Money and Interest.

"I want the earth plus 5 percent" by Larry Hannigan (abstract).

For generations the people used the barter system. A man supported his own family by providing all their needs or specialized in a particular trade. The surplus assets of its own production, he exchanged for the surplus of others.

In each community a simple Government had been formed to ensure that the freedoms and rights of each person would be protected and not force any man to do anything against his will by any man or any group of men.

This was the only purpose of government and each Governor was voluntarily supported by the local community who elected him.

However, market day was a problem that could not solve. Was it worth a knife or two baskets of corn? A cow was worth more than a wagon ... and so on. None could think of a better system.

Fabian, the goldsmith, had announced, "I have the solution to our bartering problems, and invited everyone to a public meeting tomorrow."

Money

The next day on a big stage in the town square, Fabian explained all the new system which he called "money". He said: "The use gold ornaments and jewelry is an excellent metal. Do not tarnish or rust, and will last many years. Refine some of my gold coins and call each coin a" dollar. "

He explained how values ​​would work, and that "money" would be really a medium for exchange - a much better system than bartering.

One of the governors said, "some people may find gold and make coins for themselves", he said, "That would be most unfair", Fabian was ready with the answer.

"Only government-approved coins can be used, and these will have special marking stamped on them." This seemed reasonable and was proposed to give each man an equal number of coins. "Only I deserve it most," said the candle-maker, "everyone uses my candles." "No," said the farmer, "no food here is no life, we must have the largest amount of money" ... and the discussion continued.

Fabian let them argue for a while and finally said, "since none of you can agree, I suggest that everyone gets the number you require of me. There is no limit, except your ability to repay. The more money each gets, the more you return at the end of the year.

Interest

"So what do you get paid?" people asked Fabian. "Since I am providing a service, ie, the source of money, I am entitled to payment for my work. Let's say that for every 100 coins you get, I get back 105 per year you hold the debt. 5 will be my charge, and call this payment, "interest."

There seemed no other way, and besides, 5% seemed little amount for a year.

Fabian did not lose a minute. He made coins day and night, and at the end of the week he was ready. People queued to get into his tent, and after the coins were reviewed and approved by the Governors the system commenced. Some called for only a few coins and went to try the new system.



source: economia.com.mx