Quote from: Rassah on July 19, 2011, 04:51:57 PM

Quote from: jtimon on July 19, 2011, 04:31:41 PM

Quote from: Rassah on July 19, 2011, 02:44:33 PM

Quote from: jtimon on July 19, 2011, 11:26:52 AM

But lenders take the liquidity premium without providing any service to society.

The money holder has the power to enable commerce...

So, which is it? Money holders/lenders don't provide any service, or money holders/lenders enable commerce?

Money provides the service, lenders take the profit. Also they enable other "capitalists" to take it too.

Is that like "rental car provides the service, rental car agency that maintains the fleet or cars take the profit?"

No. The rental car agency has produced or bought the car. The money owner has bought the money, but nobody (but the state?) can produce the money on its own.
Even if the state produces it, we could still reject it.
If you're thinking about gold-money, you can mine gold, but you need the whole society to treat it as money.

Quote from: Rassah on July 19, 2011, 04:51:57 PM

Quote from: jtimon on July 19, 2011, 04:31:41 PM

Quote from: Rassah on July 19, 2011, 02:44:33 PM

You are also apparently focusing in on the "liquidity premium" as the main evil of interest. Is liquidity, aka easy access to capital, a useless/worthless service?

I focus on it because I don't want to attack the risk premium.
No, liquidity is so important that influences all the economy and capital accumulation.

But, without liquidity, economic activity would grind to a slow pace, since everyone who needs capital for whatever purpose will have to wait a long time until their request for such is fulfilled (like putting a buy price at MtGox, and waiting for hours until your order is filled, if it ever does)

Yes. Liquidity is very important, that's what I said. With free money you still have liquidity, but nobody profits from it.

Quote from: Rassah on July 19, 2011, 04:51:57 PM

Quote from: jtimon on July 19, 2011, 04:31:41 PM

Quote from: Rassah on July 19, 2011, 04:51:57 PM

How can you make a profit on liquidity without lending???

Very good question.
The easy answer (just like the borrowers would do it) doesn't apply here, because we're supposing that we're in a recession environment in which no borrower can make any investment that yields more than the liquidity premium in any sector of the economy. A very extreme scenario, by the way, I bet impossible within capitalism.
That's what merchants do. They make profit on liquidity through the wares. If they're borrowers, they pay it to their lender.

Using exact definitions of the words, a "liquidity premium" is basically what the money holder can get on a spread in a currency market. If no one is borrowing/buying money (no trading of currency), the spread will be irrelevant, and thus might as well be 0. What's your definition of this liquidity premium? I think mis-communication as to what you mean by that is what may be causing problems in this discussion.
[...]
What is YOUR definition and explanation of it?

Is it important that is my definition or Gesell's ?
Liquidity premium = basic interest:
1) A component of the gross interest, when you subtract the inflation and risk premiums.
2) The mother of all capital yields. The yield of money.
3) What merchants can take from the wares.
4) What workers have to sacrifice to exchange their products for what they need/want.

Quote from: Rassah on July 19, 2011, 04:51:57 PM

By the way, I've come to the conclusion that Gesell is a TERRIBLE writer, since the book tends to have a lot of words with little explanation regarding the assumptions behind them.

Well, that chapter is almost at the end of the book. He assumes that you have read the previous parts.
Mathematicians and philosophers do it too. First define concepts and then make more complex propositions based on those concepts.
I find his style pretty clear though.
You could read the whole book but you don't have to: you can ask me whatever you don't understand and I'll try to explain it to you.
You haven't quoted any false sentence from the chapter. Do you agree with everything?

By the way, you don't even have to read the first two parts on land to understand free money. In the Spanish translation, the first two parts were at the end, and I didn't noticed that until I saw the English translation.