In an earlier article, "Forgetfulness and Interest,"2 I showed how the hereditary and relativistic formulation of the theory of the demand for money can be applied to provide a precise and operational expression of the psychological rate of interest. This leads in turn to a deepening of understanding, in new directions, of the general theory of interest. This is the main purpose of the present article.3 4 As far as can be judged, the analysis presented below, which later may be refined and revised, seems capable of clarifying certain aspects of a complex and controversial question which has been under discussion ever since the beginning of the eighteenth century, namely, the link between