2022-06-02
A wide-ranging global history of finance focused on interest.
“By the early twenty-first century,” writes financial journalist Chancellor, “interest had been charged on loans for around five thousand years, possibly longer. Interest had survived biblical injunctions, Aristotelian outrage, and the onslaught of medieval canonists and modern socialists.” As the author shows, interest is the oil in the wheels of capitalism, but it can just as easily became the wrench in the works. Many leftist commentators see it as the means by which the rich get richer, extracting wealth from others while doing nothing. Chancellor points out that lenders are taking on risk and sacrificing the option of spending the money directly, so they should get something for it. Borrowers, for their part, hope to use the funds to improve their own position, even after paying the interest. The rise of banks and professional lenders revolutionized societies, accelerating wealth creation and moving power away from landed aristocrats. It was chaotic, and governments tried to bring order with central banks, which set official rates. The assumption was that rates could be raised to dampen an overheated, inflationary economy and lowered when stimulus was needed. The nadir of this strategy was rates of zero or near zero after the Great Recession, from 2007 to 2009. Of course, for every winner, there is a loser, and Chancellor presents data showing that ultra-low rates often do little to lift a sagging economy. In fact, low interest rates often lead to property speculation, poor corporate governance, and frightening levels of risk-taking. In explaining all this, the author looks at some of the great financial debacles, a host of theories about interest, and rate policy in China. In the end, he does not present answers for finding a “natural” rate—because there aren’t any. Nevertheless, the book is a comprehensive, entertaining read on an ever relevant topic.
An authoritative examination of the secret machinery of capitalism and how, for better or worse, it affects us all.
Praise for The Price of Time:
“Interest rates haven’t simply fallen—they were pushed. And by their pushing, the world’s central banks have constructed the hall of mirrors in which every investor has become, of necessity, a speculator. So argues Edward Chancellor in this brilliant chronicle of the most important prices in capitalism. You must read it. It is a masterpiece of history, analysis—and properly understated outrage.”—James Grant, editor of Grant’s Interest Rate Observer
“I wish The Price of Time were the book that I had written. I am reminded of Keynes’s letter to Hayek after reading The Road to Serfdom where he said ‘In my opinion it is a grand book. We all have the greatest reason to be thankful to you for saying so well what needs so much to be said. I find myself in agreement with virtually the whole of it, and not only in agreement but in a deeply moved agreement.’”—William White, former Chief Economist, Bank for International Settlements
“Is it possible to write a highly engaging history of the world going back to Hammurabi, unfolding along the way a bitingly comprehensive explanation for its problems today, all told through a single character? Apparently yes. Edward Chancellor has done it, an achievement all the more notable since his drama is built around a character so unheroic on its surface: his ‘price of time’ is interest rates. This is a timely, vitally important and hugely readable book.”—Ruchir Sharma, Chairman, Rockefeller International and New York Times-bestselling author
“Chancellor provides a different, more compelling, and more frightening explanation of the world’s slowing economies: central banks’ now decades-long love affair with artificially low interest rates . . . One of the book's joys is its relevance to both political policy and personal finance . . . Chancellor’s encyclopedic grasp of economic history shines through on nearly every page . . . Besides being a first-rate economic historian, Chancellor is also a master wordsmith; almost unique among serious finance books, The Price of Time serves well as bedtime reading.” —William J. Bernstein, author of A Splendid Exchange, in Enterprising Investor
“Edward Chancellor has produced not just a brilliant explainer of the value of money and time but a hugely engaging history of the greatest problem confronting markets today. The Price of Time is a must read—a copy should be on the desk of everyone who has anything to do with financial markets or wondered why things work as they do.”—Merryn Somerset Webb, Editor-in-Chief, MoneyWeek
"Chancellor has done the nearly impossible: He has made a potentially dreary topic—interest rates—into a witty, philosophical and highly entertaining story crammed with historical anecdotes starting with the Babylonians and ending yesterday." —Jeremy Grantham, Founder and Chief Investment Strategist, GMO LLC.
"I'm not sure I've ever read a book on finance where I have agreed with all of it but that time has now come." —Russell Napier, investment strategist and author of The Anatomy of the Bear
Praise for Edward Chancellor“Entertaining, useful, admirable . . . Chancellor seems to have read everything.” —New York Times Book Review, on Devil Take the Hindmost
“[Edward Chancellor is] one of the great financial writers of our era.” —Financial Analysts Journal, on Capital Account
