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Comment by fodkodrasz | Hacker News Reader

Although not directly interest, but in similar vein:

There was once a so called fair profit rate of 4% in the middle ages and early modern age, in Hungary. Greek wine traders operating there featured the number 4 on their seals and ornaments of their houses. (They were also often tried for violating this rule)

In those ages of course there was no constant inflation in the current sense, gold standard was used for payments, etc.

source, in Hungarian language, the site of the greek ethnic minority's cultural institute (the pictures feature one such ornament): https://gorogintezet.hu/kultura/2022/07/gorog-kereskedok-sze...

https://gorogintezet.hu/wp-content/uploads/2022/08/15264.jpg

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The entire concept of inflation comes from the fact that various Med. cultures figured out you could issue coinage with a high percentage of gold and then slowly drop the percentage over time to increase the purchasing power of the government. It got insanely bad at some points, with "gold" coinage being less than 50% gold. Inflation wasn't just constant, it was an everyday fact of life.

> The entire concept of inflation comes from the fact that various Med. cultures figured out you could issue coinage with a high percentage of gold and then slowly drop the percentage over time to increase the purchasing power of the government. It got insanely bad at some points, with "gold" coinage being less than 50% gold. Inflation wasn't just constant, it was an everyday fact of life.

I'm not an expert on this - how does this idea differ from that of 'seigniorage' where the sovereign can profit from the creation of money?

Your example only addresses the buying power of the sovereign; it's not obvious that it should affect the prices of goods between private parties.

https://en.wikipedia.org/wiki/Seigniorage

Devaluing the new currency by adding lesser metals will also devalue existing currency that is "pure" as you aren't able to trust the value of the currency anymore, so the value of the existing pool of money will drop.

Its at a smaller scale, but it can be seen with counterfeit currency today. Cash-heavy businesses have to absorb whatever amount of counterfeits they accept, so they are really valuing your dollar at $0.99 if they might have to throw it out.

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