you're saying that 21% is effectively 1%, right?
Discussion
Because you risk the loss of the principle and the principle is tied up for X years, for a measly 1% return. That does not cover the risk premium.
You need some nearly-guaranteed returns, like the US government can give because they have the monopoly on violence.
So charge 27%?
Haven't you just redefined the base rate?
No because she's not a central bank so even if she's guessing right she can't guarantee profits for herself and her cronies by changing it again on a whim
If I'm getting what she's saying
Like, with no party running the circle of monetary flow, no debt system can really be stable
"[...] This division of labor benefits the saver by delegating to the bank the task of successful forecasting – in which the saver may have no skill or desire to perform. Delegating the lending to the bank would in most cases provide the customer with a more secure investment than if he were to lend the money out himself on the basis of his own judgments of entrepreneurial success
...
Interest payments primarily are paid for the service of acquiring access to capital sooner rather than later
...
Bob has deposited money in a bank that will invest it in projects for him. it promises 5% interest.
Joe acquires a loan for 100 dollars + 10 percent interest from this bank. [after some time]
Joe has responsibly paid the bank the principal of his loan (one hundred dollars) along with the ten percent interest (ten dollars). The following month, Bob arrives to collect his investment, at which point in time, the bank may return to Bob his principal and interest or offer to keep the funds and renew the lending agreement. Even if Bob refuses the offer to continue and decides to collect his funds, both parties benefit as both parties become five dollars richer. Even Joe the borrower benefited by gaining access to capital needed to start his small business sooner as opposed to his waiting later. Perhaps starting the business at that current point of time was crucial to its success"
Who did anything about guaranteed profits? No profits are ever guaranteed. That's what separated the successful from the successful and insured society is benefitting from people's endeavours.
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Wow sorry, billions of typos! Fixed:
"Who said anything about guaranteed profits? No profits are ever guaranteed in a truly free market. That's what separates the successful from the unsuccessful and insures value is delivered to society from the efforts of the successful"
Banks are just gonna prefer equity for a while I'd bet