Comment: This is how interest is different.....

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This is how interest is different.....

Interest is a real phenomenon of human action. It can't be eliminated in any way. It will always be a real factor in the economy, whether or not people are allowed to by law to pay interest.

Interest is simply the ratio of the price payed for a product recieved today versus the price of a product recieved at a latter date. This is time preference, and can't be eliminated without redesigning the physical world. Interest is how economics deals with time, plain and simple.

As an example, an I-phone recieved today is worth more than the same I-phone next week, which is worth more than the same I-pod next year.

This is obviously true, and accepted by everyone, but we tend to ignore the economic consequences. We shouldn't ignore them, though, because the boom/bust cycle is caused solely by the FED pushing the "market" interest rate LOWER than our time preferences.

**Notice that I'm saying that deppressions are only caused by LOWERING the interest rate below our time preferences.***

This makes economic calculation inaccurate in a way that makes unprofitable business ventures, appear profitable. Capitol goods, in particular, are effected by this mis-calculation more-so than consumer goods.

The boom is nothing more than people persuing these new ventures that appeared unprofitable before the interest rate was lowered, but, all of a sudden, appear profitable when the lower rate of interest is used for economic calculation. People get hired to produce these unprofitable capitol goods, and they think things are improving.....

....Until noone wants to purchase these goods at a profitable price. Then the companies involved close the doors or downsize, everyone loses their jobs, and the depression is here.

As can be seen, depressions have nothing to do with "rich,greedy businessmen", but are caused by economic ignorance concerning the concept of interest.

Compare the "defintion" of interest on the main wikpedia site...
http://en.wikipedia.org/wiki/Interest

....to the one on on the Mises wike site.....
http://wiki.mises.org/wiki/Interest

...and you will know how Ron Paul was able to predict the crash, when others weren't.

Here is a link to a history and critique of various theories concerning interest....
http://wiki.mises.org/wiki/History_and_Critique_of_Interest_...

"I do not add 'within the limits of the law,' because law is often but the tyrant's will, and always so when it violates the right of an individual."