Friday, May 22, 2015

The Originary Interest Rate

The inherent component of gross or market interest rates which represents the ever fluctuating ratio between the values assigned to want satisfactions in the immediate future and those assigned to want satisfactions in the more distant future, In short, the difference between present value goods and gross market goods. In addition to the originary interest component, gross or market interest rates include the entrepreneurial component (uncertainty of repayment) and the price premium component (anticipated changes in the future values of the particular goods, including the monetary unit, under consideration.)

(via Percy Greaves in Mises Made Easier)