No interest economy , would it work ?

[Your Account]

Buying something with the bank money coming through a loanor a credit card of some kind, is always having some interest attached to that money,
so you borrow 500k from a bank to buy a house, and you have to return 600k , so bank earns 100k for borrowing someone 500k.
Wouldnt it be better for citizens if they could borrow the money from the state, and return the same amount over some time, without interest ?
Why would that not work ?
seems like a more fair approach

 

[Natural Order]

A borrower nor a lender be!

 

[SammyPops]

The govt could not print enough money to keep society moving. Its not just citizens but its companies that borrow. Think of all the construction, infrastructure projects, R&D, supplies requried to produce goods and so on

 

[jeff7b9]

The govt could not print enough money to keep society moving. Its not just citizens but its companies that borrow. Think of all the construction, infrastructure projects, R&D, supplies requried to produce goods and so on

This is exactly what they do though, they just let a third party skim trillions off the top for the privilege of using our own currency which should be issued debt free by congress and backed by gold to remain stable.

They are currently "printing" money like it is going out of style.

As to TS question:

Theoretically a level/stable or even deflationary system could exist, bitcoin is based on a finite system which would function basically as a deflationary currency once all tokens have been mined if I understand it correctly, since as society continued to grow there would be less for each person and as opposed to the buying value going DOWN in an inflationary market such as we are in now, the buying power would go UP over time.

But good luck in reality to see any system in which the elite give over their right to use the monetary system to rob us blind. The world is too corrupt for that. And the elite have sufficient power and wealth to introduce their corruption into any system including a deflationary system.

 

[ObsoleteSoul]

Early folks did, as it was against religious law to lend money with interest. Not sure how to go back now though. Maybe some real intelligent folks here could say. Just seems there is too much going on in today's world to have a system like this. Again though, IDK

 

[Fluffernutter]

OP seeking Sharia law

 

[plataoplombo]

You'd have to provide some incentive to replace interest earned.

 

[Scheme]

There's inherent risk with any loan in not being paid back. Those risks are amortized via interest, the riskier the loan the higher the interest. If you didn't have any interest then no one would give out loans, as they not only would possibly lose money but also they would not be able to invest it and make any returns on their money.

 

[flektarn]

1) Any lender can make more by investing it elsewhere when compared to 0%.
2) Money loses buying power every year in real terms. 3% on average. Higher these days though.
So the government would be losing money at least due to inflation on every loan handed out + potential earnings they could've made putting it elsewhere. Shortfalls due to inflation would have to be recovered via taxes...

 

[ColemanwastheGOAT]

500k from a bank to buy a house, and you have to return 600k

Wtf bank are you with and where do I sign up?

 

[EndlessCritic]

Japan has actually experienced deflation.

Inflation obviously causes the value of cash to fall. The good thing out of this is that it encourages you to spend your money (or invest it) because it's going to lose value if you don't.

By contrast, if the value of your dollar actually increases over time, you are incentivized to not spend or invest it.

It's just bananas reading articles like this: https://www.reuters.com/markets/asi...5-year-battle-with-deflation-govt-2023-08-29/

But the government has refrained from officially declaring an end to deflation, arguing that doing so requires not just underlying price rises but clear signs that Japan won't return to periods of price falls.
"We need to eradicate the sticky deflationary mindset besetting households and companies," the report said, adding the government must work closely with the BOJ to achieve sustained wage growth.

"Since declaring Japan in a state of deflation in 2001, the government has made ending price falls among its top policy priorities. The focus has led to years of big fiscal spending to prop up the economy, and kept pressure on the central bank to maintain ultra-loose monetary policy."


Imagine being concerned about falling prices!

 

[ColemanwastheGOAT]

And in response to the actual thread topic, how about just address restrictive covenants and ridiculous zoning laws and end the housing shortage so a starter home doesn't cost $500k in the first place.

Housing is bn absurd racket. I owned a home for one year and made $30k when I sold it a year later, now my property value has gone up like $15k in two years on my current house.

Get government out of the way and let people build affordable housing for their families FFS and I say that as someone benefitting from this perverse system.

 

[ferrisjso]

It would be a massive improvement for people and would might save the system from revolt until ecological collapse set in. It would kick a lot of problems down the road. Whether or not thats good is a whole other discussion but it would make society a whole lot desperate and on each others toes.

The problem is assuming capitalists are looking for sustainability of their system and trying to make it more workable for society. Interest is not a pesky side feature of credit its the main point. So yeah I don't see this happening. Like if push comes to shove they make take this on just student loans or just something else in the name of shutting people of but they will never get rid of interest entirely.

 

[Your Account]

OP seeking Sharia law

well whatsupp there with muslim states and their no interest banking ?
how is that possible to be still in place in such countries , why are they no collapsing and going bankrupt ?
I understood that its not the law they have to abide there, more like a recommendation , but banks choose to go with the no interest rates practice ?

 

[Two Crows]

There are centuries of this debate.

Search for "Usury", and you will find more argument and thought on the topic than expected.

State operating as banking system creates all sorts of potential disasters. Not to mention interest-free loans from the state are effectively just subsidies.

 

[SammyPops]

This is exactly what they do though, they just let a third party skim trillions off the top for the privilege of using our own currency which should be issued debt free by congress and backed by gold to remain stable.

They are currently "printing" money like it is going out of style.

As to TS question:

Theoretically a level/stable or even deflationary system could exist, bitcoin is based on a finite system which would function basically as a deflationary currency once all tokens have been mined if I understand it correctly, since as society continued to grow there would be less for each person and as opposed to the buying value going DOWN in an inflationary market such as we are in now, the buying power would go UP over time.

But good luck in reality to see any system in which the elite give over their right to use the monetary system to rob us blind. The world is too corrupt for that. And the elite have sufficient power and wealth to introduce their corruption into any system including a deflationary system.

except the 3rd party pays them a prime interest rate so the govt breaks even.

 

[nostradumbass]

That would fall apart pretty quickly. A mortgage is paying it back over 30 years, and money doesn't hold its value, so lending $500k now to get $500k back over the next 30 years is losing quite a lot in the best case scenario of the person actually paying back the amount they borrowed that is now worth significantly less, then add in the other huge losses of people not paying the loans back and you'll be way underwater very quickly.

 

[Patrick Jane]

I'm not lending anyone money in that case.

Buying something with the bank money coming through a loanor a credit card of some kind, is always having some interest attached to that money,
so you borrow 500k from a bank to buy a house, and you have to return 600k , so bank earns 100k for borrowing someone 500k.
Wouldnt it be better for citizens if they could borrow the money from the state, and return the same amount over some time, without interest ?
Why would that not work ?
seems like a more fair approach

How are you planning to offset the risk of payment default?

 

[Fox by the Sea]

in a non-profit scenario, sure.

 

[JudoThrowFiasco]

Why would an institution lend money without a return on their end? Unless you're giving them an equity stake in whatever the borrower is using the money for. Lenders lose out due to the value of the dollar(s) being less than what is was worth when the obligation is complete plus the risk of the borrower defaulting.