Popular Interest Rate Theory Describes but Fails to Explain

Tags: Capital and Interest Theory, Money Supply, Other Schools of Thought

03/16/2026 Frank Shostak

Milton Friedman and others tried to explain interest rates using liquidity, economic activity, and inflation expectations. These things, however, only describe interest but do not explain it. Only the Austrian theory of time preference correctly explains interest.

Original article: https://mises.org/mises-wire/popular-interest-rate-theory-describes-fails-explain

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