“Interest is the price of time”

Good interview with author Edward Chancellor on the macro environment and interest rates. I just started reading his book “The Price of Time” which explores the history of interest rates. Interest rates are like water – we just assume it’s there and it works – but when it’s manipulated, it can poison the global economy, which is what we’re seeing now.

Source: https://themarket.ch/interview/edward-chancellor-central-banks-delayed-the-day-of-reckoning-ld.7051

Book: https://www.amazon.com/Price-Time-Real-Story-Interest/dp/0802160069

Some excerpts from the interview:

Interest is the price of time. Time is valuable, or as Ben Franklin would say, time is money. And if you don’t place a proper price on time, then the world will turn upside down.

By aggressively pursuing an inflation target of 2% and constantly living in horror of even the mildest form of deflation, they not only gave us the ultra-low interest rates with their unintended consequences in terms of the Everything Bubble. They also facilitated a misallocation of capital of epic proportions, they created an over-financialization of the economy and a rise in indebtedness. Putting all this together, they created and abetted an environment of low productivity growth.

Going forward, we’ll have more inflation in the stop-go fashion that I described, we’ll have rising interest rates and a lot more volatility in financial markets

Chancellor also mentions Bill White who I’ve shared previously.

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