Bite Size Economics No. 1 (repost)
'interest is the price of risk'!
If a higher interest rate is being charged there is more risk of non-repayment.
This is why some people are charged more for loans & why some 'investments' are offered with higher interest rates.
Knowing this helps make sense of loans & investments; and is a useful scam warning
If an interest rate is out of line, ask yourself, why?
As I am still not entirely sure what will happen to Bite Size Economics posts (boosting may not protect them from disappearing if my old instance is blocked), I'm going to re-start the series this morning - repeating the first three daily posts & then picking up the tempo when that has been done.
Apologies for the repetition (but I want the whole series & thread, eventually) to be accessible for people coming late to it.
Thanks for your patience
As a precaution & because its an ongoing thread, I'm just going to boost the first three Bite Size Economics posts from this instance, so they will be available to those who want to see them all at some point in the future.... if my previous instance *does* get blocked (as I suspect it may do).
Bite Size Economics No. 4 will follow tomorrow
Bite Size Economics No. 3
'markets are never free'
The idea that in some ideal world markets can be free misunderstands how markets work; they are dependent on property & contract laws shaped by the state (or in earlier times the local political authority).
Historically markets have operated without formal laws, but even then community trust & local authority set the norms for market interactions.
All markets are regulated the issue is how & by whom?
Bite Size Economics No. 2
'Money is trust'
Money is usually seen as a store of value or a means of exchange but these functions depend on its manifestation of trust.
We trust money is acceptable to others (in the form we want to use from paper money to digital payments); we trust its value is (at least in the medium term) relatively stable.
When our trust declines so does money's stability (inflation, barter exchange). So, without our trust money cannot work!
Bite Size Economics No. 1 (remix)
'interest is the price of risk'!
If a higher interest rate is being charged there is more risk of non-repayment.
This is why some people are charged more for loans & why some 'investments' are offered with higher interest rates.
Knowing this helps make sense of loans & investments; and is a useful scam warning
If an interest rate is out of line, ask yourself, why?
So looks like Bite Size Economics is a goer.... I'll need to organise it, but it will appear as a thread (thanks @KimSJ for the suggestion/reminder) and with a # (see below) and will be regular (although possibly not daily). I'll get under way with it this weekend & thanks to all my Mastodon friends for all the positive feedback.
It will start this weekend with a remix for the interest as the price of risk post from yesterday.
Emeritus Prof. Christopher May
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