[p2p-research] Fwd: Re: excellent contribution on flow moneybyMartienvanSteenbergen

[Dmytri Kleiner]

On Sun, 31 May 2009 21:31:54 +0200, Martien van Steenbergen
<Martien at aardrock.com> wrote:
> 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.

This Georgist cartoon is a good simple starting point:

http://www.henrygeorge.org/rent1.htm

> 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?

Demurrage attempts to solve artificial scarcity by discouraging hoarding,
since money _loses_ money with time, the holder has a strong motivation to
pass it on. "Supply" of money is a function the volume of currency and
circulation, so any increase in volume or circulation will increase supply.
That is the same motivation as when central banks lower interest rates to
attempt to stimulate the economy.


Cheers.


--
Dmytri Kleiner
editing text files since 1981

http://www.telekommunisten.net