Ripple, what's up

[Fredrik]

It's been quite here lately. With the financial world collapsing,
ripple should be getting more attention....


-fredrik-normann-

[Corey]

Still no one knows about it. I saw on the news the other day a commentator joking that "If only every person was a bank...". Thought that was interesting.
// Corey

[Thomas Hartman]

It's not collapsing.

As long as the american taxpayer can back government subsidies to keep
the system afloat, all this crisis talk is just hype.

When people stop paying their taxes -- which means no more point
loaning money to america -- or there is a run on the dollar... that's
the collapse.

[Corey]

I'm sorry to say man, but you appear to be living under a rock. Even Sequoia is freaking out. There's a huge problem here and it's not going to go away any time soon.

But the most convincing argument for this is time -- we'll see. I'll just leave it at that.

// Corey

[thomas hartman]

I guess what I'm thinking is the only kind of crisis that would make
ripple seem more attractive is a collar collapse -- maybe even a
collapse of all fiat currency -- possibly precipitating demand for
community currencies and other forms of decentralized value storage...
basically, a desire to experiment with money.

Otherwise, people are going to continue to want to hand over cash and
get their beer.

This current crisis doesn't seem to me to be about to precipitate a
dollar collapse, in fact the dollar is going up. Even a 50% drop in
the dollar isn't a dollar collapse -- we've already had that, and life
went on, you still trade pieces of paper for beer, it just sucks that
they're worth less. But not that much less that 99.9% of people would
consider ripple.

So what I meant was, the magnitude of the current crisis isn't
sufficient to propel ripple out of obscurity. And a lot of this is
because america's foreign creditors still believe the US taxpayer has
their back. On the other hand, if this stopped being the case...

who knows.

On Oct 10, 1:44 am, Corey <corey.birnb...@gmail.com> wrote:
> I'm sorry to say man, but you appear to be living under a rock. Even Sequoia

> is freaking out <http://blog.weatherby.net/2008/10/a-ceos-sequoia.html>.

> There's a huge problem here and it's not going to go away any time soon.
>
> But the most convincing argument for this is time -- we'll see. I'll just
> leave it at that.
>
> // Corey
>
> On Thu, Oct 9, 2008 at 2:16 PM, Thomas Hartman <
>

> thomashartm...@googlemail.com> wrote:
>
> > It's not collapsing.
>
> > As long as the american taxpayer can back government subsidies to keep
> > the system afloat, all this crisis talk is just hype.
>
> > When people stop paying their taxes -- which means no more point
> > loaning money to america -- or there is a run on the dollar... that's
> > the collapse.
>

[Knud Soerensen]

Fredrik wrote:
> It's been quite here lately. With the financial world collapsing,
> ripple should be getting more attention....
>
>

I think someone should make a video about ripple and submit it to
googles 10^100 project.

http://www.project10tothe100.com/
> -fredrik-normann-
> >
>
>

--
Crowdnews.eu - a social news site based on sharing instead of voting.
Follow me on CrowdNews http://crowdnews.eu/users/addGuide/42/

[Joe Edelman]

I think there's a significant chance the dollar will collapse. What's
going to happen is that, as certain other national currencies appear
to weather this storm better, the US dollar will stop being the
preferred unit of account and purchase for commodities like oil. This
will remove a tremendous stabilizing and supporting force for the
dollar.

It would make sense for those of us who'd like to see a system like
ripple to prepare for this possibility.

Also, people are more interested in the beer (or, increasingly, the
rice) than in how they are paying for it. Successful alt currencies are
launched in cooperation with businesses, so that it's possible to buy
beer on day one. It would make sense for us to follow this strategy.

Finally, there is no reason Ripple needs to make its debut in the U.S.
As other nation's economies and currencies collapse, we could be ready
to support the same kind of transition.

I think the global situation calls for strategizing, not whining and
vague pessimism. This is a moment of opportunity on many levels and in
many ways, and the question is this: are any of us motivated and
organized enough to plan for it, work for it, and take advantage of it?

--Joe

--
J.E. -- http://nxhx.org -- 413.250.8007

[Thomas Hartman]

> Successful alt currencies are
> launched in cooperation with businesses, so that it's possible to buy
> beer on day one. It would make sense for us to follow this strategy.

excellent point.

[Daniel Reeves]

I think the current financial crisis could be a massive opportunity
for Ripple for another reason. The fear that the financial crisis
could precipitate a true economic crisis is a fear that credit will
dry up. Ripple taps in to another source of credit: the trust
between friends and family. Prosper.com is another way to bypass the
financial system and I expect it to prosper if the financial crisis
gets worse.

--
Daniel Reeves
Dynamic Signature 1 (04:00:26)

[dsyd]

Hello everyone, this is my first post here. I only found out about
Ripple a few days ago but I have been reading up on it, and it all
sounds very exciting, but getting other people interested is a hell of
a challenge without some form of medium of exchange between the
"Ripple world" and the "Real world" brokered by an established payment
intermediary.

Anyway, I don't know if anyone here uses Facebook, but I created a
group to raise awareness and help promote Ripple's eventual adoption
when the time comes. Please join and invite friends:
http://www.facebook.com/home.php#/group.php?gid=84709750013&ref=mf.

> > J.E. --http://nxhx.org-- 413.250.8007

[Daniel Reeves]

Great idea! I disagree that our money system itself is at the root of
the financial crisis though. Would you be willing to water down the
group description for the sake of wider appeal?

--
http://ai.eecs.umich.edu/people/dreeves - - search://"Daniel Reeves"

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[dsyd]

Hi Daniel. The money system is not at the root of the financial
crisis? As I understand it, our money system requires continual
expansion of credit in order to work. When credit expansion ceases
(either because the bursting of a speculative bubble causes a
reduction in borrowing, or because banks don't want to give out any
more loans), people will inevitably default on their loans due to the
lack of money in circulation. These defaulted debts have caused banks
to draw down too much liquidity, which in turn has shut off interbank
lending to the point that many banks have become insolvent. The
increased cost of lending then leads to further debt defaults and the
whole thing crashes to the point where the amount of money in
circulation is enough to start paying off people's loans again.

I agree that there are multiple causes to the financial crisis. There
wouldn't be a problem if speculation didn't occur in the first place,
or if banks trusted each other to start lending again. But I believe
that it is the fact that the system relies on continually expanding
credit that makes an initially small situation (people defaulting on
loans) spiral into something much worse. Without the requirement for
continually expanding credit, the initial cease of credit expansion
does not cause a shortfall in circulating currency. There would
therefore not be an unstable condition in the economy that causes a
bad situation to get worse.

Furthermore, although banks may have stopped trusting each other,
people are still lending to each other, as is proven by the prospering
of Prosper.com. If our money system was decentralised and based on
interpersonal trust, the system would still be functioning fine at the
moment, and it would not matter that banks didn't trust each other.

Please let me know if you disagree on any of these points.

That said, of course I am willing to change the group description for
the sake of wider appeal - any suggestions?

Daniel

> --http://ai.eecs.umich.edu/people/dreeves - -  search://"Daniel Reeves"

[Fredrik]

The shipping business could make use of ripple
http://www.financialpost.com/story.html?id=866310 Shipments all over
the world is stalled, because of lack of credit/trust...

The whole world don't need to understand ripple, but the idea needs to
be spread to the right[tm] people... that's the challenge.

-fredrik-normann-

[Daniel Reeves]

I guess I don't understand what you mean by "requires ever-expanding credit".

Suggestions for watering down the facebook group description: just
removing all assertions that some folks might consider radical and
stick with the very basics (radical enough as it is), ie, ripple is a
system for decentralized banking that can run on a social network and
taps in to the interpersonal trust that that social network
represents. And maybe emphasize that trust and credit are in some
sense the same thing.

I would actually suggest sticking exclusively with prose culled from
Ryan Fugger, ie, the ripple website(s).

--
Daniel Reeves
Dynamic Signature 1 (19:04:04)

[dsyd]

Daniel,
The "requirement of ever-expanding credit" is due to the issuance of
currency with interest. This means that for every dollar brought into
circulation through the creation of a loan, the dollar must eventually
be paid back to the central back with the interest earned on it. Since
neither the loaned dollar nor the interest existed before the loan was
granted, where does the money come from to pay back the interest? The
answer is that the interest comes from the next loaned dollar spent
into the economy. You can see that the same problem occurs with the
second loaned dollar, and a third loaned dollar has to be created to
pay the interest on the second loaned dollar. And so on and so on...
As a result, banks must continually issue loans faster than they are
repaid in order for money to circulate within the economy. As soon as
banks stop lending, there is no money to pay off loans. Incidentally,
this exponential increase in loan issuance is also the process by
which inflation is caused.

For a better and more enlightening explanation of the process, the
animated video "Money As Debt" is very much worth watching:
http://video.google.com/videoplay?docid=-9050474362583451279 (47
mins).

It seems to me to be well established that our debt-based money system
does not serve people well, and this has been the reason why people
have created community currencies such as LETS. There is indeed an
explanation of the above process on the LETS website. Many have said
they see Ripple as a way of connecting various LETS systems, and so I
think that dodging the issue of monetary reform could isolate the very
people Ripple needs to attract.

Since the group is entitled "Solution to the Global Financial Crisis",
I also think it could confuse people to go straight in explaining what
Ripple is, and it would not be immediately obvious to everyone why
Ripple could be a solution.




Fredrik,
Yes I heard that in some places goods are piling up on docks because
sellers cannot trust that their payments will be guaranteed. Wouldn't
Ripple need to route through a trusted "external" intermediary (e.g.
bank, PayPal, etc) to work in their case? And wouldn't that present
the same problems that exist at the moment without Ripple? (I.e., that
no such trusted intermediary can actually be trusted.) It is
unfortunate that Ripple appears to be in a Catch-22 situation whereby
there needs to be a large network for its advantages to be immediately
obvious to sellers, but that can't happen until there are already
sellers using the network.

Daniel Syddall

> >> --http://ai.eecs.umich.edu/people/dreeves- -  search://"Daniel Reeves"

[Daniel Reeves]

We had a really productive discussion of that video on this list last
year. Subject was "must see animated 'film'" and the thread went from
2007-06-17 to 2007-07-01.

--
http://ai.eecs.umich.edu/people/dreeves - - search://"Daniel Reeves"

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[dsyd]

Daniel,
I just had a quick read through the discussion, thanks, very
interesting. It seems the argument was that if you consider loan
payments continuously rather than as single discrete payments where
everyone has to pay at once, then the shortfall in circulating money
is made up by the bank spending into circulation its revenue (e.g. to
its employees, to vault operators, etc.) This would indeed seem to be
the case in a perfectly free market with plenty of competition between
the banks, in which the revenue on loans, i.e.

Interest Rate Charged on Loans -
Interest Rate Paid to Depositors
Loan Revenue =
---------------------------------------------------------------------------------------------
* Value of Deposits

Reserve Ratio

In a perfectly free market, the loan revenue would be pushed down to
minimize profits over operating costs. However, in anything less than
a free market, the bank would be able to abuse its position and charge
higher interest on loans and pay lower interest to depositors. In this
situation the bank accrues profits beyond its operating costs which
are no longer spent into circulation and you have the original problem
of a shortfall in currency.

Whether banks operate in such a free market is another subject (I
personally think they don't).

I don't think central banks can be said to operate in such a free
market. In this case, I don't believe that the loan revenue raised by
central banks is related to its operating costs (although I have heard
somewhere that central banks pass back all profits beyond operating
costs back to the treasury, I wonder if anyone could confirm that?)

Daniel Syddall

On Oct 12, 4:22 am, "Daniel Reeves" <dree...@gmail.com> wrote:
> We had a really productive discussion of that video on this list last
> year.  Subject was "must see animated 'film'" and the thread went from
>  2007-06-17 to 2007-07-01.
>

> ...
>
> read more »

[dsyd]

Oops, that formula didn't come out right. Should be, with
abbreviations to the above:

LR = (IRCL - IRPD) * VD / RR

> ...
>
> read more »

[matabele]

The problems with our present banking system derive from two sources -
compound interest and fractional reserve banking.

Compound interest builds an exponential term into the monetary system
- exp** (i-r) - where i is the inflation rate and r is the discount
rate - it is this ratio (i-r) that is important. This exponential term
does not reflect the 'real' economy - nothing grows exponentially
forever - or even for a sustained period.

To remove this exponential term we must make i=r - that is the
inflation rate must equal the discount rate. My preference is for
i=r=0 (due to the second source of problems). There are arguments in
favor of low rates of interest and low rates of demurrage - but in any
case these rates must be close to zero.

When the international banking cartel loans new money to the
government at interest to extract a real proportion of 'profit' for
themselves - and the government is unable to mop up the surplus with
tax - they are forced to increase the supply of money in each cycle to
cover the new debt. The inevitable result is an inflationary 'bubble'
- whereby the total debt exceeds the real value of assets backing that
debt.

The FED in collusion with the US Treasury deliberately cooked up a
scheme to shift this 'bubble' into the US housing market (about 1991)
- in order that the inflation was not apparent in the value of the US
$, and to maintain the artificially high value of the US$ (and other
major currencies). The process went into overdrive to finance the 'War
on Terror' (whatever that might mean) in 2001. We are currently
experiencing the inevitable consequences.

No amount of helicopter bombing of more money into the system will
cure the underlying problem - it will only prolong the agony and cause
swings and instability as the new money is bombed into different
sectors (for example the recent oil price bubble).

Ultimately the US$ must lose about half its real value (the size of
the bubble) - in addition to inflating 'normally'. This is likely to
manifest as further inflation, as it is perceived as the lesser of two
evils. This in combination with the depression we have now entered (or
perhaps more acceptably recession or downturn) - makes for a bleak
picture - a repetition of the stagflation of the 70's (along with
everyone losing half the money they thought they had saved!). The
recession in turn resulted from poor investments - again due to the
new money being directed into the old economy and distorting the
market.

The correct approach to avoiding prolonged stagflation is not to bomb
more money into the market (especially when distorting the market by
directing money towards preferred members of the old economy) - but to
cut taxes - reduce regulation - and allow entrepreneurs to build the
new economy with as few interferences as possible. This cure will not
be painless - but it will be quick.

Where does ripple feature in all this?

It is unlikely that the vested interests in the old economy will give
up easily, and they are unlikely to 'bite the bullet'. The consequence
will be instability and pain for some time to come. Communities who
establish their own 'good' money will be less affected and will be
better equipped to weather the storm. There are two options open to
them - 'new currency' (commodity based currency) - or community
currency (community guaranteed currency).

After the shocks of the past few months - the public will be more
susceptible to the idea of monetary reform - and democratized money in
general. This is the perhaps the best or only time that monetary
reform may be possible - and a golden opportunity for ripple. Ripple
offers the glue that will bind these new democratic currencies into a
global banking system.

Sorry to lecture - but I have been on about the inclusion of interest
in ripple for some time - and I feel that recent events have to some
extent validated my opinion - a golden opportunity to press home the
point!

For those who wish to research the above opinions:

- Throw away your classical economics books (they are based upon some
abandoned physics equations and use several simplistic assumptions
that are completely unrealistic);
- read up some Austrian school economics - especially as it pertains
to the business cycle;
- have a look at monetary reform - especially 'full-reserve banking'
- read Bernard Lietaer on 'new currency'
- and follow the many links from the ripple-group about community
currency and of course ripple!

regards William Jackson

[Amr Gharbeia]

matabele wrote:

> Sorry to lecture - but I have been on about the inclusion of interest
> in ripple for some time - and I feel that recent events have to some
> extent validated my opinion - a golden opportunity to press home the
> point!

I second William in this one. He explained the economic side of it.
This is a good time to rethink interest. However, I will focus on
Ripple as a piece of Free Software.

Free Software is a movement that creates software focusing on
communities and people, rather on companies and profit. The movement
itself is the most successful example of how the people are able to
gain grounds and organise themselves. It is certainly a one part of
many that are coming together and networking to create a sustainable
life.

Regardless of the decision developers make whether to include interest
or not, it is bound to happen that in the future, someone will 'fork'
the software and make another version in the opposite direction. If we
do not include interest now, an entrepreneur who sees the brilliance
of Ripple will hire someone to add the code, and will use for their
business. If we decide to include interest in Ripple now, some
electronic collective will fork a version that has no interest, and
promote it as a meta-network of LETs networks.

We should not worry about the future direction of Ripple. The question
really is whether we think interest is sustainable or not. Personally,
I know that interest is against both people and the planet.

A suggestion to developers: could you make it modular perhaps? An add-
on to the original interest-free Ripple? In Linux distributions, users
have the choice of installing patented codecs or using a 100% Free
system. This will help the future Ripple developers community from
forking over ideology, and therefore will help make everybody use one
software regarding of their left/right position, which increases the
network effect and improves the chances against the much-bigger
centralised currency.

--
Amr Gharbeia
http://gharbeia.net

[dsyd]

Amr,
The way I see it is that even though interest is available as an
option in Ripple, people are not forced to use it. Imagine Ripple
became widely adopted, and some people chose to use interest and some
chose not to do so. Over time, instabilities would occur in the groups
on Ripple who did choose to use interest. This would economically
impair those groups, while groups that do not chose to use interest
would not suffer such problems. People would eventual see the
incentive in not using interest. Eventually a "survival of the
economically fittest" would weed interest out of the system. I think
that allowing the freedom to chose whether or not to use interest and
having a process of "evolution" towards interest-free currency would
be the most conducive towards personal choice and would have the
widest appeal, while the ultimate goal would still eventually be
achieved.
Daniel Syddall

[Chris Wagner]

On Sun, 2008-10-12 at 06:47 -0700, matabele wrote:
> - read up some Austrian school economics - especially as it pertains
> to the business cycle;

I know this is a bit off-topic, but I must second this suggestion. The
Austrian economists make sense out of a confusing world. Before
discovering their school of thought, I thought economics was mostly
rubbish. I've been fascinated with the science since I began reading
stuff by those of the Austrian persuasion. (BTW, the "Austrian" label
is more of a nickname and has little to do with Austria the country, as
I understand it.)

A great site for relevant articles, free audio books, and other media is
http://mises.org/.

[Alexis Delevett]

Even if current Austrian economics may not have any present day Austrian contributors (don't know that, but assume that this is so), its roots clearly are in Austria, at that time a center of cutting edge scientific inquiry as represented by the Vienna circle... good new thinking, then.

--- On Sun, 10/12/08, Chris Wagner <christophe...@gmail.com> wrote:

[Daniel Reeves]

I'm partial to the San Francisco school myself:

http://maravi.blogspot.com/2008/07/progress-waxing-and-waning-schools-o.html

--

http://ai.eecs.umich.edu/people/dreeves - - search://"Daniel Reeves"

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[dsyd]

> I'm partial to the San Francisco school myself:
>

> http://maravi.blogspot.com/2008/07/progress-waxing-and-waning-schools...

Hehe, I like the idea of a "VieChiSan" (Austrian business cycle +
Chicago no intervention + San Francisco fairness in land rents)
school. I'm a fan of Fred Foldvary's writing. If I had to name my
politico-economic orientation, it would be his formulation of
"geoanarchism":
http://www.anti-state.com/geo/foldvary1.html

[matabele]

I second the writings of Fred Foldvary - especially relevant at this
time is his article "The Real Estate Bubble"
http://www.progress.org/2004/fold364.htm

Also an article by Mark Thornton - "We Told You So"
http://www.lewrockwell.com/thornton/thornton33.html

[matabele]

I have not thought carefully through the consequences of routing money
through groups who use interest. If indeed this will not effect the
whole system - but only bring about instability/poverty/jealousy/
hatred/social chaos in the groups that do - whilst the rest of the
community go about their lives - then an interest facility can be
included as an option (perhaps with a red flashing scull and
crossbones as a warning).

Simple interest is not exponential - only compound interest - perhaps
interest on interest can be excluded?
Can someone confirm if the problem will be isolated?

[matabele]

Just culled a couple of gems off the 'Federal Reserve' Wikipedia page:

Each Federal reserve bank shall keep itself informed of the general
character and amount of the loans and investments of its member banks
with a view to ascertaining whether undue use is being made of bank
credit for the speculative carrying of or trading in securities, real
estate, or commodities, or for any other purpose inconsistent with the
maintenance of sound credit conditions; and, in determining whether to
grant or refuse advances, rediscounts, or other credit
accommodations ...
Whoever knowingly makes any false statement or report, or willfully
overvalues any land, property or security, for the purpose of
influencing in any way...shall be fined not more than $1,000,000 or
imprisoned not more than 30 years, or both.

Since the whole 'housing bubble' has been on public record since at
least 2004 - and many deliberate interventions have been made to
perpetuate the situation - it appears the US is in no need of further
regulation. If those they have are enforced - perhaps even a few
bankers will be open to monetary reform!

On Oct 13, 4:43 am, "Daniel Reeves" <dree...@gmail.com> wrote:
> I'm partial to the San Francisco school myself:
>

> http://maravi.blogspot.com/2008/07/progress-waxing-and-waning-schools...

>
>
>
> On Sun, Oct 12, 2008 at 11:12 PM, Alexis Delevett <adele...@yahoo.com> wrote:
>
> > Even if current Austrian economics may not have any present day Austrian contributors (don't know that, but assume that this is so), its roots clearly are in Austria, at that time a center of cutting edge scientific inquiry as represented by the Vienna circle... good new thinking, then.
>

> > --- On Sun, 10/12/08, Chris Wagner <christopher.t.wag...@gmail.com> wrote:

>
> >> From: Chris Wagner <christopher.t.wag...@gmail.com>
> >> Subject: Re: Ripple, what's up
> >> To: rippl...@googlegroups.com
> >> Date: Sunday, October 12, 2008, 6:35 PM
> >> On Sun, 2008-10-12 at 06:47 -0700, matabele wrote:
> >> > - read up some Austrian school economics - especially
> >> as it pertains
> >> > to the business cycle;
>
> >> I know this is a bit off-topic, but I must second this
> >> suggestion.  The
> >> Austrian economists make sense out of a confusing world.
> >> Before
> >> discovering their school of thought, I thought economics
> >> was mostly
> >> rubbish.  I've been fascinated with the science since I
> >> began reading
> >> stuff by those of the Austrian persuasion.  (BTW, the
> >> "Austrian" label
> >> is more of a nickname and has little to do with Austria the
> >> country, as
> >> I understand it.)
>
> >> A great site for relevant articles, free audio books, and
> >> other media is
> >>http://mises.org/.
>

> --http://ai.eecs.umich.edu/people/dreeves - -  search://"Daniel Reeves"

[Daniel Reeves]

We may have irreconcilable views on interest and I definitely don't
want to dive into that debate. (See the previously referenced 2007
thread.)

So I don't know if simple-interest-only avoids the problems you see
with compound interest but here's perhaps evidence that you'll view
the answer as no: Compound interest is not common for individual
loans. If you're paying compound interest you have a so-called
negative amortization loan. Most loans on which monthly payments are
being made are strictly simple-interest-only loans.

A question for all the Fred Foldvary fans: Has Foldvary ever talked
about interest? I'd be extremely interested to hear anything he's
said about it. (I'm willing to bet he hasn't but it would cause a
small upheaval in my worldview if he has.)

PS: I just saw what you noted about the Federal Reserve. Great point!

--
http://ai.eecs.umich.edu/people/dreeves - - search://"Daniel Reeves"

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[dsyd]

I don't know that Foldvary has talked about interest as a problem per-
se. Nor do I personally think that interest is necessarily a bad
thing, except when applied to newly-issued government-mandated
currency. In this case all profits earned by the central bank and
returned to the treasury are effectively a stealth-tax, while all
profits not returned to the treasury represent a form of economic
parasitism, in my view. However, (although I suspect you know this
already, since it was in the article you posted) Foldvary mentions the
setting of interest rates by central banks (as opposed to the free
market) as being the cause of the business cycle. Not really the same
issue though.

> --http://ai.eecs.umich.edu/people/dreeves - -  search://"Daniel Reeves"

[matabele]

Simple interest is fine - it is equivalent to any contract - an
exchange of X units of a commodity A at time T1 for a promise of Y
units of a commodity B at time T2 (in this case commodity A and B are
both money). The total debt will never exceed the original value of
the exchange. Default is a matter for the courts - not for the
creditor to take unilateral punitive action.

Simple interest can still be a problem if levied on new money in a
fractional reserve system, as there is still a shortage of money at
the end of each cycle - the problem is however straight line rather
than exponential. With full reserve banking there is no shortage of
money at the end of each cycle - and there is no problem with any
party (including a bank) charging simple interest on a loan.

If this principal were followed - there would be far less incentive to
lend what can not be repaid. Is the lender not equally at fault in
this instance?

Does this cover your requirements for interest?

> --http://ai.eecs.umich.edu/people/dreeves - -  search://"Daniel Reeves"

[Nagy]

Interest is not ok.
Generate inflation
Concentrate the power in the hands of those few who charge interest.
It should be only a small fee for making the money flow trought the
system.
In Szekler communities there where not such a thing like lending on
interest and we where fine for hundreds of years.
The communities had built the houses for the new pairs, they had given
them the means to produce goods.
As a matter of fact it should be imosed a limit on wealth. Beyond a
certain level it should be turn on to the communities common asset.
Otherwise in a short period of time few people would accumulate so
much money again that they would be able to impose they rule.

[matabele]

A brief mention of interest

http://www.cooperativeindividualism.org/foldvary_interest2.html

> --http://ai.eecs.umich.edu/people/dreeves - -  search://"Daniel Reeves"

[dsyd]

Nagy,
> Interest is not ok.

Although I disagree that interest is to blame for the concentration of
wealth we see in the world, I agree in the sense that our current
interest-based monetary system enforces the continual undersupply of
goods:

Suppose interest was abolished, then there would be no incentive to
make loans (except to those who are well trusted and known such as
friends and family). As a result, money would be hoarded rather than
invested. Prices would therefore be higher, as there would be less
money in circulation.

Interest returned to money is limited by the size of the reduction in
prices that the money facilitates, just the same way as the price of
machinery is limited by the reduction in cost that it facilitates.
(This is because people are not forced to use money. Money does not
hold a monopoly on the means of exchange - alternatives exist, such as
bartering. And just as it would not make sense to pay more for
machinery than the machinery saves you in production costs, people
will not pay more in interest than money saves them from resorting to
barter.) In reality though, due to competition between money-lenders,
the interest returned to money is in fact less than what money is able
to extort through the threat of its withdrawal, and generally tends
towards operating costs, just as the price of machinery in a
competitive market will tend towards its cost of production. Money-
lending in that respect is not really any different to machinery-
lending.

Except that machinery devalues over time reducing the rate of interest
that machinery-lending would return if machinery were currency. If we
had a $50,000 truck that we were not using, for instance, and expected
that truck to devalue by $10,000 over the next year, then we would not
complain if we lent that truck expecting only a $45,000 truck as
repayment. However if we had $50,000 in money, we would expect at
least the original amount to be repaid, since money has no storage
cost. Money is thereby seen to have an advantageous position over all
other commodities, since it is both hoardable and universally accepted
as a medium of exchange. Money will not be made available for the
production of trucks until the number of trucks diminishes to so few
that trucks are able to exact a tribute equal to what is required to
pay the money interest. This led Silvio Gesell to assert that money-
interest causes interest to be exacted upon real capital, forcing the
continual undersupply of real capital below actual demand in order to
maintain its ability to exact enough interest that the money tribute
can be paid:

"real capital owes its interest-earning capacity solely to the fact
that money, through forced crises, forced unemployment, that is,
through fire and sword, prepares the market conditions which enable
real capital to exact interest equal to basic interest [money
interest]...

"The unique and characteristic advantages of this medium of exchange
permit the arbitrary postponement of demand, without direct loss to
its possessor; whereas supply, on account of the physical
characteristics of the wares, punishes delay with losses of all kinds.
In defence of their economic welfare both the individual and the
community have been and are at enmity with interest; and they would
long ago have eliminated interest if their power had not been
trammelled by money."

Gesell concluded that in order for supply to actually reach demand,
rather than always being slightly below demand, a form of money was
needed that could exact no interest. He applied to money the same
feature that disadvantages all other forms of capital - a storage cost
or demurrage fee. In this way money could no longer be hoarded without
a loss in value, and so could not hold the chain of production to
ransom by the threat of its unemployment. Interest would thereby no
longer be charged on real capital, since no money tribute had to be
paid.

For a better explanation, see:
http://www.cooperativeindividualism.org/newland-terry_on-silvio-gesell.html

Or the original text:
http://www.utopie.it/pubblicazioni/gesell/teory_of_interest.htm

The trouble with Gesell's system is that it only works when legal
tender laws are in place, since Gresham's law works in reverse in the
absence of such laws and people will chose to transact with only money
that has the highest long-term value.

Ripple provides an alternative to Gesell's system that incorporates
its advantages while not requiring legal tender laws (and therefore
the whole centralised state apparatus required to enforce them). By
reducing the operating cost of money-lending to zero (many people are
willing to lend to friends and family without charging interest), the
interest on money is thereby reduced to zero through competition. No
longer would money be able to exact a tribute on real capital, and the
supply of goods would raise to become equal with demand - there would
no longer be the artificial scarcity of goods imposed by money that we
see today.

[Thomas Hartman]

Maybe interest is like drugs. Even if you ban it, people will still use it.