Okay, but do you think it'd be easy to raise capital with interest-bearing debt, for a big project like a highway bridge or a new university?
Discussion
I suggested that you wouldn't be able to just go to the bank and take out a 100 BTC loan with 10% interest and full return of principle, to build a new apartment building or whatnot, but I'm apparently the only one who thinks that.
Well, if the area of the apartment was seeing an influx maybe... Depends on the term also, longer loans have a lower rate given a solid collateral, but real estate stops being a way to get up front of the fiat printer, so the lender's assessment would be consequently based on a lower expectation of appreciation of price so maybe the rate would be lower even.
What is the collateral?
the downpayment does not reduce the principal until the termination of the contract, meaning that if you put a 25% downpayment on it, that is not in the hands of the lender until the rest of the principal is paid off, it is a margin that is guaranteed to the lender in case of default, and has to be kept in escrow
also, just wanna say this: i keep seeing the word "principle" being used in relation to the amount owing in a bill
principle is more or less a synonym of axiom or rule or law, principal is the responsible party or the amount owed in a loan, or the chief executive of a school
Sorry, principal.
i saw this misspelling, or more accurately wrong word usage in a dictionary you quoted yesterday or so, it's embarrassing to anyone who knows the english language well
Could just be my German spell-check changing things.
pretty sure the word prince and principal are related and that it is most definitely a different word, i think in german it's prinzip, or synonym grundsatz, regel, or element
yes, principal in german is rektor or direktor, haupt- or das Kapital (yes that one), schulleiter
2
(of money) denoting an original sum invested or lent.
"the principal amount of your investment"
the words are closely related but different, and probably the confusion comes out of their close relation, a principle is essential, an element, a thing with controlling influence, but a principal is the ruler or king or basis or collateral
yes, and collateral literally means "from both sides" which implies that the principal is collateral meaning that it only can be released to the lender upon settlement of the contract, ie, it requires fulfillment of the contract
We don't know how a hyperbitcoinized world looks like, so it's just theories right now. Nonetheless, humanity has seen a steady long term decline in interest rates over the past 5,000 years, interrupted by the occasional calamities like war and natural disasters. This all stopped in the 20th century with fiat money.
Having said this, there's a possibility the trend could return and send interest rates to 0% or near it. How? Because money always has a carrying cost (bank fees for example or it being stolen) that is always larger than 0. So if holding money has a cost, then not lending money has a nonzero cost, meaning people would be offering to lend money at lower and lower rates.
Saifedean Ammous really goes into this on chapter 14 of his book, Principles of Economics, and he seems to be the only Austrian economist out there talking about this.
It sounds like we're doing the whole Bitcoin thing for no reason because it'll just be the same as now, but with sats.
Minus all your wealth/work being stolen from you and being unable to save for buying a house or affording good quality food.
I thought we were just going to have Bitcoin mortgages?
If there's a demand for something, it will exist, but with a hard money you wouldn't need to forcibly get a mortgage just to buy your first house or plot of land. There's currently an excessive use of real estate for trying to preserve purchasing power over time, which inflates housing prices, couple that with money printing and government regulation on housing projects and it all creates a massive bubble in real estate.
It's the younger people who suffer here, since they don't come into the work force earning much, they then have to compete in the housing market (and inflation) with all the older/wealthier people trying to preserve their purchasing power. Bitcoin would suck much of the premium out of real estate, since bitcoin is a better asset long term; it doesn't inflate like fiat and hopefully technological progress will continue to bring down housing costs. The only major factor negatively influencing housing prices, in my opinion, would be government.