Money
// Filed in: Questions
Every person should know about money, in particular fiat currency. If you went to public school this topic was avoided on purpose, so you are forgiven for not having learned in school. But… after you got out of school and started dealing money, debt, credit cards and so on you should have thought to find out all about money.
To start here are two truism’s about rich people: 1. Rich people do not get rich by spending money. They never spend money on stupid things. A rich person will not spend 1000 dollars monthly on a car payment and live in an 800 apartment. Rich people do not buy crap because advertising tells them to. So, rich people do not spend money to get rich. 2. Rich people use other people’s money to get rich, not their own. In fact, most often the use the money of the guy willing to spend 1k on a car while living in a dump.
Questions:
1: A bank has 100 dollars in deposits from their customers. The bank loans out 100,000 dollars to 10 different people who want to borrow money for a house. Where did the 100,000 dollars come from?
2. On its 100,000 dollar investment the bank expects to get a return of 300,000 dollars of compound interest from these borrows. Where does the 300,000 dollars come from? In this case I do not mean which people, or via what mechanism, I mean where does the interest money itself come from?
My guess is few if any answered the question properly and it is the second question that is most important.
Find out the answer here
To start here are two truism’s about rich people: 1. Rich people do not get rich by spending money. They never spend money on stupid things. A rich person will not spend 1000 dollars monthly on a car payment and live in an 800 apartment. Rich people do not buy crap because advertising tells them to. So, rich people do not spend money to get rich. 2. Rich people use other people’s money to get rich, not their own. In fact, most often the use the money of the guy willing to spend 1k on a car while living in a dump.
Questions:
1: A bank has 100 dollars in deposits from their customers. The bank loans out 100,000 dollars to 10 different people who want to borrow money for a house. Where did the 100,000 dollars come from?
2. On its 100,000 dollar investment the bank expects to get a return of 300,000 dollars of compound interest from these borrows. Where does the 300,000 dollars come from? In this case I do not mean which people, or via what mechanism, I mean where does the interest money itself come from?
My guess is few if any answered the question properly and it is the second question that is most important.
Find out the answer here
