Thread: Interest
View Single Post
Old 03-16-2017, 04:03 AM
PickleBottom's Avatar
PickleBottom (Offline)
Always Online
Official Member
Join Date: Sep 2011
Posts: 2,032
Thanks: 1,327
Thanks 378

Originally Posted by moonpunter View Post
Ie No.
Just to clarify;
Option 1 - the lender does not inherit any risk and therefore no need for interest.
Option 2 - the lender does inherit a risk and therefore charges interest, but this interest increases the risk (the risk of a person defaulting on their loan), which should increase the interest, and this would approach a point where every person reaches their particular threshold where they are unable to pay back both the principal and interest, and at this point the risk reaches certainty. Therefore if the lender is risking their money they should charge infinite interest.

It would be like an insurer placing lightning rods within haystacks covered by their own fire insurance.

But from what I understand, you believe that there is the third option;
-interest has nothing to do with risk but is rather a price a borrower is willing to pay at a rate which ensures the lender makes a profit.
If you have an apple and I have an apple and we exchange these apples then you and I will still each have one apple. But if you have an idea and I have an idea and we exchange these ideas, then each of us will have two ideas
-George Bernard Shaw
Reply With Quote