Financial Issues Forum: Edward Chancellor on The Price of Time: The Real Story of Interest

In the beginning, there 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 onward, denunciations of interest were tempered because interest was a necessary reward for lenders who parted 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 other financial securities; and allows us to price risk.

Over the first two decades of the 21st 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 multiple asset price bubbles, a reduction in productivity growth, discouraging savings and exacerbated 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 The Price of Time, he explores the history of interest and its essential function in determining how capital is allocated and priced.

About the Speaker
Edward Chancellor is the author of The Price of Time and Devil Take the Hindmost: A History of Financial Speculation, a New York Times Notable Book of the Year. He also writes the specialist report Crunch-Time for Credit?, a prescient analysis of the credit boom in the U.S. and the U.K. In addition, Chancellor has edited two investment books, Capital Account and Capital Returns. An award-winning financial journalist, he is currently a columnist for Reuters Breakingviews and has contributed to many other publications, including the Wall Street Journal, MoneyWeek, New York Review of Books, and Financial Times.