Interest Rates in a Free Market

In this thread on mises.org, someone was asking about interest rates. When people decide to invest or consume, how does that affect interest rates?

Suppose there was a really free market.

If people decide to save money, then interest rates drop. There is surplus labor/capital for others to invest.

If people decide to borrow and build businesses, then interest rates rise. There is less labor/capital for others to invest.

The central bank credit monopoly distorts this process. The central bank price-fixing cartel sets interest rates, and not the free market.

By keeping interest rates below the natural free market rate, this sends a false price signal that it's profitable to borrow and invest. This leads to boom/bust cycles.

In a really free market, interest rates are a price signal about "What investments are worth pursuing?" The central bank credit monopoly prevents people from communicating, via interest rates (prices), which investments are most desirable.