An interest rate chronicle

Tuesday, January 17, 2006

Premise

I'm not an economist, but they say that money is a good like anything else. There is a pile of money over there next to a pile of corn. They both have their uses and their value. They also each have a price.

The price of money is reflected in the interest rate. How much will it cost to use this pile of money for a while? That is the amount of interest you pay on a loan. In addition to having to return the pile, you have to pay the fee for borrowing it.

So how about the price of money these days? It's seems pretty cheap. People don't seem to value it too much. Usually, prices fall when the supply of something increases. So do we just have more money sloshing around? Is it because it has lost it's value - it's effectiveness at being used for more higher returns? Are we out of wealth-creating ideas just like we are out of ideas for original screenplays?

I too would like to know the answers to these questions. Was it Disraeli who said that the best way to learn about something was to write a book about it? He might have said that the second best way was to write a blog.

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