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NOTE How does time preference relate to 'usury?'

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Von Boehm-Bawerk pointed it out for the first time and Frank Fetter, the American Austrian,

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developed it, clarified it, the interest, long run profit, is a term that comes from

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time preference.

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This is something, by the way, the poor anti-usury people could never figure out, the Catholic

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Church theologians, who tended to be in favor of the free market, but they couldn't figure

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out what the justification for interest is, interest on a pure loan.

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They can understand about risk. They understood about uncertainty and all that. They just didn't understand about why should people be able to charge 3% or 8% or whatever on a pure loan.

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And the answer is that people prefer a good right now to waiting for it or the present expectation of a good coming in a year from now, 10 years from now or 100 years from now.

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Everybody's got a time premium rate on present goods immediately available and a discount for the future. That determines the rate of interest.

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Also, von Boehm-Bawerk pointed out in Menger II, the capital, which by the way modern economics still has not learned.

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Capital takes time, production takes time, capital is a time structure.

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Some goods are very close to consumers, like producing Wonder Bread, and the retailer of course is very close to the consumer.

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On the other hand, the machinery that goes over, iron ore that goes into making the machinery that produces Wonder Bread is way up the structure.

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It takes a lot of time to get to the earlier stage of production, so to speak.