yea keynes bla bla bla. i need stronger info and reasons why. any well read economists here?
2006-10-22 18:58:58 · 9 answers · asked by vida 2 in Social Science ➔ Economics
Interest rates have existed for ages, even before there was money as we know it today.
Presumably some caveman went out hunting one day and didn't catch anything, so he asked one of the other cavemen for chunk of mammoth so that he would have something to eat. The other caveman agreed to give him a chunk, so long as as the hungry caveman gave him back 2 chunks the following day. This 'transaction' is effectively an interest rate, of 100%. Ever since, whenever people have borrowed something and they have paid back slightly more than they borrowed because the lender has had to go without for a few days, you have had interest rates.
Gradually, we have develoepd more sophisticated means of exchange using money, so that if you are a pig darmer, you don't have to take pigs with you everytime you want to buy something. The development of money, and then banking has just been an extension of this trend. Since the concept of interest rates already existed for other types of borrowing, it was only natural that it was then adopted by banks.
2006-10-22 21:41:51 · answer #1 · answered by eco101 3 · 0⤊ 1⤋
It is an old story of profit making. When I invest money I want to make profit in the end. And when I borrow money I must pay the cost of borrowing. I dont want to go into numbers. Simply put it is profit of lending and cost of borrowing.
As far as I ve gone with my books, I dont really remember having read someone who claims credit for this let alone implementing the regimes. What I know is that...its been evolving over the years and it still is.
Remember no such things in Islamic banking.
Thanks.
2006-10-23 08:06:21 · answer #2 · answered by infinitum 1 · 0⤊ 0⤋
interst rates are made so that when you are giving back the money...1 the bank would make a profit...two to match inflation.....when lets say inflastion is expected to riase to 7% over your loan you to ok out a bank will want to match it so that the get back the smae purcahsing power of the nonimal amout you pay back...so if the interest rate is 7% but inflation goes up 9% over the loan...you make out..becuase your nominal amount you pay back is not worth as much becuase inflation made it less....vise versa if the inflation rate was only 4% then the lender makes out becuase the nominal amount you pay back is stronger in purchase power then you expected...so for example that dollar you thought was going to be really only worth 50 cents in 5 years turns out to be 75 cents from the low inflation, the bank is making more money back then expected.....uughhh...waht happened...i black out.....THATS HOW YOU DEBATE!
2006-10-23 03:13:39 · answer #3 · answered by blacklion 2 · 0⤊ 0⤋
Interest rates have been around for a long time, and much like we will never put a name to the first person who tamed fire, we will never know for certain who charged the first interest rates.
The first written records of lending money and interest rates date back from ancient Babylon; about 1900 BCE (Before the Common Era). The first law about what interest rate one can charge comes from Hammurabi’s code of laws. Hammurabi was an emperor of ancient Babylon around the year of 1800 BCE. The following are citations form Hammurabi’s code.
Law 86
“If a merchant put out grain at interest, for one kor he shall receive one hundred sila of grain as interest”.
Law 87
“If he put out money at interest, for one shekel of silver, he shall receive one-fifth of a shekel as interest”.
This works out that you can only charge 20% interest on any loan. This is about the same interest rate that one pays on a credit card.
Interest rates probably started when humans started living in cities and started accumulating wealth. My personal theory is that charging interest is the second oldest profession. It was used to finance the oldest profession.
I hope this helps you out a bit.
2006-10-24 00:00:07 · answer #4 · answered by Just Wondering 3 · 0⤊ 0⤋
It was the Jews who first invented Interest. It is that simple.
2006-10-23 02:04:50 · answer #5 · answered by Anonymous · 1⤊ 0⤋
Why, yes, I believe it was the WInter Warlock for his own selfish reasons.
2006-10-23 02:01:29 · answer #6 · answered by steinwald 4 · 0⤊ 0⤋
Someone very brilliant.And rich.
2006-10-23 02:08:31 · answer #7 · answered by airwimp 2 · 0⤊ 0⤋
greedy gop.
2006-10-23 02:02:35 · answer #8 · answered by cork 7 · 0⤊ 0⤋
the bombays..
2006-10-23 02:05:38 · answer #9 · answered by gorgeous witch 1 · 0⤊ 0⤋