Which do you think is a better system for loaning money (given no central bank)?
I think compound interest is but only because it would deter people from borrowing too much.
Loaning where only a fee may be charged is good for debtors, but I think it would cause more borrowing than saving.
Of course, compound interest is only a problem because of central banking. People often have no choice but to borrow due to inflation eating savings and they pay compound interest because of that. High time preference also causes people to borrow a lot of money, but the loaning of money would be reduced by 1/2 if there were a finite money supply (assuming that high time preference in society is as much as inflation).
I think compound interest is but only because it would deter people from borrowing too much.
Loaning where only a fee may be charged is good for debtors, but I think it would cause more borrowing than saving.
Of course, compound interest is only a problem because of central banking. People often have no choice but to borrow due to inflation eating savings and they pay compound interest because of that. High time preference also causes people to borrow a lot of money, but the loaning of money would be reduced by 1/2 if there were a finite money supply (assuming that high time preference in society is as much as inflation).
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