INTEREST FREE MONEY SYSTEM (MARKET STANDARD). Please, comment.

say the seller was using gold bars as collateral. the buyer gets them free for a promissory note. He can use them to make other investments such as selling them or using collateral for something. If he makes money, he's good, if he loses money, he took his risk. A lot like selling short or using margin.
I have to point out that the constitution says that congress "has the power to coin money and regulate the value thereof". But all private transactions should be acceptable.

I believe that the above system is a little overly complicated for the average user and could be subject to fraud, making it less attractive to early adopters.
What I believe to be the ideal monetary system is one that derived by the market and more importantly decentralized.
How a bout a simple home based precious metal smelter, where users could melt various metals into predetermined molds.
Precious metals will always have value and are difficult to be fraudulently replicated.
This idea seems to be an easy comprehend monetary system which could be easily decentralized
Waddda Ya Think?

you're not going to be able to find many people that want to take part. You're asking people to sacrifice for you. Why would anyone want to lend you money without interest if they have the opportunity to use that money for a profitable purpose? There are others that are willing to pay interest to use that money. Or that money could be used to build a house to sell for a profit. I'm not going to let you borrow money unless you're willing to offer me high enough interest to compensate me for missing out on other opportunities. Maybe your Mom will, but hardly anyone else.

Edit: I just realized, I didn't know if you were advocating this 'money' as a replacement or simply as an independent exchange. If it would be just an exchange then yeah do whatever you want, if you can find people to participate. But if this is the outline of a replacement financial system, that everyone is to use see below for some thoughts...

What is to stop collusion of parties in inflating the currency? A buyer and a seller can agree to get together and exchange a property or labor for an inordinate amount of "money". So they get more purchasing power than people who realistically assess the value of the exchange. Altogether more abuse can be had if a third accomplice resides in the market exchange.

Speaking of purchasing power, where is it to come from? From the collateral backing the 'money'? So you could have a money backed by a house and by wheat...if the money that represented these collateral was called the same thing you'd have an inequity in purchasing power...how are you to equate a house's value in terms of bushels of wheat? Only two people involved in that exact exchange can determine that. You'd have the same problems as fixed ratio bimetallism and soon you'd have either a shortage of wheat or houses. See Gresham's Law.
If the 'money' is called something different based on what is backing it, then the money has no point...you're just bartering with paper surrogates. Then you'd have all the problems associated with 'mutual coincidence of wants'

Money is not something consciously created by clever individuals, it emerges from the market...individuals making exchanges come to recognize a commodity as generally acceptable by all parties.
The commodity is traded for its own value, then people begin to recognize a particular commodity as having widespread demand. The commodity may then come to be accepted by an individual not because they have a use for it themselves but because they know it will be accepted as payment for what they do want. Over time all exchanges become denominated in terms of the money commodity. This is this price mechanism.

Putting a legal tender backing on the 'money' proposed above will make it 'work'. But realize that it is the threat of legal sanction that makes people accept the money.

People used to accept payment in salt, tobacco, cattle, spices. (Colonial businesses in Virginia used to keep books accounted in bales of tobacco.) (You could have paper as the commodity, but when was the last time you thought to yourself... I really want some paper right now?)

All of these are commodities. The reason that gold and silver have emerged as the time tested commodities used as money is because they have the following characteristics:
1) they is an innate demand for them before they are used as money
2) they are durable
3) they are portable (high value to weight)
4) they can be easily divided (in the above market standard, though you
could denominate your money in terms of your collateral, say 1/1000th
of a house...it wouldn't make any sense. What is 1/1000th of a house
worth? And if anyone lays claim to that as soon as the house is broken
apart it loses its value)
5) gold and silver come from the ground...it takes labor to extract them, this
usefully limits the money supply, no one can just print more gold or
silver. It is difficult, though certainly not impossible, nor unprecedented,
to inflate with gold and silver.

I think the biggest problem I have with this market exchange is that there is somebody 'issuing' the money. In a free market society, (I am assuming this is what you also advocate) no one 'issues' the money. The money is accepted because people recognize it as generally exchangeable. If you and I and Bill want to exchange, what right does Bob have to come in and tell us how we should do so? If we don't want to use the 'money' Bob 'issues' than why should we be forced to accept it?

Anyway, some food for thought. Creative idea, but it does not sit well with me, nor do I think it compatible with a true free market society.

I believe that the above system is a little overly complicated for the average user and could be subject to fraud, making it less attractive to early adopters.
What I believe to be the ideal monetary system is one that derived by the market and more importantly decentralized.
How a bout a simple home based precious metal smelter, where users could melt various metals into predetermined molds.
Precious metals will always have value and are difficult to be fraudulently replicated.
This idea seems to be an easy comprehend monetary system which could be easily decentralized

Waddda Ya Think?

this a bump because I think it would make for interesting discussion. Peace

is to have an interest free currency that is MUTUALLY CONVERTIBLE to interest-earning bonds.
That way, the free market automatically adjusts the money supply.
If there is an excess of money in circulation, money holders will convert their unneeded cash to interest-bearing bonds and the currency goes back to the Treasury out of circulation.
If there is a shortage, they will convert the bonds back to currency.

Somehow some of you folks have gotten the idea that all debt is bad. It isn't. There is good debt and bad debt.

Good debt: People save their money by postponing consumption of their income. They loan their savings AT INTEREST (because that is the only reason to loan it) to somebody who invests it in improving the means of production (a new machine at the shoe factory, for example). The improvement in production results in more and cheaper goods for consumers and more profit for the borrower. From the profit, the borrower pays back the loan with interest. The people who save have been rewarded with interest. The borrower is rewarded with more profit. The consumers are rewarded with cheaper goods. And there is no expansion of the money supply if it is 100% reserve lending. Everybody wins.

Bad debt:
Bank/Fed creates money out of thin air. Bank loans money to person who uses it to buy a tv set. Borrower is not more productive as a result but has actually reduced his future income by saddling himself with principle and interest payments. Instead of postponing consumption and investing the savings like the example in the first paragraph, he has not only consumed everything he has, but is consuming income he has not even earned yet. He has eaten the seed corn and borrowed seed corn from the neighbor and eaten that as well. And the money supply has been expanded, reducing everyone's buying power. Nobody is better off except the banker and the tv set maker.

Good debt is encouraged by allowing interest rates to seek a market level, requiring 100% reserve banking, sound money, taxes that don't punish productive activity and savings, and allowing banks and individuals to suffer losses rather than bail them out when they make bad decisions. Bad debt is encouraged by . . . well . . .pretty much everything our government, the Fed, and the banks have been doing since 1913. It took a generation or two for the people to give up their frugal habits of saving and investing and adopt the borrow and spend policies of the brain trust in Washington, but we have FULLY embraced it now. And we are about to reap the reward.

What does the "buyer" of the contract gain when the "seller" does not default?

How about we eliminate "interest" on all transactions to the extent that it is illegal and associated with extortion. Think that would cut down on the Fed's self-interest to print money? It would cut down on predatory lenders, interest rates would be set at 0% forever with no chance of ever being instituted again. Interest is what creates debt and the overwhelming sense of unfairness in this country.

If I loan a friend $100 do I ask for more than $100 in return? Point is corporations have so desensitized the population where an anonymous person isn't treated as an equal friend. I think that could fix a lot of issues in this world.