Synopses & Reviews
Synopsis
A comprehensive and profoundly relevant history of
interest from one of the world's leading financial
writers, The Price of Time explains our current global
financial position and how we got here The tradition of charging interest on loans is one of man's oldest practices,
going back at least to the Mesopotamian era in the third millennium B.C.
From ancient times, usury or charging for the use of money, has attracted
opprobrium--from philosophers, including Plato and Aristotle, and from the
religious authorities, whether Jewish, Muslim, or Christian. Yet as capitalism
became established from the late Middle Ages onwards, denunciations of
interest were tempered. It was gradually accepted that creditors had a right to
charge for lending out their property and that credit was essential for trade. By
the seventeenth century, the debate about interest shifted to what might be
considered a fair price.
Over the first two decades of the twenty-first century, interest rates have
sunk lower than ever before. Central bankers and policymakers appear blithe
to the unintended consequences of their actions, but easy money after the
global financial crisis in 2007/2008 has produced several ill effects, including
the appearance of multiple asset price bubbles, a reduction in productivity
growth, discouraging savings and exacerbating inequality, and forcing yield-starved investors to take on excessive risk.
The financial world now finds itself caught between a rock and a hard
place, and Edward Chancellor is here to tell us why. In this enriching volume,
Chancellor explores the history of interest and its essential function in determining how capital is allocated and priced.
Synopsis
Winner of the 2023 Hayek Book Prize
Longlisted for the 2022 Financial Times Business
Book of the Year Award
A comprehensive and profoundly relevant history of interest from one of the world's leading financial writers, The Price of Time explains our current global financial position and how we got here
In the beginning was the loan, and the loan carried interest. For at least five millennia people have been borrowing and lending at interest. The practice wasn't always popular--in the ancient world, usury was generally viewed as exploitative, a potential path to debt bondage and slavery. Yet as capitalism became established from the late Middle Ages onwards, denunciations of interest were tempered because interest was a necessary reward for lenders to part with their capital. And interest performs many other vital functions: it encourages people to save; enables them to place a value on precious assets, such as houses and all manner of financial securities; and allows us to price risk.All economic and financial activities take place across time. Interest is often described as the "price of money," but it is better called the "price of time: " time is scarce, time has value, interest is the time value of money.
Over the first two decades of the twenty-first century, interest rates have sunk lower than ever before. Easy money after the global financial crisis in 2007/2008 has produced several ill effects, including the appearance of multiple asset price bubbles, a reduction in productivity growth, discouraging savings and exacerbating inequality, and forcing yield starved investors to take on excessive risk. The financial world now finds itself caught between a rock and a hard place, and Edward Chancellor is here to tell us why. In this enriching volume, Chancellor explores the history of interest and its essential function in determining how capital is allocated and priced.