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I'm not much of an economist, but I think interest basically represents risk. So it's insurance against being wrong. If we average it out over all the loans made by everybody, I don't think this is necessarily inflationary.

Even if the miner doesn't find copper, he's still obligated to pay back his loans. Maybe the bank seizes his property or he pays it off slowly from some regular job where he generates some other value. Either way it will work out in the end, although perhaps the effect is slightly inflationary until he pays off his loan.

And you have to take into consideration all the other loans made. If there is some other miner whose enterprise works out, then, if risk estimation techniques are good, it balances the one that failed.

When the techniques that everyone is using to estimate risk are totally wrong, you get the USA in 2009.

Again: not an economist.




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