Or, maybe come up with an alternative to making loans? Why is more debt the only answer? People seem not to want it.

The government could spend the money. Or it could give the money to the people (universal basic income) and they could spend it.

This also fixes the inflation problem. Just don't overshoot.

Living in Japan, I feel like they've naturally developed the culture of changing the color of the sky. I mean to say they always find ways of getting the people to blow cash to keep money circulating. Most companies here have like 3x more staff helping me or standing around than in Canada. Consumerism and state marketing is big too.

I'm not any kind of economist, but to me this seems like asking whether the sky really ought to be blue. Reducing the impact of debt (and by extension interest rates) on the economy is every bit as simple as undertaking a massive transforming project to change the color of the sky.

Yes, anything that requires government action is very hard in practice. But rhetorically, we discount that when talking about whether some government action would be a good idea or not.

Who's "we"? I think it's completely reasonable to consider how practical something of this magnitude is. You're not passing a single law; you're talking about fundamentally changing the entire nature of the (US? world?) economy in ways that I find difficult to even comprehend. I'm not even sure any amount of government action would be sufficient to bring it about.

Sorry, I must have given the wrong impression. To be clearer, I was hinting at either more government spending, universal basic income, or "helicopter money," as alternatives to attempting to stimulate the economy by encouraging more loans. These have precedents and it's not particularly difficult for a government to be efficient at giving people money.

> Increases in inequality and wealth concentration means there is more money to loan

Confiscate $3 trillion from the "rich", and give everyone in the US $10k dollars. What percent would end up back in the banking system after 1 year?

This is why you have to do it every year. Which is exactly what a progressive taxation system does (or would do if it was a little more progressive than current systems)

I imagine you would have to "do it" every week to have the claimed effect...

With online banking, etc perhaps once a day.

EDIT:

Actually, if the funds are transferred electronically it would take as long as an ACH transfer takes to get to the new account. The funds are tied up during that but then immediately available to the banking system again.

100%.

Banking system is where money lives.

Value lives outside, but the money represented by the value lives on accounts, in databases.

Even cash is just something tracked by central banks as liability (negative account value - because when someone deposits cash they increase one account, and if the bank then deposits that electronic money at the central bank the total money supply must not change, hence cash is tracked separately).

Wouldn't it be better to have interest rates match the natural interest rate? People paying for loans can't afford the rate payment, so these payments should be lowered to reflect the ability to pay back the loan (including into negative territory). If you're the U.S. Government, you're essentially telling capital surplus holders, "You can keep you large hordes of money here, but it'll cost you 1% a year."

And if you want to take out a loan, it'll still be a risk, since you'll need to make the principle payments, but you'd get a tailwind on the interest paid to you.

I'd be happy to learn where I'm wrong if you have any insight.

Yeah it's always great to have the interest rates match the natural interest rate.

Btw the definition of the natural interest rate is "The natural rate of interest, sometimes called the neutral rate of interest[1], is the interest rate that supports the economy at full employment/maximum output while keeping inflation constant"