Freigeld

As part of the theory of Freiwirtschaft, Freigeld ('free money', German pronunciation: [ˈfʁaɪɡɛlt]) is a monetary (or exchange) unit proposed by Silvio Gesell.

Freigeld has several special properties:

The name results from the idea that there is no incentive to store or hoard Freigeld as it will automatically lose its value after some time. It is claimed that as a result, interest rates could decrease to zero.

According to Gesell, all human-produced goods are subject to expensive storage, whereas money is not: grain loses its weight, metal products rust, housing deteriorates. Therefore, money has a supreme advantage over all other goods. John Maynard Keynes renamed the concept of basic interest articulated in Gesell's book The Natural Economic Order with the more familiar term liquidity preference. Being "liquid" – having money – is a great advantage to anybody, much more so than having comparable amounts (past utility) of any product. The result is that people will not even provide zero-risk, inflation-corrected credits unless a certain interest rate is offered. Freigeld simply reduces this "primordial" interest rate, which is estimated to be somewhere around 3% to 5%, by an absolute, in order to lower the average interest rate to a value around 0.

E-gold is an example of a modern private currency in which demurrage is applied. In this case there is a gold storage charge of 1% per annum. The demurrage associated with e-gold is arguably expended by the currency operator to help cover real storage costs.

Bernard Lietaer's terra is a commodity basket currency proposal similar to Keynes's bancor or L'Europa and bearing a demurrage charge.

The chiemgauer is a regional community currency in a part of Bavaria, using a demurrage system.

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