What do Interest Rates Mean?

In this thread on mises.org, someone was asking what interest rates mean.

Suppose you're 30 years old. You do work now, but want to save some of the profits for your retirement.

You produced more than you consumed. Now, you have money.

The rest of society benefits, because you performed work in exchange for money.

If you lend that money to other people, they can invest your surplus labor profitably.

Interest is the reward for someone producing more than they consume, so they can have savings for later.

Suppose interest rates were determined by the free market and not a central bank credit monopoly. Other people are bidding on the right to invest my surplus labor. Whoever offers the highest interest rate, and is creditworthy, gets the right to invest my surplus labor when I lend them my money. This guarantees that surplus labor is invested efficiently.

When central banks distort the interest rate market, they distort people's ability to make economic decisions and plan for the future.

If I put Federal Reserve Notes in my checking account, I get 1% interest but true inflation is 10%-30%+. By saving money, I'm letting the banksters rip me off via inflation.

A CEO of a large corporation wants to borrow to build a new factory. He may borrow at 6% while true inflation is 10%-30%. This sends a false price signal that building the factory was desirable. A factory is built, instead of something else that would be more useful.

The central bank credit monopoly steals, via inflation, my reward for producing more than I consume. There's reduced incentive to save, because my savings are stolen via inflation. There's incentive for people to rack up as much debt as they can, because interest rates are less than true inflation.

The central bank credit monopoly has damaging effects. It affects everyone's ability to make rational economic decisions and plan for the future. The beneficiaries of this theft are insiders, who may borrow at cheaper interest rates compared to everyone else.