Negative interest rates — logically absurd or mathematically genius?
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All financial institutions such as banks, insurance companies, pension funds were all invented and structured on one assumption — positive interest rates. Credit is built on the basic premise of time differential. It enables you to receive something of value immediately, for which you can pay on a future date. But borrowed money comes at a cost — which is nothing but the interest rate. And this interest rate serves as income for lenders that keeps them going.
Negative interest rates — logically absurd or mathematically genius?
Negative interest rates — logically absurd or…
Negative interest rates — logically absurd or mathematically genius?
All financial institutions such as banks, insurance companies, pension funds were all invented and structured on one assumption — positive interest rates. Credit is built on the basic premise of time differential. It enables you to receive something of value immediately, for which you can pay on a future date. But borrowed money comes at a cost — which is nothing but the interest rate. And this interest rate serves as income for lenders that keeps them going.