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The Pure Time Preference Theory of Interest

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Prashanth Perumal posted on Tue, Jul 17 2012 5:28 AM

I would like to know if there are books that deal with the debate within the Austrian school on what determines the market interest rates (whether it's time preference alone, or if productivity too plays a [partial] role in the determination of interest rates). I have read the arguments of both sides (Mises, Fetter etc. vs Bohm Bawerk et al.), but would like to know if there has been any work that has tried to, in a sense, "settle the debate".

Thanks! :)

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I recently saw a new book edited by Herbener became listed and is available as a PDF....

I am struggling to find the time to read it though ! Maybe you can do better ;-)

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I recently saw a new book edited by Herbener became listed and is available as a PDF....I am struggling to find the time to read it though ! Maybe you can do better ;-)

Hey nirgrahamUK, I read it a few weeks back. The book is more of a survey of the PTPT than a settling of the debate :(

This thing keeps bothering me. I won't be able to make up my mind on the ABCT unless I am clear on a proper theory of interest, and the fact that there is very less material on the PTPT debate doesn't help matters.

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Did you follow Clayton and DD5's debate in your thread from last month?

 

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If I remember correctly, Mises forum user Blacknumero had a particular interest in this and related topics. Might be worth reaching out to him for pointers, or checking out some of his threads for leads.

Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid

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I plan on presenting a critique of Mises's time preference theory here within the next few weeks.

"The limits of my language mean the limits of my world." ~ Ludwig Wittgenstein
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I'm reading America's Great Depression. Rothbard offers this:

The final market rates of interest reflect the pure interest rate plus or minus entrepreneurial risk and purchasing power components. Varying degrees of entrepreneurial risk bring about a structure of interest rates instead of a single uniform one, and purchasing-power components reflect changes in the purchasing power of the dollar, as well as in the specific position of an entrepreneur in relation to price changes. The crucial factor, however, is the pure interest rate. This interest rate first manifests itself in the "natural rate" or what is generally called the going "rate of profit." This going rate is reflected in the interest rate on the loan market, a rate which is determined by the going profit rate.

From what Rothbard says, he allows for a few additional factors to influence market interest rates. While I can't say for certain, I'd imagine Rothbard gives this subject a more in depth treatment in Man, Economy and State.

 

If I had a cake and ate it, it can be concluded that I do not have it anymore. HHH

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I plan on presenting a critique of Mises's time preference theory here within the next few weeks.

ZZZZzzzzzzzzzz

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What is that supposed to mean? I'm boring? You disagree with me? You think I'm a troll?

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Clayton replied on Thu, Jul 19 2012 12:48 AM

What is that supposed to mean? I'm boring? You disagree with me? You think I'm a troll?

Many of your posts seem to be contrarian for contrary's sake.

Clayton -

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I do tend to mainly post about things I disagree with here. So I can see why you might think I am faking or exaggerating my contrarianism. I'll try to make more of an effort to note areas of agreement.

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I plan on presenting a critique of Mises's time preference theory here within the next few weeks.

FYI, said critique has been posted here.

"The limits of my language mean the limits of my world." ~ Ludwig Wittgenstein
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