Interest Rates Are the Price of Time

Author Edward Chancellor neatly summarizes why interest rates are so important, “Interest rates are the price of time.” Since time is a consideration in every financial transaction that makes up the economy, interest rates are a foundational concept to understanding behavior.

I heard this in a podcast about Easy Money, the most recent memo from Howard Marks.

See also:

  • What Founders Should Know About Interest Rates

    Between 2008 and 2021, the market was operating under zero-interest rate policy (ZIRP). That changed in 2022 back to historically normal interest rates (5-6%) set by the Federal Reserve.

  • Interest Enables Transactions Across Time

    Interest rates are a technology that allows people to transact across time. Without the concept of interest, it’s only possible for two parties to transact with what is immediately in front of them, in that very same moment.