Sunday, August 21, 2011

Magic of Zero

Part of the source of the magic of zero comes from the odd disparity of society's opinion of borrowers and lenders. Consider someone who has a good steady job with a substantial income and prospects for the future, the bank is willing to lend to him at some interest. This person accumulates debt and then some event causes his income to fall sharply so that he can no longer service the debt. A sensible view would be that both the borrower and the lender took a risk here and both should loose out. In this view zero is far less magical. However, society at large tends to view the borrower as fully responsible and the lender as a sort of victim. This is wrongheaded for two reasons. For one the borrower can pay for his necessary expenses out of the value of his labor, the lender can not. (If he could he would be doing that rather than taking the risks of lending) For another the lender's business model depends upon support from the government. One really has no chance of making a living by lending money at interest unless one has the contract enforcement authority of a government behind him.

Labels: , ,

1 Comments:

At 10:14 PM, Blogger sanjay varma said...

Appreciation for nice Updates, I found something new and folks can get useful info about BEST ONLINE TRAINING

 

Post a Comment

<< Home