Zero Interest Money for Low-Cost Infrastructure

To build infrastructure a community borrows money from savers. Typically borrowing is with debt or bonds on which the community pays interest and repays with money. The community can eliminate interest by repaying with goods and services while still giving savers the same or better return on the loan.

The above seems to defy reason. How can we eliminate interest and still give people a return on their money? Surely providing a return on money is the same as giving interest?

To resolve this paradox we repay with different zero interest money, and we do that by repaying in the goods and services created with the loan.

If we use special money people may not want it as it only buys specific goods and services? But the new money is transferable, so we can sell it and receive general purpose interest bearing money.

While this seems complicated with modern computers and communications, it is a relatively trivial task. We do it by putting all the rules and zero money tokens into an app. We then give everyone who wants to provide loan money an instance of the same special purpose app.

By doing this, we remove the need to pay interest on loans because we repay with zero interest money. The approach works when there are multiple buyers and sellers of the special purpose loan money and works well when we exploit resources in the Commons. In particular, it allows a community to share common infrastructure fairly while keeping ownership of the Commons with the community.

Many infrastructure investments are long lasting and saving the cost of compounding interest is a significant saving. At 4% compound interest the cost of infrastructure doubles each 17.5 years. If it lasts 35 years, the cost quadruples. By using this approach, communities can easily halve the cost of infrastructure. Importantly they can replace existing loans and buy back privatised infrastructure.