we would find that we had more freedom than we knew how to use. But as soon as all factors were taken into the reckoning and equilibrium established, we would undoubtedly see a steady rise in the rate of interest owing to the clearing away of the present obstructions between supply and demand. The contention of some of the economists that there can be no general rise in value is absurd: they have never thought of value in terms of resistance.
On the other hand, the layman’s contention that interest is a vicious toll on effort is equally unjustified. If total national economic value is Effort multiplied by Conductivity (or EffortResistance), then all value which is unconsumed becomes either an inducement of new effort, or a conducement of current effort. If it is an inducement it has what the economists call “exchange value.” If it is a conducement it has a daily “use value.” If money were truly representative of all value, as it should be, then it would reflect both these qualities; and, naturally enough, we would get the phenomena of valid capital and valid interest. The reason some observers have been unable to reconcile these phenomena is that our present form of money is not representative of total national value, but is an unrelated arbitrary. It represents too much value, in which case we get high interest rates and a “panic”; or it represents too little value and we get low interest rates and a “boom.”
