Who invented interest on money

Instead, wealth was available to anyone willing to work for it. Eliminating the carried interest provision is a turn in the wrong direction. Back to modern day: there are those in the government that want to cripple start-up businesses looking to grow their company. Businesses rely on investors to get started or jump to the next level of success. Just like the merchants of Venice, American businesses would stagnate without investors willing to take a risk. And investing in start-up businesses is risky as there is no guarantee that the money invested will ever return a profit.

For over years in America, the risk for investors has been offset by the lower tax rate for capital gains and carried interest. A lower capital gains tax rate serves as a great incentive to take that risk. It would be a massive tax increase on investment capital and, as such, would discourage investment.

Rather than raising capital gains up to the tax rate of regular income levels, we should be lowering both tax rates. That would provide more incentive for investors to buy into American businesses and create more jobs and more wealth for everyone. Drew Armstrong is a freelance political journalist based out of Orange County, California. Key European ports and trading nations, such as the Republic of Genoa or the Netherlands during the Renaissance period, help provide a good indication of the cost of borrowing in the early history of interest rates.

Genovese bankers provided the Spanish royal family with credit and regular income. The Spanish crown also converted unreliable shipments of New World silver into capital for further ventures through bankers in Genoa. A perpetual bond is a bond with no maturity date.

Investors can treat this type of bond as an equity, not as debt. Issuers pay a coupon on perpetual bonds forever, and do not have to redeem the principal—much like the dividend from a blue-chip company. Unlike other countries where private bankers issued public debt, Holland dealt directly with prospective bondholders.

They issued many bonds of small coupons that attracted small savers, like craftsmen and often women. In , the British government converted all its outstanding debt into one bond, the Consolidated 3.

The interest rate was further reduced to 2. The United States Congress passed an act in authorizing three separate consol issues with redemption privileges after 10, 15, and 30 years.

This was the beginning of what became known as Treasury Bills , the modern benchmark for interest rates. In the s, the global stock market was a mess. For close to a decade, few people wanted to invest in public markets. Economic growth was weak, resulting in double-digit unemployment rates. Since then, interest rates set by government debt have been rapidly declining, while the global economy has rapidly expanded.

Further, financial crises have driven interest rates to just above zero in order to spur spending and investment. It is clear that the arc of lending bends towards ever-decreasing interest rates, but how low can they go?

Tracking the companies that have gone public in so far, their valuation, and how they did it. The beginning of the year has been a productive one for global markets, and companies going public in have benefited. From much-hyped tech initial public offerings IPOs to food and healthcare services, many companies with already large followings have gone public this year.

Some were supposed to go public in but got delayed due to the pandemic, and others saw the opportunity to take advantage of a strong current market. This graphic measures 47 companies that have gone public just past the first half of from January to July — including IPOs, SPACs, and Direct Listings—as well as their subsequent valuations after listing. Historically, companies that wanted to go public employed one main method above others: the initial public offering IPO.

Hence, even a smaller initial investment amount can fetch you higher wealth accumulation provided you have a longer investment horizon of say five years. The Rule of 72 is a simple way to determine how long an investment will take to double given a fixed annual rate of interest.

By dividing 72 by the annual rate of return , investors obtain a rough estimate of how many years it will take for the initial investment to duplicate itself. He considered it the most powerful force on earth. In its simplest form Einstein explained it this way.

When you invest money, you earn interest on your capital. As credit was increasingly privatized, debt became a dynamic powerful enough to dissolve the checks and balances that had shaped the social context in which money first developed.

Mesopotamia had usury and debt bondage, but its rulers managed to avoid the irreversible disenfranchisement and ultimate serfdom that plagued the Mediterranean lands.

Most debts in early Mesopotamia were owed to the palace, so rulers basically were cancelling debts owed to themselves and their collectors when they proclaimed Clean Slates that saved their economies from widespread debt bondage that would have diverted labor to work for creditors at the expense of the palace.

Money and debt in Greece and Rome thus followed a different trajectory from its origins in Mesopotamia. Oligarchies gained sufficient power to stop civic debt cancellations. Rural usury in Greece and Rome expropriated indebted citizens from their land irreversibly, typically to become mercenaries in armies formerly manned by self-supporting citizens.

Land ownership was much more concentrated than in Bronze Age Mesopotamia or even in the contemporary Neo-Babylonian economy. Yet Clean Slates are what saved Near Eastern economies from the chaos of economic polarization and widespread bondage. This post-Roman oligarchic collapse into local self-sufficiency and barter reverses the once-held idea that exchange evolved from barter via monetization to credit economies.

Yet textbooks still repeat that sequence without recognizing the early role of credit, without mentioning the palaces and temples where monetization first evolved, or citing the tendency of debts to be mathematically self-expanding when not overridden by debt writedowns and clean slates.

If such economic theorizing really were universal, history simply could not have occurred in the way it did. Also reversed today is understanding of how the charging of interest originated. Instead of reflecting productivity, profitability or risk, interest rates were officially administered and remained remarkably stable in each region throughout antiquity. Origin myths at odds with the historical record are the result of the conflict between vested interests and reformers over whether the monetary and credit system should be controlled by banks or by governments.

Are credit and debt to be administered by laws favoring creditors, or should the prosperity of the indebted population at large be protected?

The way in which economic writers answer this question turns out to be the key to their preference regarding the Barter or State Theories of the origins and character of money, credit and interest. Assyriological and anthropological research confirms that money and monetary interest were not created by individuals trucking and bartering crops and handicrafts or lending crops and animals with each other.

Interest emerged as the means of financing long-distance trade and advancing land to its cultivators or managers, administered mainly by palace officials. Recognition of this palatial origin of money and interest is at odds with the drive by commercial bankers to depict their own control of money and credit as being natural and primordial. The resulting mythology to explain the origins of money and interest reflects public relations lobbying by bankers and other creditors.

Goodhart highlights the relevance to modern times of misinterpreting the history of money: It underlies creation of the euro. The eurozone was created without a central bank to monetize budget deficits for EU member governments.

The anti-state ideology underlying the euro thus stands in opposition to the State Theory of money. Central bank credit is to be created only to bail out commercial banks for losses on their own credit creation and bad investments, not for governments to spend directly into the economy.

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