There is no better alternative for society than debt free currency

Thanks for bringing this interesting topic to the table. Monetary economics is a complex and interesting topic. There are many ideas being proposed on how to improve the current system, and debt free currency is one of those. As mentioned, debt free currency is a fiat currency created by public authority and allocated without an interest charge. And here I must first clear up a misunderstanding. There is no connection between the money being crated by a private or a public authority and debt free currency and debt obligations. In fact, most of the worlds currencies are fiat cirrencies created by a public authority that does charge interest on it. So the question of debt free currency or not can be simplified. It's not a private vs public question. Both todays currency system and debt free currency systems are fiat currencies created by public authorities. So lets look at the effects this will have. So there are three difference betweens todays system and the debt-free currency system. Not all of these three differences is needed to be in effect for the currency to be called debt-free. some proponents of debt-free only proposes parts of these three points. So let's look at them one by one. 1. No interest on the money borrowed from the central bank(no obligation to return the money. In todays system, when banks borrow money from the central bank, they pay interest on it. This is simply to make them give the money back. This interest i usually very low, around 0.25% per year. This interest has two functions, the first is that you this way can regulate the amount of currency in circulation. If it increases the interest rate, the banks will return money, while lowering the rate will make banks borrow more money. This regulation of the money in circulation will have an effect on what money is worth, and hence, it will affect inflation. Higher interest, less money, money becomes worth more, lowers inflation. Less interest, more money in circulation, stimulates economy, but can cause inflation. Without this interest, the central bank has lost one way to keep the economy stable and minimize bubbles in crashes. The second effect is the simple effect that banks will give money back. If they don't have an incentive to give money back, they will not. That means that whatever money the central bank prints, will quickly be borrowed by the banks, and then be lost to the central bank. If the state then needs money, it either has to borrow money from the banks, or print more money. Printing more money will increase inflation. Borrowing money from the banks will not, but since some of the claims of debts free money is to get rid of government debt and/or inflation, we see here that this is clearly not achieved by debt free money. 2. The state banks allocates money instead of lending. One way to solve the problem with the banks borrowing up the money is to not lend money at all, but just give it away. This means that the state now will allocate who gets money. And here we see a third use of the interest rate. With an interest rate, it costs money to borrow money from the state. You will therefore not borrow the money unless you need it. You will not borrow money just to sit on it, you will only borrow it if you can make more money with the borrowed money that without it. This works as a regulation of who gets the money, and the state does not need to allocate it. It automatically goes where it's needed. Without this function, the state must now allocate money. This is central planning, which is well known not to work. Instead of having the market and the system automatically allocate money where it's needed, you now have bureaucrats sitting and trying to figure out who needs the money. This is practically impossible, as you would need to have an oversight over the whole economy at once. And you can't just give money to anyone who wanted, because the interest-free money does not have any frawbacks, so everyone always want more. That means the state would have to just continue printing money, which would immediately throw the country into hyperinflation and collapse the economy. 3. No state debt. This is the last and the most serious part of the debt-free currency ideas. Here the idea is that when the state needs more money, instead of borrowing it, they should simply use the central bank to print more money. This is an idea that has been tested many times in history. Some examples are Germany in the 1920's, Hungary in the 1940's and Zimbabwe between the early 2000's and April 2009. It has the same effect every time: Hyperinflation and economic collapse. It's the worst monetary policy possible. In short, interest free borrowing only robs the central bank of their biggest tool to combat inflation and stimulate the economy. No obligation to return the borrowed money to the central bank will empty the coffers of the bank, and giving state a license to print money without debt is a recipe for economic disaster. Debt free currency in it's worst interpretation is in not the best possible system, but in fact the worst possible system. In it's least destructive interpretation it is no disaster, but clearly worse than todays system. It is therefore clearly not the best alternative.