Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Display:
Well it's actually about the "market return" on Capital isn't it, if one considers Capital to be property in productive assets?

Money, unless it is Money as Debt, actually has no "cost".

The cost of Credit is the shared cost of administration, and the shared costs of defaults.

This has nothing whatever to do with arbitrary rates of interest.

Likewise the cost of Capital has nothing to do with interest rates unless you are in an economy where Money is debt.

The cost of Capital relates to the "market price" and that has declined from 25% pa in Babylonian times, through 10% pa in medieval times to around 5% pa at the Indutsrial Revolution. Now the world is awash in productive capital, and the streams of use value they generate, I reckon the market price can be little over 1%.

All of these in real terms, of course, since without deficit-based money there was little inflation historically, and there would have been little inflation in the last 100 years, I suspect.

The sort of rate Wessex Water got on their 50 year index-linked borrowing ie 1.49% pa is indicative, I suspect.

What you are able to "charge" for credit you create is pretty much constrained, I think.

There's a lot of stupidly high expectations out there for sure.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Jan 19th, 2008 at 02:13:37 PM EST
[ Parent ]

Others have rated this comment as follows:

Display:

Top Diaries

Impeachment gets real

by ARGeezer - Jan 17
18 comments

A Final Warning

by Oui - Jan 10
111 comments

Environment Anarchists

by Oui - Jan 13
4 comments

More Spanish repression

by IdiotSavant - Jan 6
8 comments

Occasional Series