Can any non-zero interest even exist under a 100% commodity (gold) standard?

[Paul]

@z1235

Assume a closed system (island) with 100 people each owning 100oz of gold. Each have deposited their gold in banks paying 1% interest. At the end of one year there will be 100 bank accounts, each showing 101oz of gold on their balance sheet. If all depositors asked for their gold back, where would the banks (physically) find the extra 100oz (interest) to pay ALL of their depositors in full?

The above scenario leads to the conclusion that charging/paying interest would be BOTH impossible AND unnecessary under a 100% gold standard.

If you make the assumption that everybody keeps all their money in the bank, nobody ever spends anything, and nobody borrows from the bank, yes. But why would the bank offer to pay interest in that scenario anyway? Why would there even /be/ money?

[z1235]

ThreeTrees, Paul: Please read the whole thread, as the discussion has progressed beyond the (somewhat clumsily constructed) original question. I don’t think you are saying anything that wasn’t already acknowledged and/or addressed.

Z.