[p2p-research] excellent contribution on flow money by Martienvan Steenbergen

[Martien van Steenbergen]

Thanks for clearing this up Dmytri. I didn't know this (i.e. the first  
part of your explanation). I'll read it a couple of times, because I  
don't grasp it al yet.

You say:

> Thus the most significant component of the price of borrowing money is
> Rent, and the solution is to eliminate artificial scarcity.  
> Demmurage and
> mutual credit are two ways that this is attempted, the former by
> encouraging circulation (velocity) through negative interest, the  
> later
> by allowing currency to be created by all participants.

I'm confused. How does demurrage solve artificial scarcity?

Succes en plezier,

Martien.

On 31 May 2009, at 20:49 , Dmytri Kleiner wrote:

> On Thu, 28 May 2009, Martien van Steenbergen wrote:
>
>
>> True. There is some threshold where it becomes important to measure  
>> and pay for borrow
>> time, depending on context.
>>
>>      (So where is the difference to compound interest?
>> Rent (normally) is lineair with time; you just pay for use over time.
>> Compound positive interest is exponential with time. A slow start,  
>> but an ever steeper
>> line after its tipping point. You pay rent over rent. This is what  
>> will eventually kill
>> it, or make it less attractive.
>
> Hello, there has been far too much text in thread for me to follow it,
> so my apologies if I am not understanding, but it appears the words
> "Rent" and "Interest" are being misused here.
>
> Economically speaking "Rent" is not a price paid for borrowing
> something physical, and "Interest" is not a price paid for borrowing
> money, rather both are are prices, and *all* price are composed of  
> Rent,
> Interest and Wages.
>
> Rent is the economic return to "Land" which in economics refers to any
> productive input of which the supply can not be increased by the
> application labour. This, of course, includes Land.
>
> Interest is the economic return to Capital, which is any productive
> input that can have it's supply increased by the application of  
> labour.
> This does *not* include Money. Money is not a productive input at all,
> but rather it is a debt instrument, it is a form of memory, money is
> nothing more than a way of remembering debt.
>
> It is important to understand that even prices paid only once contain
> rent, it does not mean the price of borrowing something, but rather  
> the
> component of scarcity in price.
>
> It is import to distinguish the colloquial "Adam's Rent-All" usage  
> from
> the historical/economic usage, rent form Old French "rendre": to  
> deliver, to
> yield
>
> The price for borrowing physical objects or money includes both Rent  
> and
> Interest.
>
> Gesell, like George and Proudhon on whom his work is based, is  
> primarily concerned with the elimination of economic rent, and notes  
> that Money,
> being an artificially scarce commodity, captures (unearned) value as  
> a result of it's scarcity, and that this scarcity is artificial and  
> can be removed by designing better currency.
>
> State-money, whether specie or fiat based, is artificially scarce,  
> because
> of limitations on who can create it, As the "interest" charged by  
> money lenders is a return to scarcity, this is properly considered  
> Rent and not
> "Interest," -- A return on investment could only be considered  
> Interest when it is retained earnings from the yield of Capital.
>
> Thus the most significant component of the price of borrowing money is
> Rent, and the solution is to eliminate artificial scarcity.  
> Demmurage and
> mutual credit are two ways that this is attempted, the former by
> encouraging circulation (velocity) through negative interest, the  
> later
> by allowing currency to be created by all participants.
>
>
> Cheers.
>
>
>
>
>
>
> -- 
> Dmytri Kleiner, aspiring crank
>
> http://www.telekommunisten.net