Interest

[PickleBottom]

Here's a riddle,

If a bank charges interest as they inherit the risk, does not the charging of interest increase the risk of the person not being able to pay back the loan. Thus the interest has to increase based on the interest charged. As a result the risk will increase, which should therefore increase the interest etc etc

Technically interest should increase to infinity.

[Prodigalson]

I would think the ability to pay back the loan (with interest) would be determined more by the circumstances of the debtor than the amount of interest on the loan.

Thus, interest alone would not increase risk, unless the debtor had no business taking on the obligation, anyway.

[PickleBottom]

Originally Posted by Prodigalson

I would think the ability to pay back the loan (with interest) would be determined more by the circumstances of the debtor than the amount of interest on the loan.

Thus, interest alone would not increase risk, unless the debtor had no business taking on the obligation, anyway.

That would be an argument to not have interest in the first place but rather only repayments that account for inflation and a small admin fee.

[PickleBottom]

Actually, do you know what would be really cool! I had this awesome thought last night, and I cannot believe that no one has thought of this sooner!

Imagine there were a governing or legal body in society, capable, responsible and accountable for governing the society!

[brianpatrick]

Originally Posted by PickleBottom

Actually, do you know what would be really cool! I had this awesome thought last night, and I cannot believe that no one has thought of this sooner!

Imagine there were a governing or legal body in society, capable, responsible and accountable for governing the society!

The Muslims thought of that in like the 600's AD.

[brianpatrick]

They also invented the idea of universities and the toothbrush.

[brianpatrick]

Oh yeah, and algebra. God knows we needed that.

[PickleBottom]

Originally Posted by brianpatrick

They also invented the idea of universities and the toothbrush.

Shit!

There goes my great idea.

[Nick Pierce]

great idea

A great idea would be one that facilitates a great idea into practical application.

Judging by the way things are reported to be going on in the Middle East the "how to govern" originators ain't got all the wrinkles out of the system.


On an evolutionary progressive front the electric car idea seems to be coming along nicely.


https://www.youtube.com/watch?v=lltlyxGZUZQ


Well, the vid clip is at the address but a click from here don't get it to play.
I'm a simple man who is ignorant of such internet intricacies.

I have stopped using my pick ax to resolve computer issues so there is hope I also am on a progressive evolutionary path.

Yeah.
This from a guy who starts his 75 HD when he gets home from work so he can listen to it idle.

[PickleBottom]

Originally Posted by Nick Pierce

A great idea would be one that facilitates a great idea into practical application.

Judging by the way things are reported to be going on in the Middle East the "how to govern" originators ain't got all the wrinkles out of the system.


On an evolutionary progressive front the electric car idea seems to be coming along nicely.

Oh, I just presumed the idea was original as I could not find any evidence for it, but the more I read about it, apparently, according to Wikipedia, governing bodies already exist!

[Nick Pierce]

Originally Posted by PickleBottom

Oh, I just presumed the idea was original as I could not find any evidence for it, but the more I read about it, apparently, according to Wikipedia, governing bodies already exist!

I personally neither support nor contest anyone else's facts.


Might be why the current governing body of this place is more a source of entertainment rather than distress for me.

All I know for certain is every night I sleep like a dead baby.

[PickleBottom]

Originally Posted by Nick Pierce

I personally neither support nor contest anyone else's facts.


Might be why the current governing body of this place is more a source of entertainment rather than distress for me.

All I know for certain is every night I sleep like a dead baby.

Oh well, there is not much voting citizens in a democracy can do about it?

[PickleBottom]

Incidentally, I had a conversation with someone at work about the transfer of luck, and he told me that luck is transmitted when a person's mouth touches another person's cock. Suddenly they get things like, promotions, raises, a few extra holidays etc

[Nick Pierce]

Originally Posted by PickleBottom

Incidentally, I had a conversation with someone at work about the transfer of luck, and he told me that luck is transmitted when a person's mouth touches another person's cock. Suddenly they get things like, promotions, raises, a few extra holidays etc

Is this The Lewinski Principle?

[brianpatrick]

Originally Posted by Nick Pierce

Is this The Lewinski Principle?

Didn't work for her. She didn't even get a talk show.

[Nick Pierce]

Originally Posted by brianpatrick

Didn't work for her. She didn't even get a talk show.

So P.B.'s work conversation represents
another phallacy about how luck functions that doesn't stand up?

[PickleBottom]

Yeah nah, luck is all about frequency, Lewinski put all her eggs in the one basket, or as the old wives saying goes, only wrapped her lips around the one cock

[moonpunter]

Most loans the interest is fixed at the beginning, the rate determined largely by the debtor's credit score. Variable rate mortgages were a large part of why so many people lost their homes when the housing bubble burst, which is why it's not advisable to take out such a mortgage. Credit cards also have varying interest, which benefits the issuing bank because it keeps the debtor paying a lot longer. And if they can't pay, the bank just sells it off to a collection firm. They won't get the full balance, but they at least get a chunk of it.

[PickleBottom]

Originally Posted by moonpunter

Most loans the interest is fixed at the beginning, the rate determined largely by the debtor's credit score. Variable rate mortgages were a large part of why so many people lost their homes when the housing bubble burst, which is why it's not advisable to take out such a mortgage. Credit cards also have varying interest, which benefits the issuing bank because it keeps the debtor paying a lot longer. And if they can't pay, the bank just sells it off to a collection firm. They won't get the full balance, but they at least get a chunk of it.

But if the person has a bad credit score that should increase the risk, i.e. the interest, but as the person is a high risk the additional interest should hurt them more, increasing their risk...

[moonpunter]

Originally Posted by PickleBottom

But if the person has a bad credit score that should increase the risk, i.e. the interest, but as the person is a high risk the additional interest should hurt them more, increasing their risk...

A smart bank won't risk giving someone with bad credit a loan. A less scrupulous bank would give someone with bad credit a loan, collect some payments with interest (the way loans are amortized, there's more interest in earlier payments), and then once the debtor defaults, they repossess the property and liquidate it to recoup their initial investment.

[brianpatrick]

Originally Posted by moonpunter

A smart bank won't risk giving someone with bad credit a loan. A less scrupulous bank would give someone with bad credit a loan, collect some payments with interest (the way loans are amortized, there's more interest in earlier payments), and then once the debtor defaults, they repossess the property and liquidate it to recoup their initial investment.

Well, when you are selling as many potato chips as you can sell in one place, and the mandate to grow or wither pounds it's ugly drum, you march on to new and uncharted territory!

The poor and broken are always an easy target.

[PickleBottom]

Originally Posted by moonpunter

A smart bank won't risk giving someone with bad credit a loan. A less scrupulous bank would give someone with bad credit a loan, collect some payments with interest (the way loans are amortized, there's more interest in earlier payments), and then once the debtor defaults, they repossess the property and liquidate it to recoup their initial investment.

I.e. no interest for a smart bank
and infinite interest for a less scrupulous bank

[moonpunter]

Originally Posted by PickleBottom

I.e. no interest for a smart bank
and infinite interest for a less scrupulous bank

Ie No.

[PickleBottom]

Originally Posted by moonpunter

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.

[moonpunter]

Originally Posted by PickleBottom

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.

I don't have to "believe " I'm telling you how it actually works in the real world. If you don't believe me go down to your local bank and speak with them.

[PickleBottom]

Originally Posted by moonpunter

I don't have to "believe " I'm telling you how it actually works in the real world. If you don't believe me go down to your local bank and speak with them.

Surely a bank would not admit they are charging interest for no reason whatsoever (other than for them to make heaps and heaps of cash), that is, not providing any commensurate service for this interest.

[moonpunter]

Originally Posted by PickleBottom

Surely a bank would not admit they are charging interest for no reason whatsoever (other than for them to make heaps and heaps of cash), that is, not providing any commensurate service for this interest.

Interest is the bank's reward for taking the risk of loaning you money. You can't expect banks to something for nothing. They aren't charities.

[PickleBottom]

Originally Posted by moonpunter

Interest is the bank's reward for taking the risk of loaning you money. You can't expect banks to something for nothing. They aren't charities.

Therefore interest is related to risk? Therefore you will need to consider Option 1 or Option 2.

Yes the banks provide a service and could charge a service fee commensurate with their service (as well as account for inflation), a zero risk service of lending people money might take an admin officer 1 hour to process, a few overheads here and there, let's say $50.00 standard loan fee.

[moonpunter]

Originally Posted by PickleBottom

Therefore interest is related to risk? Therefore you will need to consider Option 1 or Option 2.

Yes the banks provide a service and could charge a service fee commensurate with their service (as well as account for inflation), a zero risk service of lending people money might take an admin officer 1 hour to process, a few overheads here and there, let's say $50.00 standard loan fee.

Your naivete is pretty hilarious. So the bank grants you a $500,000 mortgage for a cool profit of $50? LOL You've really accomplished something, though, in making this Bernie Sanders fan feel sorry for banks.

[PickleBottom]

Originally Posted by moonpunter

Your naivete is pretty hilarious. So the bank grants you a $500,000 mortgage for a cool profit of $50? LOL You've really accomplished something, though, in making this Bernie Sanders fan feel sorry for banks.

As opposed to the bank making a profit of ~$500,000 (in interest) for only typing some details into a database? Why can't I make a fictional unreasonable post on an Internet forum in response to a bank being unreasonable (in the real world, legally, in plain sight).

Secondary to this, with a $50.00 service fee, houses would not be worth $500,000 but more a truer value relative to median income.