Neither Debt nor Interest

Sensible Taler currencies cannot be used to express debt. Because of this, nobody needs to ever agree to pay interest.

Recall that Sensible Taler currencies are fully value-backed and the Taler currencies are used to pass ownership on values without inflation.

Debt does not exist in Sensible Taler.

Since debt expresses a shortage, it cannot be expressed in units of Sensible Taler; it expresses backed value, and shortages have no backing. In any other case, titles of ownership would change hands on unfounded basis, and somewhere along the line the full backing breaks down.

Other currencies will express debt, as a handle to future payment. This uses Keynesian logic, where debt becomes a value, and an interest rate is the price of money. Debt can be backed with debt, which creates a chain of dependencies tht can break and eventually lead to market mistrust that leads the way into a period of economic depression.

Sensible Taler deliberately passes ownership on the underlying value, and guarantees full reserve all along the way, because actual ownership has the stability that is lacking in a partially-backed system of debt, and removes any competitive advantage from reliance on fractional value-backing. Sensible Taler currencies always have the (title to) value in the hands of the party spending it, so their payments are fully backed and leave no debt.

Debt is the main reason to charge interest. It covers losses from not using money elsewhere, and it covers a risk of debtor default in a ratio to the debt amount. Finally, inflation needs to be overcome, which is considered the responsibility of the party in debt.

All this does not work in the Sensible Taler system and, as a result, interest need never be charged. There is no inflation and, without debt, there is no risk of default. And money can still be used where it is most profitable or most stable, but the value it brings will vary as a result of the risk and, in lieu of inflation, can only be the result of added value.

Instead of charging interest, an investor would share in a supported undertaking's profit. The risk of not making any profit would also be shared, so that a failure does not have an extra kick-back effect on the failed undertaking, but rather has a kick-forward effect on the investor who will be more likely to guide the investment and probably add experience from past projects. This makes investment a personalised activity, in line with the practices of the most successful investors on the planet; they sit on the boards of large companies, and likewise smaller investors can sit on the bboards of smaller companies. The result is that the investment becomes a binding force between people, leading to collaborative effort.

Several authors have argued that interest is a bad idea, because it works exponentially over time, widening the gap between rich and poor.