# The Price of Time ## Metadata * Author: [Edward Chancellor](https://www.amazon.comundefined) * ASIN: B09NS1CZ7W * ISBN: 0802160069 * Reference: https://www.amazon.com/dp/B09NS1CZ7W * [Kindle link](kindle://book?action=open&asin=B09NS1CZ7W) ## Highlights In short, the ancient history of interest provides no strong support for any particular view as to how the rate of interest is formed. Law and custom obviously played an important role. Yet occasional changes in the quantity of money in circulation also appear to have influenced interest rates. — location: [823](kindle://book?action=open&asin=B09NS1CZ7W&location=823) ^ref-53305 --- In the Middle Ages, many trades were looked down upon for breaking religious taboos, among them innkeepers, pastry cooks, shoemakers and dishwashers.7 Of all these unclean trades, usury was deemed the lowest, to be carried out by Jews and other outcasts from Latin Christendom. — location: [934](kindle://book?action=open&asin=B09NS1CZ7W&location=934) ^ref-43293 --- The Stoic philosopher may have written these words filled with remorse for his own unbounded avarice. After all, the same Seneca who extolled virtue above riches amassed a great fortune from his service to the Emperor Nero. He owned several estates and many villas and entertained guests by the thousand. In fact, ‘Super-Rich Seneca’, as contemporaries called him, was a most covetous usurer. — location: [982](kindle://book?action=open&asin=B09NS1CZ7W&location=982) ^ref-9266 This paragraph about Seneca reminds me of people in our society who look down on capitalism but who have gotten rich from their own participation. (Larry Fink). --- Established Italian merchants gained a competitive advantage from their access to cheap credit.27 As a result, Datini and his fellow Tuscan traders were able to oust Flemish merchants from the cloth markets in England and France, and even to undercut them on their home turf. By the fifteenth century, Venetian merchants paid as little as 5 per cent for their loans.28 — location: [1042](kindle://book?action=open&asin=B09NS1CZ7W&location=1042) ^ref-36953 Was venetian credit cheaper than flemish? why? --- The ban on usury proved futile because as trade expanded, both at home and abroad, the demand for credit became overwhelming. — location: [1068](kindle://book?action=open&asin=B09NS1CZ7W&location=1068) ^ref-1423 --- ’Tis not altogether improbable, that when the nation become heartily sick of their debts, and are cruelly oppressed by them, some daring projector may arise with visionary schemes for their discharge. And as public credit will begin, by that time, to be a little frail, the least touch will destroy it, as happened in France; and in this manner it will die of the doctor. — location: [1519](kindle://book?action=open&asin=B09NS1CZ7W&location=1519) ^ref-7522 --- When leading Mississippians, led by the Prince of Conti, started to realize – another neologism thrown up by bubble, meaning to convert ‘ideal property into something real’ – their profits, exchanging banknotes and shares for ‘other things more solid than paper’, Law responded by banning the possession of precious metals.fn7 His dictatorial bent is revealed in a pamphlet of March 1720 in which he railed against the hoarding of money. — location: [1756](kindle://book?action=open&asin=B09NS1CZ7W&location=1756) ^ref-24134 banning real assets to preserve authoritarian monetary system. --- The great stock-market bull seeks to condense the future into a few days, to discount the long march of history, and capture the present value of all future riches. It is his strident demand for everything right now – to own the future in money right now – that cannot tolerate even the notion of futurity – that dissolves the speculator into the psychopath.55 — location: [1837](kindle://book?action=open&asin=B09NS1CZ7W&location=1837) ^ref-20079 --- In April 1928, Keynes met the Swiss banker Felix Somary at the Berlin home of Carl Melchior, a mutual friend.52 Somary’s disposition was so inherently bleak that he called his memoirs The Raven of Zürich. In the same month that Keynes expressed the view that the Fed would arrest any incipient depression, Somary was warning his clients of an impending crash. The danger, Somary said, came from the ‘wide gap between yields on the highest-priced shares on the stock exchange and ordinary interest rates. The lower the yields speculators expect from high-flyers on the markets, the greater the danger of a crash – and this development is going on in New York.’ — location: [2582](kindle://book?action=open&asin=B09NS1CZ7W&location=2582) ^ref-49456 --- a capitalist economy, Hayek said, continuous advances in productivity mean that consumer prices have a natural tendency to decline. During periods of rapid technological development and commodity gluts, such as the 1920s, the price level might be expected to decline quite rapidly. The pursuit of stable prices by central bankers, however, worked against this natural tendency.58 Monetary policy directed at stabilizing prices, said Hayek, ‘administers an excessive stimulus to the expansion of output as costs of production fall, and thus regularly makes a later fall in prices with a simultaneous contraction of output unavoidable.’ The future Nobel laureate wrote these words in 1928. In effect, Hayek was predicting that the Roaring Twenties would end in a deflationary bust.59 — location: [2621](kindle://book?action=open&asin=B09NS1CZ7W&location=2621) ^ref-59424 --- ‘Better no credit control at all,’ proclaimed the German economist Wilhelm Röpke, ‘than one based on this treacherous and dangerous criterion [of price stability]!’66 Central bankers also came around to this view. In 1937, the Federal Reserve’s Objectives of Monetary Policy affirmed ‘the inadequacy of price stability as a guide to policy’. The Australian Monetary and Banking Commission concluded in the same year that ‘price fluctuations are little more than symptoms’ and that the monetary authorities should not attempt to regulate credit by reference to a selected price index. — location: [2656](kindle://book?action=open&asin=B09NS1CZ7W&location=2656) ^ref-22697 --- Metrics serve to stifle innovation and creativity; they imitate science but resemble faith. — location: [3072](kindle://book?action=open&asin=B09NS1CZ7W&location=3072) ^ref-59764 --- Hansen’s secular stagnation claim is one of the worst forecasting errors ever made by an academic economist. Its resounding failure makes it all the more curious that the idea should resurface, little changed, some eight decades later. The new stagnation argument consisted of three main claims, similar to those earlier advanced three-quarters of a century earlier. — location: [3188](kindle://book?action=open&asin=B09NS1CZ7W&location=3188) ^ref-10618 --- Modelling the financial cycle correctly … requires recognising fully the fundamental monetary nature of our economies,’ was Borio’s clarion call.7 The financial system, he asserted, doesn’t just allocate resources, it generates purchasing power. It has a life of its own. Finance and macroeconomics are ‘inextricably linked’. We inhabit a looking-glass world. Finance does not mirror reality, but acts upon it.fn2 Economics without finance, said Borio, is like Hamlet without the prince. — location: [3323](kindle://book?action=open&asin=B09NS1CZ7W&location=3323) ^ref-33515 --- Paul Krugman deems what he calls the ‘hangover theory’ of depression to be as ‘worthy of serious study as the phlogiston theory of fire’.9 Yet recent studies of the impact of the Great Depression on American industry suggest otherwise. Take car manufacturing, one of the booming industries of the 1920s. Car sales in the United States fell by around two-thirds during the depression. Nevertheless, even at the nadir the most efficient operators continued to invest in new plants. New mass-production techniques were introduced at the time, including conveyor belts and quick-drying lacquers. Packard cut its factory space requirements per unit by half. Inefficient car makers failed in droves, leaving firms that survived the shake-out to prosper. Once the US economy recovered, real wages and salaries paid by the car industry increased. ‘The Depression thus was, at the level of industries, an evolutionary event,’ concludes a study of American car manufacturing in the early 1930s. — location: [3518](kindle://book?action=open&asin=B09NS1CZ7W&location=3518) ^ref-27193 For efficient and wel run operators, the depression was not an extinction event but an opportunity to evoke more efficiently --- In his book The Great Leap Forward, Alexander Field of Santa Clara University claims that the 1930s were the most technologically progressive decade in American history. — location: [3528](kindle://book?action=open&asin=B09NS1CZ7W&location=3528) ^ref-19021 --- ‘Paradoxical as it may seem, the riches of nations can be measured by the violence of the crises which they experience,’ opined the nineteenth-century French economist Clément Juglar.13 Once creative destruction is taken into account, Juglar’s observation doesn’t appear so puzzling. Some economists take a ‘pit-stop’ view of recessions, seeing them as periods when efficiency measures are most likely to be undertaken.14 Business failures, which soar during economic downturns, are seen as essential to the economy’s evolution over time. As the saying attributed to the former astronaut and airline boss Frank Borman goes, ‘capitalism without bankruptcy is like Christianity without hell.’ If that is the case, then monetary policy should not interrupt a recession’s cleansing effect. — location: [3542](kindle://book?action=open&asin=B09NS1CZ7W&location=3542) ^ref-33504 --- Both the Forest Service and Federal Reserve focused their attention on immediate problems – fires and panics – while ignoring the longer-term consequences of their actions. — location: [3805](kindle://book?action=open&asin=B09NS1CZ7W&location=3805) ^ref-58261 --- Interest is the wage of abstinence, said Senior. — location: [4513](kindle://book?action=open&asin=B09NS1CZ7W&location=4513) ^ref-54684 --- According to the ‘public choice’ school of economics, rents are created when the state interferes with markets and prices are kept away from equilibrium.124 Financial repression in China created copious rents and fostered crony capitalism. — location: [6688](kindle://book?action=open&asin=B09NS1CZ7W&location=6688) ^ref-20002 --- The international currency arrangements introduced at Bretton Woods in 1944 imposed capital controls that prevented citizens from taking their money abroad. The US government then imposed a maximum limit on deposit rates. New regulations required American banks and insurance companies to hold more government bonds. ‘When credit is rationed,’ writes investment strategist Russell Napier, ‘determined by something other than its price [interest], it is politicised.’ — location: [6783](kindle://book?action=open&asin=B09NS1CZ7W&location=6783) ^ref-35056 --- A few years later, the ECB cut off financing to Greece after a national referendum rejected the EU’s austerity measures. In effect, sovereignty was transferred from the peoples of Europe to unelected technocrats in Frankfurt.fn3 — location: [6848](kindle://book?action=open&asin=B09NS1CZ7W&location=6848) ^ref-42069 --- If resources aren’t allocated by the market then the authorities must step in. He was concerned that ‘once the free working of the market is impeded beyond a certain degree, the planner will be forced to extend his controls until they become all-comprehensive.’32 — location: [6898](kindle://book?action=open&asin=B09NS1CZ7W&location=6898) ^ref-4742 --- ‘Inequality is undoubtedly more readily borne, and affects the dignity of the person much less, if it is determined by impersonal forces than when it is due to design.’ — location: [6910](kindle://book?action=open&asin=B09NS1CZ7W&location=6910) ^ref-42249 --- Hayek envisaged a world in which money was issued by private banks that competed with each other to get their money accepted by the public. Good money would drive out the bad, he predicted. Any bank that offered too little interest would lose clients.15 The advent of cryptocurrencies has the potential to realize Hayek’s vision. Cryptocurrencies are already lent on various platforms (one of which calls itself ‘Compound’). Interest on crypto loans is charged at suspiciously high rates, suggesting the existence of Ponzi schemes, and the early history of cryptocurrencies has been marked by seamy behaviour and uncertainty regarding their true scarcity. Still, it’s possible that one day a cryptocurrency may emerge which is safe to store, efficient for transactions and limited in supply. The trouble is that governments won’t willingly give up their money monopoly. — location: [7235](kindle://book?action=open&asin=B09NS1CZ7W&location=7235) ^ref-714 ---