3 ms·

How do you run the economy without interest?

by throwaway123x2 6y ago

xorx 6y ago
I've read some non-mainstream theories that economies based on cash accounts and equity-only investments are possible. Some would argue that equity-only investment arrangements are better for society, as they align interests between capital and production in a way that recourse interest lending cannot. You can already see some fintech startups attempting equity-based home "loans", in which the "lender"'s lien is on a percentage of the future sale value of the home, not a fixed dollar amount. It will be interesting to see how this develops. I'm not sure how financing on consumer debt like credit cards and non-commercial vehicles would work, though. Perhaps discouraging consumer profligacy would be a feature, however, not necessarily a bug.
rizalp 6y ago
By barter? By producing something valuable and exchange it through fair trade, and using sound money (not worthless currency)
jay_kyburz 6y ago
In utopian reality, you could run a state owned bank that was run not-for-profit and only charged interest enough to cover losses and expenses.
- User23 6y ago
  In real reality, Danish banks are charging 0% interest for mortgages and making their money off of closing fees[1]. Also the natural rate of interest is zero[2]. Just because you've been raised from birth to believe usury is necessary for the payment system (not the economy!) to function doesn't make it so. [1] https://au.finance.yahoo.com/news/danish-bank-introduces-new-20-year-0-per-cent-mortgaes-012823441.html https://au.finance.yahoo.com/news/danish-bank-introduces-new... [2] https://news.ycombinator.com/item?id=16414199 https://news.ycombinator.com/item?id=16414199 http://www.moslereconomics.com/wp-content/graphs/2009/07/natural-rate-is-zero.PDF http://www.moslereconomics.com/wp-content/graphs/2009/07/nat... (link is broken in the HN post)

3 ms·

How do you run the economy without interest?

by throwaway123x2 6y ago

How do you run the economy without interest?

xorx 6y ago
I've read some non-mainstream theories that economies based on cash accounts and equity-only investments are possible. Some would argue that equity-only investment arrangements are better for society, as they align interests between capital and production in a way that recourse interest lending cannot. You can already see some fintech startups attempting equity-based home "loans", in which the "lender"'s lien is on a percentage of the future sale value of the home, not a fixed dollar amount. It will be interesting to see how this develops. I'm not sure how financing on consumer debt like credit cards and non-commercial vehicles would work, though. Perhaps discouraging consumer profligacy would be a feature, however, not necessarily a bug.
rizalp 6y ago
By barter? By producing something valuable and exchange it through fair trade, and using sound money (not worthless currency)
jay_kyburz 6y ago
In utopian reality, you could run a state owned bank that was run not-for-profit and only charged interest enough to cover losses and expenses.
- User23 6y ago
  In real reality, Danish banks are charging 0% interest for mortgages and making their money off of closing fees[1]. Also the natural rate of interest is zero[2]. Just because you've been raised from birth to believe usury is necessary for the payment system (not the economy!) to function doesn't make it so. [1] https://au.finance.yahoo.com/news/danish-bank-introduces-new-20-year-0-per-cent-mortgaes-012823441.html https://au.finance.yahoo.com/news/danish-bank-introduces-new... [2] https://news.ycombinator.com/item?id=16414199 https://news.ycombinator.com/item?id=16414199 http://www.moslereconomics.com/wp-content/graphs/2009/07/natural-rate-is-zero.PDF http://www.moslereconomics.com/wp-content/graphs/2009/07/nat... (link is broken in the HN post)