Economics Dictionary of ArgumentsHome
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| Market interest rate: The market interest rate is the prevailing rate at which borrowers can obtain funds and lenders provide funds in financial markets. It reflects the supply and demand for credit, influenced by factors like central bank policies, inflation expectations, economic conditions, and credit risk, serving as a key determinant in financial decision-making. See also Interest rates, Market._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Dictionary of Arguments. | |||
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Murray N. Rothbard on Market Interest Rate - Dictionary of Arguments
Rothbard III 550 Market Interest Rate /Rothbard: The pure rate, (…) abstracts from any entrepreneurial uncertainty. It gauges the premium of present over future goods on the assumption that the future goods are known as certain to be forthcoming. In the real world, of course, nothing is absolutely certain, and therefore the pure rate of interest (the result of time preference) can never appear alone. >Time preference. Risk: (…) the riskier a given venture appears ex ante, the higher will be the expected interest return that capitalists will require before they make the investment. >Investment/Rothbard. Rothbard III 551 On the market, then, a whole structure of interest rates will be superimposed on the pure rate, varying positively in accordance with the expected risks of each venture. The counterpart of this structure will be a similar variety of interest rates on the loan market, which, as usual, is derivative from the goods market.(1) >Goods/Rothbard, >Market/Rothbard, >Economy/Rothbard. 1. The loan market will diverge from the “natural” market to the extent that conditions for repayment of loans, etc., establish such differences. The two would be the same if the loans were clearly recognized as entrepreneurial, so that in cases where there was no deliberate fraud, the borrower would not be considered criminal if he did not repay the loan. However, if, as discussed in chapter 2 above, there are no bankruptcy laws and defaulting borrowers are considered criminal, then obviously the “safety” of all loans would increase in relation to “natural” investments, and the interest rates on loans would decline accordingly. In the free society, however, there would be nothing to prevent borrowers and lenders from agreeing, at the time the contract is made, that borrowers would not be held criminally responsible and that the loan would really be an entrepreneurial one. Or they could make any sort of arrangement in dividing gains or losses that they might choose._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. "Vs" indicates differences in content, not necessarily the chronological progression of a controversy. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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