One more thing, why do all the banksters steal our wealth, time, industry and pensions at the same time as telling us it's the 'free market'. ...
Beacause they can?
The ignorance level here is over 9000
And the reason they can is because of INTEREST, money has a liquidity value which accrues unearned to the one holding it. People can then monetize that value by loaning money at interest, the rate of interest will reflect the market valuation of the liquidity value, that is how banks make money.
Demurrage sterilizes the liquidity value of money, the liquidity is now being paid for by the person holding money, they have no surplus unearned value to sell. People will still loan money but it will be at 0%, the loan maker will lose liquidity but stop paying demurrage, the loan recipient will acquire liquidity and begin paying demurrage.
I'm with you on this (the interest part), what i don't understand is how demurrage would be different from simply inflating the money supply (like it is done with fiat). I am also having trouble coming up with plausible scenarios where people would voluntarily adopt such a currency.
The egalitarian part of me likes it -- it would be great for the poor & discourage hoarding, but so is inflation-done-right.
Did you read my reply in another thread concerning Price information and how inflation/deflation over time destroys this information flow? That is a major part of the equation for demurrage over inflation (and the one I bring out first as Austrians generally except the importance of price information), but their are other points as well but they are a bit more complex.
In the classic 'quantity theory of money' the equation MV = PQ (Money Supply x Velocity = Price Level x Quantity of Goods) is going to hold true IN THE LONG RUN. But in the short run a central banks increase in M may not go directly into an increase in P, it may (as it is now) result in dropping V as the money becomes 'stuck in the Banks'. Because their isn't any inflation YET, no one is interested in loaning or investing and thus the money never gets out to cause the inflation desired. You see normal Banks actually create most money by credit expansion they stand between the Central Bank and the actual inflation rate in the economy.
Central Banks have a high degree of control on Interest rates by controlling the bond markets and thouse rates go right out into the economy to encourage or discourage borrowing and investment, but they have only INDIRECT control of inflation rates. Right now the FED has a 2% inflation target but inflation is failing short of that, in contrast the FED just PICKS the interest rate and sets it practically at Will (smaller or indebted nations may not have that degree of control mind you but the FED dose).
So because inflation/deflation in actual prices in the economy is so indirect, being after all a dynamic arising from the gradual bidding up of prices as consumers have more money in their pockets to spend with the effects of a central bank have a lot of lag. The economy may need higher prices and higher velocity right now but money supply expansion could take months or years to reach the economy and it would continue to have an effect long after the need is gone.
A Demurrage rate though has the EFFECT of Inflation but moves at the SPEED of Interest rates allowing it to be far more responsive then even the best managed Inflation targeting. Now in FRC we don't have the ability to adjust the rate of Demurrage (no technical solution and no willingness on our part to take the responsibility to set it), but a nations central bank WOULD use a dynamic rate, really it would just be an extension of their interest rates so this would allow them to be a better central bank.
On a side note I've speculated on a means to created decentralized demurrage rates in Freicoin, the general outline I have is that their would be some kind of internal bond-market / prediction market operating inside the block-chain that all clients can participate in, the result is then used to modify the demurrage rate. Something similar might control Money Supply as well but it's all VERY complicated and just a bare theory right now.
