‘Over the last few decades, we have been conducting a large-scale social experiment with ultralow savings rates, without a strong safety net beneath the high-wire act,’ wrote economist Tyler Cowen.56 Michael Burry, the hedge fund manager featured in Michael Lewis’s The Big Short, put it more bluntly. ‘The zero interest-rate policy,’ said Burry, ‘br

‘John Bull’, says someone, ‘can stand a great deal, but he cannot stand two per cent …’ Here the moral obligation arises. People won’t take 2 per cent; they won’t bear a loss of income. Instead of that dreadful event, they invest their careful savings in something impossible – a canal to Kamchatka, a railway to Watchet, a plan for animating the Dea

delusion lies in the conception of time. The great stock-market bull seeks to condense the future into a few days, to discount the long march of history, and capture the present value of all future riches. It is his strident demand for everything right now – to own the future in money right now – that cannot tolerate even the notion of futurity – t

Interest, he said, is the price of time. There is no better definition.

The Mesopotamians invented what Einstein supposedly called the eighth wonder of the world, namely compound interest.fn5

By 2014, five years after the end of the Great Recession, US productivity growth trailed at half its historic average.2 Under Ben Bernanke, America’s central bank wasn’t standing pat, as it had done in the early 1930s. In fact, the Fed’s balance sheet expanded by more than the total dollar increase in US national income.3 Across the Atlantic, the s

To twenty-first-century policymakers, the interest rate is simply a lever used to control inflation and tweak economic output. Yet an acquaintance with the Babylonian origins of interest should give pause for thought. Interest has always been with us because resources have always been scarce and must be rationed somehow, because wealth is unequally

The Great Depression propelled productivity improvements across many other industries, ranging from airlines to warehousing. In his book The Great Leap Forward, Alexander Field of Santa Clara University claims that the 1930s were the most technologically progressive decade in American history. After 1929, railroads accounting for a third of the nat

In Babylon, Greece and Rome interest rates followed a U-shaped curve over the centuries; declining as each civilization became established and prospered, and rising sharply during periods of decline and fall.57 Very low interest rates appear to have been the calm before the storm. In the early Neo-Babylonian period (700–630 BC) rates on silver loan