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Interest is not rent, especially if you’re talking about a financial system in which there are a finite number of currency units. Interest doesn’t exist as money in the bitcoin system.

Interest doesn’t exist in the fiat system as money either, it simply creates requirements and incentives for theft. Once introduced, it acts like a parasitic virus ultimately destroying the host.

Jeff Swann 2y ago

Idk what you mean by "interest doesn't exist as money."

If someone can grant you access to a car or a house or a tractor & charge you for the time that you have access to any of those things, why can't someone grant you access to money to buy any of the above & charge you for the time you have access to their money? Who is going to stop this from happening?

I do think there will be much less money lending & more lending of physical capital, like cars & tractors, because the value of saving & reducing upfront costs is higher under a Bitcoin standard. And the risk of loaning a bearer asset form of money is probably higher than loaning a vehicle which can be tracked & disabled & more easily retrieved by force. But lending is not inherently evil or destructive. It is just risky & prone to corruption.

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Branden with an E 2y ago

It doesn't necessarily follow that there will be less money lending. While the price of lending will undoubtedly be higher, this will force more human capital to ideate and execute on higher quality projects. I can foresee a world where society is awash in high quality, resilient businesses, creating higher order capital goods and enabling more resilient businesses to emerge.

Remember, higher price of capital means investors make profits faster, increasing the velocity of credit in the system.

Jeff Swann 2y ago

I disagree. I think financial sector gowth for the last 100 years has been wildly distorted & it should be something closer to the size & % of the economy that it was prior to the creation of the Fed.

I don't think there is any possible way for lending to be higher in an economy built on sound money, when today more people are in debt than are not. In a sound monetary system, the supply of funds available to be loaned is necessarily only a portion of the supply of money saved. There always has to be more savings than debt in a sound monetary system. And today things are exactly the opposite.

Undisciplined 2y ago

This is an interesting question. I think that ceteris paribus there would be less lending, if only because demand for loans would be so much lower in a world where the remaining balance isn’t depreciating.

However, a lot of things will be different on a Bitcoin standard, including greater general prosperity and a more stable economy. Those are both factors that are generally thought to increase the size of credit markets.