An excellent new book from Edward Chancellor, The Price of Time, sets out to explain both the theory and history of interest rates across five millennia and countless cultures. The theory is frequently bungled by economists; the history is frequently glossed over by historians. But thankfully Mr. Chancellor is up to the task. He is an excellent and engaging writer, owing presumably to his long career as a financial journalist. We need more books like this. Economists tend not to ask basic questions like, "What are interest rates, where do they come from, and what purpose do they serve?" But they should. No less than Richard Cantillon and Eugen von Böhm- Bawerk, both quoted in the opening notes, viewed the phenomenon of interest on capital as the murkiest and most neglected area of economics. As it turns out, Smith, Marx, and Keynes got these questions wrong; Turgot, Böhm-Bawerk, and Mises got them right.
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