ABSTRACT
In the previous chapter we addressed the question of the originating cause of interest. The resulting discussion served to clear the ground but in itself does not constitute a complete explanation. A reader sceptical about a liquidity preference theory, for instance, might agree with our conclusion that the existence of liquidity preference implies that wealth-holders require some payment to persuade them to give up cash in exchange for debt; but the reader might not be convinced that the payment required to persuade the wealth-holder is as large as the interest rate that we normally observe. All that we have succeeded in demonstrating so far is that the payment must be positive. Further theory is necessary to link liquidity preference to the rate of interest that is observed in the marketplace.
