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.
