The Price of Time

A history of interest rates and the first book of the next financial crisis, shortlisted for the 2023 Hayek Book Prize.

All economic and financial activities take place across time. Interest coordinates these activities. The story of capitalism is thus the story of interest— the price that individuals, companies, and nations pay to borrow money.

In The Price of Time, Edward Chancellor traces the history of interest from its origins in ancient Mesopotamia, through debates about usury in Restoration Britain and John Law's ill-fated Mississippi scheme, to the global credit booms of the twenty-first century. We generally assume that high interest rates are harmful, but Chancellor argues that, whenever money is too easy, financial markets become unstable. He takes the story to the present day, when interest rates have sunk lower than at any time in the five millennia since they were first recorded— including the extraordinary appearance of negative rates in Europe and Japan— and highlights how this has contributed to profound economic insecurity and financial fragility.

Chancellor reveals how extremely low interest rates not only create asset price inflation but are also largely responsible for weak economic growth, rising inequality, zombie companies, elevated debt levels, and the pensions crises that have afflicted the West in recent years— conditions under which economies cannot possibly thrive. At the same time, easy money in China has inflated an epic real estate bubble, accompanied by the greatest credit and investment boom in history. As the global financial system edges closer to yet another crisis, Chancellor shows that only by understanding interest can we hope to face the challenges ahead.