Interest rates are the price at which money can be borrowed. The amount of money on offer, the money supply, is important for the setting of this price. However, as in any market, demand is a crucial factor as well. What is money demand? ..and how does demand for money influence interest rates?
If wealth concentrates (and history has shown that it does) the pressure builds up over time. This can (and has) lead to many problems. What could be a remedy? Lets look at history and see if any working solutions have ever been tried. What might work and what would be fair…
Contrary to intuition, money creation does not always lead to inflation. History has shown many periods where money was supplied in abundance, but little inflation occurred. Even on the gold-standard and with loads of new gold coming into Europe from the newly discovered America’s, little inflation occurred. People used the new gold to make statues in churches, jewellery etc. Demand for money seems to play an important role too…
Unless checked, wealth will concentrate in the hands of a few. History has repeatedly shown this effect. It can lead to corrupting effects and definitely impacts democracy. Democracy can also check this concentration though…