In the previous Lecture I explained how discounting bills of exchange was invented, how the discount rate appeared, and how changes in the propensity to consume made it go upor down. I also presented the important argument that the discount rate is entirely different in origin and nature from the rate of interest. We still have one mystery to solve, namely the question: Is there one discount rate or are there many discount rates? Is the clothier discounting at one rate and the baker at another, or are all retailers discounting at the same rate? The next Chapter in The Greatest Story Ever Told will answer that problem. Chapter Seven in which the gentle reader learns why the baker discounts at the same rate as the clothier The clothier noticed that his success in trading bills of exchange attracted imitators. The miller was also drawing bills on the baker and used them to pay the grain merchant for the wheat, after the bill was accepted by the baker. In holding the miller-on-baker bill the grain merchant was earning an income on his idle cash, just as the spinner, holding the weaver-on-clothier bill, was earning an income on his
To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.