The Theory of Interest

Jeffrey Herbener builds the Austrian theory of interest from the ground up. Interest, he argues, isn’t the productivity of capital or a mere cost of borrowing—it’s the “originary” premium that arises because human beings are temporal and prefer the same satisfaction sooner rather than later. From time preference he derives the pure rate of interest, shows why a single rate integrates the entire economy from credit cards to capital investment, and explains why productivity discounts back through the rate rather than setting it.

Recorded at the Mises Institute in Auburn, Alabama, on July 21, 2026.

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