The problem is that you would get much less hoarding than is ideal, leading to wasteful consumption. A currency with no demurrage provides as close to the optimal balance of saving and spending as we are likely to be smart enough to manage to get. Every factor that increases the value of the currency to the hoarder also increases the value of the currency to those who would try to ply the currency from the hands of the hoarder -- if the currency is worth more, the price will just be lower, but the trade will happen just the same. However, demurrage disrupts this balance by injecting a "hot potato" factor, leading to inefficient spending and discouraging saving.