How can I stop myself from hoarding emails

As could hardly be expected otherwise, the article "Criticism of the interest rate criticism" caused quite a stir with some of our readers. I responded to many emails directly, but unfortunately I don't have the time to answer each email individually. So I've decided to go back to the most frequently mentioned points. From Jens Berger

Character of interest

Many emails show that interest is still often seen as something â € œmysticalâ € that eludes concrete consideration. It is not so. Seen pragmatically, the interest is nothing more than a fee, the amount of which is based on certain factors. In this point it hardly differs from the rent (also called rent) or the rental fee for a car. When renting something, you pay a previously negotiated fee to someone who leaves something to you for a certain period of time. Nobody would assume that landlords would not add rental income to the economic cycle. Nor would it occur to anyone that the rent could not be paid out of their own money, but would inevitably lead to debt. Why should that be different for a loan than for a rent? Again and again in readers' emails the idea appears that the interest payment either has to be financed by new loans or that the lender withdraws it from the economic cycle. However, both are not tenable on closer inspection. (See below.)

compound interest

In many emails I have been accused of not addressing the â € œcompound interest problemâ € in my article. However, this "problem" is only a "problem" if one adopts the argumentation patterns of those who criticize compound interest. On the side of the lender, a relevant compound interest effect can only be achieved if certain factors such as the risk of default, inflation and taxes are completely ignored and if one also assumes that the lender, or the saver, never withdraws capital from his loan volume. That would be a counterpart to the â € œJosephspfennigâ €, which I have already discussed in detail in my article. The interest or compound interest critics elegantly ignore the "risk" factor. If a lender is risk averse, his interest income is only slightly above inflation anyway, which is why there can be no significant compound interest effect. If he is willing to take risks, his interest profits are well above inflation in the event of success - but the probability of default is also considerably higher, which is why it would be dishonest here to simply brush this risk aside.

The connection with compound interest is even less on the borrower's side. Only when one reaches into the argumentative box of tricks and assumes that loans a) will not be repaid and b) the interest costs are serviced with new loans, which c) are also not repaid, does the borrower even get the opportunity to do something like this how to find a compound interest. However, these are too many and, above all, too unrealistic assumptions for an assumed “legality”.


In many replies and comments to my article the argument came up again and again that money that is not spent, but saved, is "hoarded" and thus withdrawn from the economy. This argument can already be refuted when looking at regular lending. It is true that banks do not grant their loans exclusively from customer deposits - if you look at the statistics of the Bundesbank [PDF - 25 KB], however, you can see that the loan amount of 3,963 billion euros that the German banking sector recognizes the private and corporate sectors, compared with 3,206 billion euros in deposits from these two sectors.

No matter how justified the criticism of the inadequate minimum reserve and minimum equity capital requirements may be, a look at the Bundesbank's figures shows that even today lending is still largely made from the deposits of bank customers. Those who do not hide their savings under their pillows do not â € œhaveâ € them either, but make them available to borrowers and thus to the economy - indirectly via the banking sector.

Money versus wealth

Many critics' objections are based on the simple mistake of thinking that money and assets are equated. The amount of money is often wrongly equated with the national wealth. However, this mistake of reasoning can be refuted with a simple example. Anyone who owns a house that has been fully paid off and not encumbered is undoubtedly in possession of an asset. However, this house cannot be found in any money supply calculation - it simply does not exist for the central banks. Only when you encumber this house as security for a mortgage loan, for example, does its value suddenly appear in the money supply statistics. The next day the amount of money increased by the amount of this loan. Of course, this transaction has not changed anything in terms of assets.

Circulation fee

Some readers, who are obviously supporters of the "free economy", pointed out to me that it was not the interest rate but the positive interest rate that was "the problem". This would remedy the situation with a circulation fee that punishes the "hoarding" of money through periodic devaluation.

I am happy to admit that I cannot even begin to understand such arguments. What is the difference between such a circulatory safeguard and the existing inflation? Why should a circuit protection prevent people from â € œhatchingâ € money? Anyone who withdraws their money from the cycle must reckon with a devaluation of this money even today - just not absolutely, but relatively. Readers' comments who want to prohibit interest because a constant amount of money and a constant value of money are to be striven for should be classified in the same category. Why should something like this be strived for? If a constant amount of money is faced with an increasing amount of goods, this inevitably leads to deflation with all its negative consequences, which would primarily have a negative effect on lending because the risk that the loans would not be amortized would be greater. If there were deflation and no interest, it would actually be more beneficial to "hoard" your money.

Accusation of anti-Semitism

It is not the case that I place interest critics in an anti-Semitic corner across the board in my article. In the article I write - in a single small subordinate clause - that criticism of interest rates is often mixed with an anti-Semitic tone. I am surprised that some readers rub themselves against this statement, it is no great secret that anti-Semitic works such as Gottfried Feder's â € œManifesto to Break Interest Bondageâ € are still very popular in many forums today.

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