“I want to borrow some money , as i want to be better off”
If that’s a serious question you didn’t understand a word I wrote!!!
NO, borrowing money per se does not make a person better off, borrowing money to invest in a business MIGHT make you better off IF the business is successful long term.
If you took out a loan to buy a better car because you thought it was cool, clearly that person is not going to be better off, but the savers (individuals and businesses) that put their money in the bank that then lends the money out (for a car loan) or invests it in the stock market etc… the savers make money (interest) as long as the banks don’t loose money by making too many risky loans that default.
Was that really a serious question Jamie? If so re read what I wrote as I never said borrowing money makes you better off, I said the economy relies on a combination of borrowers and lenders.
If we have no businesses/people willing to borrow money, savers can’t earn money (interest) on the money they’ve saved.
Can’t believe I’m having to explain this simple concept, but when a saver puts money in the bank it doesn’t go into a big bank vault collecting dust, the money is put to work in the form of loans to business and individuals either directly or via the stock market and similar products: the stock market basically generates cash for the business the stocks are for, so they can invest in their business etc…
Come on Jamie, this isn’t rocket science, it’s economics 101 and I’ve never studied economics, but I understand these basic economic principles.
I don’t think I can explain this in simpler terms, so if you don’t get it, not a lot I can do about it.
David
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