. Now you have the ability (at zero cost) to impede the ability of others to give something of value to society through this mechanism. You can exploit this necessity of others members. Now you can charge the liquidity premium".
A capitalist with enough funds can live his whole live (no matter if there's growth or depression) without providing any service to society and still have his fund untouched.
He can't do it because is his right, but because we allow him to do it, we give him that power through the way we've designed money. We got to take this power back.
Exactly. And the same could happen with happen with capital yields. Only when some lack of a certain capital good is in place can that capital produce yield.
If the demand for that capital was fully satisfied, the capital yield would tend to zero.
By competition between the capitals of the same type, the yield would drop to zero, but capital not only has to compete with the capitals of its same type, but with all the capital.
No exactly with all the rest, but yeah, there are level of substitution.
So do you agree that the capital yield not being zero is a prove that the demand of that type of capital is not fully satisfied?
Money is artificially scarce
Depends on the system. If you mean in the present monetary system, no, money is not artificially scarce (except in some puntual moments), the problem is the distribution and management.
By scarce I mean that it cannot be produced on demand by anyone who needs it. Although Bernanke makes that USD look abundant, they're still scarce in that sense.
I mean scarcity as opposed of the abundance of mutual credit systems like LETS or Ripple. So that scarcity is not solved through monetary inflation.
and is the only capital whose yields cannot drop to zero by competition.
Well, the Fed has the federal fund rate at 0 right now... The thing is that the yields of nothing never get to 0. Its a tendency.
The Fed can lend at zero by increasing the money supply. Normally you would be a fool if you don't charge the liquidity premium when lending the money you own. But they don't own it, they just create it.
But the real saver asks for his liquidity premium. These measures distort the financial market destroying partially the information that you were talking about earlier, but don't end with the liquidity premium.
They lead to more catastrophic effects than the basic interest itself (which they don't eliminate because they cheat the financial market without completely destroying it).
Ironically is also the only capital that doesn't produce anything of value.
See, this is where you have it wrong. Money produces a service of very important value. It allows people to trade (avoiding barter). This is an incredible service that I think you take for granted, but without it developed human civilizations could not exist.
I know. There's no (meaningful) division of labor without money. But, like with intellectual property, I don't think that someone has to specially profit from this invention. Math is also an "incredible service" but I can create all the numbers I want in my notebook while I cannot create money.
I need society for my money to have value, but the concept of money is not scarce.
Freicoin would start with no value at all, just like bitcoin did. I don't believe you can expect inflation from there.
You believe that no one would accept it, but if some people did; How would it produce poverty?
Why demurrage is not producing poverty in the communities that operate with it?
I was assuming that a working currency changes to Freicoin system. If it has to start from zero, I dont think it would be widely adopted, maybe only by ideology. And in case it was adopted by ideology competition would end up taking over.
I have heard that no one would accept a currency with demurrage many times in the forum. I guess I can't do anything but to provide examples of working systems with demurrage for that.
Then we just can try it and see what happens. I just don't want to start freicoin while I'm the only one in the world that believes in the block chain and demurrage at the same time.
Anyway I'm more concerned with the belief that it would have a negative impact to the economy like creating poverty.
Ehm...It's a system that monetizes mostly debt, but everyone can do it to the extend their partners trust them, not only banks. I hope I can contribute with the implementation soon.
Maybe I have the system wrong, but monetizes a service or a product. If I give you a product, now I have credit with you at Ripple. Now I can use that credit with someone that thinks you are trustworthy. Well, yeah, you are monetizing the debt. Its still fine. There is nothing wrong on trading the debts.
Cool. I think Ripple can eliminate the liquidity premium too.
I have heard that Ripple would create inflation and though you may think the same. It doesn't make much sense to me because ripple IOUs can be denominated in anything, including "the dollar in 1920" (calculating inflation), and
reference currencies similar to
terra.
Fair enough, but there's examples of free money operating right now, look at how many times "Liquidity Tax", "Circulation Incentive", "Demurrage" or "circulation-protection fee" appears in
this list.
Youll have to be more specific. The list is huge.
There's many example of such currencies in the list. I can't tell how many because the list is huge. In the "Cost-Recovery Mechanism" they have descriptions like the ones I told you.
http://www.chiemgauer.info/http://augusta-regional.de/http://www.regiogeld.de/http://www.dreyecker.de/They're mostly in Germany and, as far as I know, are all local complementary currencies.
The difference is that profits disappear by competition and capital yields are artificially maintained "high" by the current design of money.
Actually no. The interest are not mantained artificially high. The problem in the present system is the way money is distributed and managed. Again, the Fed has the fed fund rate at 0%.
Well, you can think in the old gold system if you prefer it. I still think that Bernanke's actions don't eliminate the liquidity premium and create other problems.
I agree. A problem in the present system is the way money is distributed and managed.
Simply by competing "dishonestly" with other capitals. The accumulation of every type of capital stops when that type of capital yields less than money itself (which as said doesn't produce any good or service on its own).
I think you are getting it upside down. Money produces a yield because there are people willing to borrow it. If nobody borrows money does not produce interest.
Now if there are no real world projects that are profitable at a certain interest rate, nobody will borrow. Therefore money will yield absolutely nothing. What savers will do (through the financial system) is lower interest rates until they find someone willing to borrow, meaning that the yield of capital will be higher than the interest of money. Does that makes sense?
That makes perfect sense.
The problem is that we can't reach the point where nobody borrows because there's no capital to invest in. Before reaching that point we reach the point where nobody lends, because holders can make more profit from their liquidity than what they could get from borrowers.
That point, even with no growth, is well above 0% (2%, 3%?).