Mill's theory is set out the chapter "Of the rate of interest" in his "Principles of political economy". He says that the interest rate adjusts to maintain equilibrium between the demands for lending and borrowing. Individuals lend in order to defer consumption or for the sake of the greater quantity they will be able to consume at a later date owing to interest earned. They borrow in order to anticipate consumption (whose relative desirability is reflected by the time value of money), but entrepreneurs also borrow to fund investment and governments borrow for their own reasons. The three sources of demand compete for loans.