the problems of interest
Could you briefly describe here what these are?
1) They impede capital yields to drop to zero by competition (as other sustained profits do). This means that the demand for a given type of capital is not fulfilled. I the case of factories, the unemployed are the ones demanding more factories. You can
read more here2) The compounding nature of interest pushes a quasi-exponential growth of the debt/credit. Since the credit participates as an effective part of the money supply, it produces inflation. When the growth of the debt becomes unsustainable, a process of liquidation (shrinking credit) begins, which causes deflation, which accelerates the liquidation in a positive feedback. The liquidation periods are known as recessions or depressions.
3) Interest makes the financial market prefer the short term investments.
Tree Metaphor
Imagine you plant a tree. In ten years, that tree can give you $100 in lamber and in 100 years, $ 1000.
Now from the financial perspective.
With a currency that yields 5% interest, $100 in ten years are equivalent to $ 61.39 today. And $1000 in 100 years are equivalent to $ 7.60 today.
If the currency has 5% demurrage, $100 in ten years are equivalent to $ 167.02 today. And $1000 in 100 years are equivalent to $ 168,903.82 today.
With interest, the same stuff in the future is valued less than today. With demurrage, the same stuff in the future is valued more than today.
This proves that the structure of money has an impact in our way to value things over time.
This fact disrupts our relations with nature and threatens the long run survival of human beings.