Everything you know about interest is wrong-Part 2

Interest is not natural, and the fact that money exists proves interest is unnecessary.

In part 1 of this series, we talked about credit. I identified 3 main forms of credit “Interest sharing loans”, money creation, and grants. To comment briefly on each of those, conventional interest rates are merely a way to offer a fixed return, in contrast with equity returns which are automatically adjusted to the level of profit. Interest is not competitive for 3 reasons: credit relationships are inter-personal, level of profits varies anyway between endeavors, and money creation has no opportunity cost. Money creation is leveraging a social contract to pay people now, but allow them to spend that money later through the common expectations of exchange among a group of people. Contrary to what MMTers suggest, the defining feature of money is that it is not honored by a specific party, but rather a community of users. This community may all be subject to a common political authority, tax burden, they may simply be like minded individuals, or profit seekers who have adapted to ongoing mutual expectations. In other words, money is not anyone’s liability. I used a quote from Eric Lonergan to support this assertion.

This is in fact the defining feature of money, that it is a token with value accepted in exchanges, not dependent on intrinsic value(although it may have some intrinsic value), but it is not anyone’s liability in particular. The power of money…