The Price of Time

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 attractedopprobrium—from philosophers, including Plato and Aristotle, and from thereligious authorities, whether Jewish, Muslim, or Christian. Yet as capitalismbecame established from the late Middle Ages onwards, denunciations ofinterest were tempered. It was gradually accepted that creditors had a right tocharge for lending out their property and that credit was essential for trade. Bythe seventeenth century, the debate about interest shifted to what might beconsidered a fair price.

Over the first two decades of the twenty-first century, interest rates havesunk lower than ever before. Central bankers and policymakers appear blitheto the unintended consequences of their actions, but easy money after theglobal financial crisis in 2007/2008 has produced several ill effects, includingthe appearance of multiple asset price bubbles, a reduction in productivitygrowth, 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 hardplace, 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.