Re:Why America will soon see a wave of bank mergers
by imtringued on Tuesday May 02, 2023 @05:58PM
(#35794793)
The 100% reserve bank people will at some point discover why Silvio Gesell imagined the concept of demurrage currencies.
Because at some point the market interest rate is 0% and the cash rate is 0%. There is no reason to lend money via longer term deposits. The amount of deposits available to banks dries up. The circulation of money stagnates and ultimately causes a recession with high unemployment.
The demurrage fee doesn't change the market interest rate, it just moves the guaranteed interest rate into the negative range so that the market interest rate can be negative, if it has to be, instead of being stuck at 0%.
Because at some point the market interest rate is 0% and the cash rate is 0%. There is no reason to lend money via longer term deposits. The amount of deposits available to banks dries up. The circulation of money stagnates and ultimately causes a recession with high unemployment.
The demurrage fee doesn't change the market interest rate, it just moves the guaranteed interest rate into the negative range so that the market interest rate can be negative, if it has to be, instead of being stuck at 0%.