If there is no interest, why would anyone lend money? How would somebody who has an idea about creating a business get the money to do it in the first place?
With a natural, Gesellian form of money that loses value with the passage of time, lending -- even without interest -- would be one of the best ways for people with excess money to avoid loss of purchasing power. Would you rather make a zero interest loan and get back 100% of your money after a year or lose 5% to depreciation? In a Gesellian system, borrowers would be doing lenders a favor by relieving them of the burden of demurrage.
For more on the Gesellian perspective on interest, check out the Robinson Crusoe parable from Gesell's book here:
That’s an interesting perspective. But why assume loss of value over time - that is, inflation?
It seems to me that the purpose of interest is to compensate the lender for the lost opportunity cost. That is, by lending money, he gives up the opportunity for a time either to purchase goods he might want, or to make investments in other people’s businesses that might bring him a good return.
In the parable, the goods treated as money are indeed perishable - but that isn’t general the case with fiat money.
You're asking the right questions. It's a complex subject. From Gesell's perspective, the problem with conventional money is that it is not perishable like real wealth. He says this design flaw is the cause of interest and all of the negative consequences that flow from it. Therefore his proposed solution is demurrage -- a planned steady, slow depreciation in money's purchasing power designed to disincentivize hoarding and keep money in circulation.
If you have the time, I recommend checking out the course we presented recently at the Henry George School. The answers to all of the questions you asked are examined in detail there.
If there is no interest, why would anyone lend money? How would somebody who has an idea about creating a business get the money to do it in the first place?
With a natural, Gesellian form of money that loses value with the passage of time, lending -- even without interest -- would be one of the best ways for people with excess money to avoid loss of purchasing power. Would you rather make a zero interest loan and get back 100% of your money after a year or lose 5% to depreciation? In a Gesellian system, borrowers would be doing lenders a favor by relieving them of the burden of demurrage.
For more on the Gesellian perspective on interest, check out the Robinson Crusoe parable from Gesell's book here:
https://www.appropriate-economics.org/materials/crusoe.html
That’s an interesting perspective. But why assume loss of value over time - that is, inflation?
It seems to me that the purpose of interest is to compensate the lender for the lost opportunity cost. That is, by lending money, he gives up the opportunity for a time either to purchase goods he might want, or to make investments in other people’s businesses that might bring him a good return.
In the parable, the goods treated as money are indeed perishable - but that isn’t general the case with fiat money.
You're asking the right questions. It's a complex subject. From Gesell's perspective, the problem with conventional money is that it is not perishable like real wealth. He says this design flaw is the cause of interest and all of the negative consequences that flow from it. Therefore his proposed solution is demurrage -- a planned steady, slow depreciation in money's purchasing power designed to disincentivize hoarding and keep money in circulation.
If you have the time, I recommend checking out the course we presented recently at the Henry George School. The answers to all of the questions you asked are examined in detail there.
https://joshsidman.substack.com/p/silvio-gesell-beyond-capitalism-vs