The Price of Time: The Real Story of Interest

Interest is much older than coined money, which only originated in the eighth century BC.

The association between interest and the fruit of a loan is embedded in ancient languages.

If wealth is placed where it bears interest it comes back to you redoubled. Egyptian scribe, named Any, early first millennium BC

Nature is, to a great extent, reproductive. Growing crops and animals often make it possible to endow the future more richly than the present. Man can obtain from the forest or the farm more by waiting than by premature cutting of trees or by exhausting the soil. In other words, Nature’s productivity has a strong tendency to keep up the rate of int

Anthropologists no longer accept that money originated to replace barter, as classical economists, including Smith, had maintained. There is no evidence for this barter-to-money myth. On the contrary, it seems likely that credit antedated money and that the earliest forms of credit bore interest.

traditional view that charging for loans was inherently unjust.

Drawing a parallel between the US Forest Service and Federal Reserve is irresistible. The Fed was created less than a decade after its environmental counterpart. By the 1920s the Fed was attempting to suppress the business cycle. While ‘federal fire suppression acts to subsidize developments of private lands in fire-prone areas’, the Fed’s policy o

Yet our modern monetary mandarins never stop to consider Bagehot’s warnings about the adverse consequences of easy money – how interest rates set at 2 per cent or less fuel speculative manias, drive savers to make risky investments, encourage bad lending and weaken the financial system. One wonders whether any of them has actually opened the pages

Economists talk about time preference rather than impatience to describe how people value present and future goods differently. An individual’s time preference can be seen as a kind of personal rate of interest.