It's working o.k. The improvement is in more fiat, not less. Demurrage means you can't own money. It means you will always owe something to someone but it also means there will also always be someone owing to you. It keeps the economy working.
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I'll be honest, I'd never heard of demurrage til now, cheers for that, but surely 'owing v owed' outside of the fiat system is better still. The economy will still work.