Wealth is exchanged on a daily basis without regards to compensation. Individuals exchange monetary assets for goods and services and then proceed to wait for the return of their change. While this process takes place there is a surplus and a deficit of wealth that remains stagnate. Let me offer an example, you buy a value meal for $4.67 cents, you pay with a five dollar bill and then proceed to wait while the cashier counts you your change in the amount of .33 cents.
Does anyone see any advantage/disadvantage in reforming this system so that interst can be paid or lent out on this stangnate money. I am aware this is very similar to fractional reserve banking.
Read until you have something to write...Write until you have nothing to write...when you have nothing to write, read...read until you have something to write...Jeremiah
You're missing the point. When you have your $5 FRN, it's continually losing value due to inflation.
The inflation tax means that idle money earns a negative interest rate. You're forced to invest, or get ripped off by inflation.
I have my own blog at FSK's Guide to Reality. Let me know if you like it.