Abstract
A crude and crass expression of Concordian economics is its aspiration to see more cash in everybody’s pockets. One might expect a unanimous agreement on this basic policy. But no. On the contrary, there is much opposition to it. Strange things we are being told of you these days. We used to call you, Cash, “King Cash” to signify our deep affection for you. No more. Ever since Jefferson deleted the word “property,” the most direct manifestation of which is cash, from the Declaration of Independence, the word “property” has become a “political” word, a word not to be uttered in polite society.
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Notes
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Joan M. Gorga, my wife, has mightily contributed to this presentation.
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Perhaps, I have discovered a way to undermine the construction of compound interest. On borrowed $100 at 5%, to ask for interest on $105 next year is not charitable at all to say the least. The $105 amount is NOT your money; the $5 belonged to the debtor a moment ago.
Next year, you should be entitled to receive another $5 as interest on YOUR $100, but not on $105 as in the practice of compound interest.
It is an abstract conception, the conception of ownership that determines the outcome favorable to compound interest.
If we focus our attention on the imprint of history, the $5 paid in interest remains what it WAS: an amount belonging to the debtor.
The transaction is voluntary; if debtors insist on it, creditors will no longer be entitled to interest on $105 next year. The lender will be entitled only to interest on the original loan of $100 until the capital is repaid.
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These observations might be corroborated by the results of empirical studies to determine whether a) borrowers are aware of the mechanics of compound interest; b) whether bankers explain these mechanics to borrowers; c) whether lenders might not be more at peace with themselves if loans were issued at simple rather than compound interest.
A final consideration. If money is the legal representation of real wealth, where is the real wealth created by the accumulation of compound interest charges?
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Gorga, C. (2024). King Cash. In: Concordian Economics, Vol. 2. Springer Studies in Alternative Economics. Springer, Cham. https://doi.org/10.1007/978-3-031-54642-6_5
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