Saturday, March 7, 2015

The Natural Rate of Interest: What is it?

Recently, I have participated in some excellent discussions surrounding the notion of interest. During these discussions, there are various notions tossed around with the concept of interest. Many think it is immoral, or its a scam created by the banking class.

What is Interest?

Many people believe that interest relates only to the loan market. While is interest is in the loan market, its not exclusive to the loan market. The notion of the natural rate of interest impacts everything we do! The notion of the natural rate of interest is rooted in the principle of marginal utility, or preference ranking of goods/services.

Some articles and readings that explore the notion of interest in more detail:

Money and Interest 

Interest on Money and Its Causes

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