Credit, Debt, Cyprus, oh my!

(Categories: ECONOMICS, DEBT, CREDIT)

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Sunrise or sunset on the economy? Keep an eye on your bank account.

Through the labyrinth of internet blogging I came upon a post about Credit so well written that even I think I understand it, and that is something.

A couple of excerpts:
“The key to the proper use of credit is that it is invested in productive enterprises at a high rate of return.”

“A high rate of return (i.e. a high interest rate) leads lenders to transparently accept risk, and entrepreneurs to only borrow for the highest-return enterprises. A low-yield, high-risk investment is not worth funding. We call these mal-investments or unproductive uses of capital.”

“In our era, the Federal Reserve and Federal policies have massively incentivized mal-investment and unproductive uses of capital. Low interest rates destroy the needed discipline on both lenders and borrowers to only risk capital in the highest-return, lowest risk uses.”

The entire brief article can be viewed here: The Proper Use of Credit

Another post that caught my attention on this site was: The Real Cyprus Template (the one you’re not supposed to notice)

This writer is prolific and there is a lot of food for thought on the website.

I found my way here via http://austrianaddict.com/. (Austrian economics, not a love of Hitler.)

I found that by way of http://necessaryandpropergovt.wordpress.com/.

All are a noteworthy circle of sites in which to browse.

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About JohnRH

Retired, avid winter skier, avid reader, traveler (avidly). :)
Gallery | This entry was posted in Credit, Debt, economics, Politics and tagged , , , . Bookmark the permalink.

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