Repost from Bonner & Partners
LAUSANNE, SWITZERLAND – One of the most remarkable conversations on finance we’ve ever had happened here in Lausanne yesterday.
“You mean it costs as much to put money on deposit at a bank as it does to borrow it?”
We asked the question to a colleague who recently bought a house here.
He borrowed the money to buy the house at an interest rate of less than 1%.
Meanwhile, a person with an account at the same bank will pay almost the same amount in negative interest for the privilege of lending money to the bank (putting it on deposit).
“How could that be?” was the question that leaped to our lips.
Age of Miracles
Imagine two people…
One has a million Swiss francs (roughly equal to $1 million). Another has nothing. One puts his million in a local bank. He pays 10,000 francs a year in negative interest.
What does he get? A monthly statement!
The other fellow borrows the same million dollars. He pays 10,000 francs a year in interest.
What does he get? A house!
But remember, we live in an age of miracles. Things that wouldn’t make sense in any other era don’t make sense in ours, either. But we learn to live with them… and gradually come to accept them as normal.
Investors, for example, have come to believe it is entirely meet and right that central banks should not only control the price of credit, but also that they should at all times and all places make sure stock prices don’t fall.
This leads them to a further whacky conclusion: Stocks may already be sky high. But so what? They’re headed to the moon!
Full post here with more goodies.
Keine Kommentare:
Kommentar veröffentlichen
Hinweis: Nur ein Mitglied dieses Blogs kann Kommentare posten.