The Importance of Targeting the Natural Rate of Interest

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Central bankers with their fixation on this 2% inflation target, and their fear of deflation. What they feared was what Hayek would have called the good deflation that comes from positive supply shocks and rising productivity. In the process doing so, they brought the interest rates down very low. And then you get, as I argue, misallocation of capital. You had a huge amount of risk taking. A build up of leverage prior to the global financial crisis. The Greenspan Fed's easy money policies after the dot-com bubble. Then creates genuine deflationary problems when the banking credit bubble bursts.

Edward Chancellor is a financial historian, journalist, and author of, "Devil Take the Hindmost: A History of Financial Speculation" and his latest, “The Price of Time: The Real Story of Interest”

The two books link together the history of money and finance, and human culture.

In today’s episode we explore the ways in which money and finance is embedded deeper in our lives than we may have previously thought.

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------ We’re living in the era of Central Banker Capitalism, low interest rates and everything bubbles. Is this a new era? What does history tell us will happen next?

Edward Chancellor is going to help us answer these questions. And along the way, you’ll learn timeless lessons about interest, debt, and the time value of money.

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------ TIMESTAMPS:

0:00 Intro 8:24 Edward’s Book Overlap 19:32 Speculative Bubble’s Inevitability 26:27 Interest, Debt, & Loans 31:15 Debt Jubilee & Inflation 35:05 The Necessity of Inflation 41:55 The Natural Rate of Interest 53:35 The Everything Bubble 1:04:10 The Price of Time 1:07:38 Devil’s Take the Hindmost 1:10:40 Have We Learned From Past Bubbles? 1:17:30 Austrian vs. Keynesian Economics 1:21:20 Edward’s Thoughts on Crypto 1:38:50 Predictions: What Happens Next? 1:42:27 Closing & Disclaimers

------ RESOURCES:

The Price of Time https://www.amazon.com/Price-Time-Real-Story-Interest/dp/0802160069

Devil Take the Hinemost https://www.amazon.com/Devil-Take-Hindmost-Financial-Speculation/dp/0452281806

Primitive Money https://www.elsevier.com/books/primitive-money/einzig/978-0-08-011679-2

Digital Chicago Plan - Column In Breakingviews https://www.breakingviews.com/columns/digital-chicago-plan-fixes-many-financial-woes/

Irving Fisher 100% money https://mises.org/library/100-money

----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research.

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