For part 1 of this please go here
Demurrage defines money as a medium of exchange instead of a store of value. No longer is money an exception to the universal natural laws of our world, rust, mold, rot and decay, toward the recycling of resources. No longer is money "above the law", Natural Universal Law that is.
Value assigns to each object in the world a number. Demurrage reverses this thinking and removes an important boundary between the Human Realm and the Natural Realm.When money is no longer preferred to goods, we will loose the habit of defining a thing to how much it is worth.
Demurrage encourages long-term thinking!
The interest base economy results in a behavior of "sacrifice", even their own. In a demurrage based system, pure self-interest would dictate that the forest be preserved. Greed would no longer be motivated by robbing the future for the benefit of the present.
Interest concentrates wealth, Demurrage promotes its distribution.
Both Interest and demurrage based systems represent a fee for the use of money, the key difference is that in Interest based systems that fee goes to who already have money, and in the later (demurrage) the fee is levied upon them. Wealth comes with a high maintenance cost, security comes from accumulating money, in demurrage based systems it comes from having productive channels to which to direct it, to become a Nexus for the flow of wealth and not a point for its accumulation.
Demurrage puts is focus on Relationships, NOT on "Having", it encourages reciprocation, sharing, and the rapid circulation of wealth.
In today's world it is much better in having a $1000, then 10 people who owe you $100, in demurrage the opposite is true!
Steem and Free Steem Money.
So how can steem "profit" from having a demurage based system. As the system is now, there is no way of creating relationships, sharing or loaning money, it is still being hoarded / accumulated, and based on the "old" interest based economy style!
The system is based around the "powering up" for having more voting power (changing Steem into Steem Power), which creates whales, and accumulates for value.
Steem needs to create and extra account like "Free Steem Money", which can be used to loan, and the accumulation or hoarding needs to be capped to a max (fee free), and introduce a demurrage fee.
This way Steem or Free Steem Money will super circulate, help out other steemians and create a better "Steem Economy".
With the introduction of Free-Steem-Money, money has been reduced to the rank of umbrellas; friends and acquaintances assist each other mutually as a matter of course with loans of money. No one keeps, or can keep, reserves of money, since money is under compulsion to circulate. But just because no one can form reserves of money, no reserves are needed. For the circulation of money is regular and uninterrupted.
No longer would money be a scarce commodity, hoarded and kept away from others, rather it would circulate at the maximum possible "velocity".
The Issuer would insure stable prices (P) according to the equation of exchange (MV=PQ) by regulating the amount of currency in circulation (M) to correspond to the total real economic output (Q).
The same result could be accomplished by linking the currency to a basket of commodities whose level correspond to the overall economic activity.
We live, in a world of "plenty", and we always have since ancient times. The present money system has created an artificial scarcity, were non need exits. Its not food or any other necessity that is scarce, It is Money, whose build-in scarcity induces the same in everything else.
In a highly specialized, technological society most of us need to perform exchanges to live. To do so we need a medium to exchange, Money. Lets make Steem that Money!