An important factor in determining the average cost of rent in a given geographic area would be the average disposable income of a household in that area. Over time, rental prices would emerge naturally from the market. This is a very complex subject.

According to the Austrian economist Ludwig von #Mises , rent is not the specific revenue from land, it is a market phenomenon, where entrepreneurs are willing to take risk by investing funds in the production of a house to earn a return (rent).

#Mises called this “originary interest,” which refers to the markup between factor prices and the expected revenues from the sale of the finished product. The implied rate of return on a production project.

When renting, the surplus money from not purchasing a house can be used for something else that is considered more important. For example, to finance a business or to save (for comparison: Under fiat, excess cash can be used to buy #bitcoin ).

We can expect the rent to be close to the risk-free interest rate under sound money, plus an adjustment for risk, because after all, the rental is not risk-free.

The property could be damaged and rent not paid. Yes, insurance could be purchased, but it would be costly and time-consuming.

The risk free interest rate would reflect the overall time preference of people in the economy. A risk-free interest rate would naturally emerge from the market, as will for example the average rents.

@leonwankum Interest rate in sound money era might be significantly high due to the fact that money is appreciate overtime. Harder to persuade anyone to loan you money?

@pctbtc Agreed. Will post a thread on this soon. The incentive for someone to lend bitcoin will be considerably low because there is no benefit in potentially losing out on deflation without adequate compensation. 1/2