ABSTRACT
The fluctuations of the rate of interest "are not what they seem". Especially the fluctuations will be found to have been much smaller than they appeared to be, but if we take into account certain extraneous elements that will dress themselves up in the uniform of interest. The apparent abnormality of the money rate of interest at such times is merely the other side of the attempt of the real rate of interest to steady itself. Silvio Gesell contends that a high rate of interest is not the cause of money shortage, but rather tends to produce an excessive issue of money. Nothing is more amply proved than the fact that the rate of interest falls and rises with the level of prices. The root of the discount fallacy to which our reformers have fallen a victim resides in the orthodox notion that an increase of the supply of money reduces the rate of interest.
