People prefer to spend the currency very quickly on goods or services and thereby generate a chain reaction of economic transactions that otherwise would occur much more slowly or simply not at all. This means in practice a strong and immediate creation of local employment without the need for government intervention. Thus, negative-interest scrip can be created and used in a local setting to generate local employment and other benefits . The alternate currency circulated with many times the rapidity of the official Austrian currency, and there was local prosperity in the midst of national depression. Negative-interest currency can help to push inflation down.
Inflation is simply the depreciation of a currency in terms of goods.
The combination of the automatic appreciation of the value of the currency and the gradual reduction of the interest component from all capital-intensive goods and services, results in a powerful technique to combat inflationary tendencies. There is an additional beneficial effect with regard to the environment. The higher the money rate of interest, the stronger is the pressure to discount the future and to place immediate gains ahead of long-term concerns. During the economic depression of the 1930s, Europe saw a number of practical monetary experiments with negative-interest alternative currency. The device worked splendidly.