[thingylab]

Don't you fuel asset bubbles by targetting 0% interest at all times ?

If your incentive is to just get rid of your money because of the inherent penalty, aren't you tempted to, say, buy overpriced houses, to use a recent example ?

[maaku]

It's too lengthy an explanation to get into, but it's the combination of inflation plus low interest plus the usurious liquidity premium that leads to asset bubbles. Gesell covers this in great depth in his work, Natural Economic Order (http://www.ces.org.za/docs/Gesell/en/neo/index.htm).

With Freicoin we're talking about counter-balancing that liquidity premium (which, historically, has always been around 5%), thereby eliminating basic interest and keeping price levels stable.