Quote from: kjj on August 30, 2011, 05:21:03 PM

The concept of price inflation as a thing only exists for people that think prices are supposed to be fixed. For everyone else, it is just a consequence of something else, usually (monetary) inflation.

I don't think that prices are supposed to be fixed and the concept also exist in my head.
Although price inflation has a cause and it's usually monetary inflation, it is a useful concept when discussing monetary matters.
In the equation of exchange (M * V = P * Q), dM (if greater than zero) is monetary inflation and dP (if greater than zero) is price inflation.

Quote from: kjj on August 30, 2011, 05:21:03 PM

Quote from: jtimon on August 30, 2011, 05:00:31 PM

Quote from: kjj on August 30, 2011, 04:20:41 PM

A moment's thought should convince you that an insurance premium is exactly the same as a higher interest rate.

But there's a basic interest that doesn't disappear with perfect secure lending. I guess you attribute it to the time preference.

I said higher interest rate, as in the difference between the interest rate with the insurance and the interest rate without it.

I think we agree in this part then. When I criticize interest I mean basic interest, I have nothing against risk premium.

Quote from: kjj on August 30, 2011, 05:21:03 PM

Quote from: jtimon on August 30, 2011, 05:00:31 PM

Quote from: kjj on August 30, 2011, 04:20:41 PM

Time preference is indeed applicable to all things. The only way it couldn't is if you assume it only goes in one direction at all times and for all things.

No. Why should I prefer everything now instead of later? Things rot and capital depreciates with its deterioration.
The utility of a liter of milk today doesn't include the utility of a liter of milk in a year, because you won't be able to safely drink it in a year.
With demurrage you could prefer 100 coins next year rather than 100 coins today. Money, an artificial good, a symbol of value can have the qualities that its users decide it to have. Their users will chose a currency with demurrage if it has advantages, for example, cheaper trades and loans.

I keep saying time-preference. Why do you keep acting as if I had said "now-preference"? Also, the utility of a liter of milk in a year doesn't include your ability to trade it now.

Correct me if I'm wrong with time-preference. But from what I know it claims:

"
1) When you own something, you have the ability to use it now or use it later.
2) When you borrow something you own, you are able to use it later but not now.
That's why no one will lend at zero interest."

1 is not true for all goods. If money is everlasting, that's true for money. But perfect durability is not a requirement for the medium of exchange. In fact it is an obstacle for a medium of exchange, since money can ask for interest to be involved in commerce and don't suffer if "the wares don't want to pay". Everlasting money ask for its tribute as exchange enabler just as a fee can be asked for crossing a bridge.

Quote from: kjj on August 30, 2011, 05:21:03 PM

I also said explicitly that rot doesn't apply here because you were talking about money..

I answered it to you.

Quote from: jtimon on August 30, 2011, 05:00:31 PM

With demurrage you could prefer 100 coins next year rather than 100 coins today. Money, an artificial good, a symbol of value can have the qualities that its users decide it to have. Their users will chose a currency with demurrage if it has advantages, for example, cheaper trades and loans.

Quote from: kjj on August 30, 2011, 05:21:03 PM

Oh, and yes, bakers might very well be better off letting their bread rot, because you might be willing to pay more for (different) bread tomorrow when you are hungrier than you are today.

I said give it to their usual customers for credit at no interest, not giving it away.

Quote from: kjj on August 30, 2011, 05:21:03 PM

So, lenders won't include demurrage in their calculations when deciding what interest rate to charge? How do you expect to make this happen?

Yes demurrage is taken into account reducing basic interest instead of just increasing the nominal interest like inflation does.
I explain the differences between demurrage and inflation with more detail in this post:
https://bitcointalk.org/index.php?topic=36450.msg469848#msg469848

Quote from: kjj on August 30, 2011, 05:21:03 PM

Also, read your post from July again. In it, you are very close to the Eureka! moment. You understand that we use peculiar mechanisms for economic policy, but then you direct your criticisms towards neutral concepts rather than the implementation.

Sorry, I don't understand.
What eureka was I close to?
What neutral concepts? I don't think interest is a neutral concept.
The fact that economic cycles are worse now than in earlier times due to our "peculiar policies" doesn't mean that there weren't monetary problems with gold.