Sunday, October 19, 2014

Interest, Rate, Value

Economic Interest per se is of no interest--it is the Rate of Interest that is decisive in motivating the sale and purchase of money.  Now, as the manipulations of the U. S. Fed in the latter regard illustrate, Interest Rate functions as a stimulus to Economic activity.  However, its Value is not intrinsic, because it depends on the values of not only the purposes to which borrowed money is put, e. g. to that of a produced or purchased good, but also on those of the consequences of stimulation itself, e. g. the hectic, if not hysterical behavior during the Christmas season that is enabled by the extending of Credit.  So, to conflate Interest-Value with Labor-, Use-, or Exchange-Value in a Macroeconomic model is as short-sighted as to assume, from the discovery, in a medical examination, of both adrenaline and an amphetamine, that the latter is as organically generated as is the former.

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