The Price of Time
The most interesting book written on interest ?
Edward Chancellor is an outstanding author who wrote the book **The Price of Time**. While the concept of interest might not initially seem captivating to the average person, Chancellor’s engaging and well-written book provides an insightful deep dive into the subject.
What is interest?
It's essentially the price of time. Interest plays a crucial role in our lives, influencing everything from the money we deposit in a savings account to the impact of rising interest rates on our mortgage. It affects borrowing costs, thereby encouraging or discouraging borrowing, lending, and spending. Given its pervasive influence, understanding interest is vital and far more interesting than it might first appear.
Easy Money
One of the book's central themes is the examination of "easy money." Chancellor explores the negative consequences of easy money both historically and in contemporary times. For instance, if car insurance is priced too cheaply, more high-risk drivers may get insured, leading to an increase in car accidents. The book also delves into how credit booms during periods of easy money create a false sense of security.
Uncle Sam
Chancellor highlights a critical point with the phrase, “Uncle Sam can stand many things, but he can’t stand 1%.” This means that when interest rates are very low, investors become desperate for higher yields, leading to increased speculation. My understanding is straightforward: low interest rates lead to a search for higher yields, which in turn leads to more speculation and eventually, a crash.
Historical Interest
The book also provides a fascinating historical perspective on interest, tracing its origins back to ancient Babylon. For example, Mesopotamians were charging interest on loans before they even discovered how to put wheels on carts. Interest was charged on commodities like silver and barley, with strict limits on how much interest could be charged, especially during crop failures.
To conclude
I highly recommend this book for investors and anyone interested in finance. Chancellor's thorough exploration of the history and impact of interest makes **The Price of Time** a compelling and informative read.
I leave a link to a video with Edward about his book: The Price of Time.
Hope you enjoyed reading.
Ollz