Sidney Homer (1963), in his seminal history of interest rates, argues that such a history of often dramatic interest rate fluctuations provides an excellent summary of the success of some communities and the failures of others to develop effective commercial ethics and laws and suitable monetary and fiscal techniques and policies. While "credit" is considered a modern device (or vice), a brief survey of financial history will demonstrate that credit was in general use in ancient and in medieval times, antedating industry, banking and even coinage. It is the purpose of this brief report to examine selected issues related to the history of simple and compound interest rates, specifically on loans, and to consider periods when high rates were commonplace in their historical context.
Gwartney and Stroup (1990) define the interest rate as the price paid for the use of money or loanable funds for a period of time. Interest is stated as a percentage of the amount borrowed; for example, an interest rate o 10 percent means that the borrower pays 10 cents annually for each dollar borrowed. This, of course, is a "simple interest rate" in which the total interest is a straightforward percentage of the whole sum borrowed. Compound interest, on the other hand, refers to the practice of paying interest on an amount loaned or invested (generally in a bank or other savings vehicle), and then paying interested on the combined principal sum and interest
Read the full essay by joining our writing community - over 32,000 professional essays and term papers. Access this essay now!
Category: Economics - H
Some common topics found in the essays are:
Gwartney Stroup, Sidney Homer, Von Mises, Short-Term Rates, History Rates, Summary Conclusion, Currently Sylla, Provence France, Century England, Bohm-Bawerk Homer, homer 1963, history rates, short-term rates, stroup 1990, prime short-term, prime short-term rates, brimelow 1999, short-term rates west, rates west, mises 1980, von mises, quinn 1997, gwartney stroup 1990, averages prime short-term, von mises 1980,
Click Here to Get Instant Access to over 32,000 Professionally Written Papers!!!