Israeli insurance companies are being flooded with profits. It appears that their fees are linked to the performance of their investments in TASE, which was good in the last quarter. I bought more Clal Insurance shares.
7
comments:
B
said...
Alright, here's something interesting. Interest rates have historically been, as far as I can tell, somewhere from .5-20% per annum, depending on the size and reliability of the borrower. Once you get into the big leagues, that range shrinks down to something like 1-8% (off the top of my head.) Two questions. 1-why this small range? 2-what would it take to make the interest rates go outside this margin? 3-what would the effects be?
As a gedankeneksperiment, let's say I'm lending gold. I want to get an interest rate of .25% a year. Obviously, inflation is not a concern to me-what makes this crazy, as opposed to lending gold at several percent per annum, or several dozen percent per annum?
If I have enough gold (I own a mine in my backyard,) what effects will this have on the world? Will the other lenders be forced to hire somebody to shoot me in the back of the head? Will it cause a rise or drop in the price of currency in terms of gold?
Should paper money been abolished and money had to be gold and silver, the situation would be like in the Middle Ages when liquidity was nil and interest rates were 30 - 60% p.a.
In that case, your backyard gold mine operating at full volume could reduce interest rates to 3 - 4 % as today.
With your mine you would be in the same position as Bernanke, able to flood the market with liquidity. Or to dry it out at will.
I am not sure why this would be. In my mind, interest rates should be set by an assessment of the financed enterprise; its return on investment and likelyhood of failure. So, for instance, the Crusades should have had an extremely high interest rate; land reclamation and canal dredging in the Low Countries, a low one. It doesn't seem, reading the history books, that there was a problem with liquidity back then; risky ventures such as wars and transatlantic voyages were constantly being financed. Shortly after the Black Plague, Europe rebuilt and reflourished; impossible to do with no liquidity and such high interest rates.
As far as my backyard mine, the Spanish Empire had just such a mine in the form of their American colonies; much good did it do them. Still, was there such an effect on liquidity in the European money market?
Gold, I think, will spontaneously remonetize in the next 10-20 years, so these are not idle wonderings.
No, there is no going back to the Middle Ages. Bad money always displaces good money, Grisham's Law. Gold will always be hidden somewhere in the basement and those bad paper bernankes will be circulating.
I don't know if Gresham's law applies on a global scale. I mean, why aren't we seeing Mexican pesos or some other piece of shit currency in global circulation?
On a tangent, I am dying to know this: Elizabethan England, a small, frozen dingleberry hanging off the rump of Eurasia, with a ludicrously debased currency, was able to achieve military, political and economical parity with the Spanish Empire. How?
Recently, there was a dirty madness edition of Econtalk on immigration. But later there was a super-awesome one on all aspects of gold as money. Most of all, on how France and America screwed up the world gold system and helped cause the Depression, Nazi Revolution, and so on.
7 comments:
Alright, here's something interesting. Interest rates have historically been, as far as I can tell, somewhere from .5-20% per annum, depending on the size and reliability of the borrower. Once you get into the big leagues, that range shrinks down to something like 1-8% (off the top of my head.) Two questions. 1-why this small range? 2-what would it take to make the interest rates go outside this margin? 3-what would the effects be?
As a gedankeneksperiment, let's say I'm lending gold. I want to get an interest rate of .25% a year. Obviously, inflation is not a concern to me-what makes this crazy, as opposed to lending gold at several percent per annum, or several dozen percent per annum?
If I have enough gold (I own a mine in my backyard,) what effects will this have on the world? Will the other lenders be forced to hire somebody to shoot me in the back of the head? Will it cause a rise or drop in the price of currency in terms of gold?
Should paper money been abolished and money had to be gold and silver, the situation would be like in the Middle Ages when liquidity was nil and interest rates were 30 - 60% p.a.
In that case, your backyard gold mine operating at full volume could reduce interest rates to 3 - 4 % as today.
With your mine you would be in the same position as Bernanke, able to flood the market with liquidity. Or to dry it out at will.
I am not sure why this would be. In my mind, interest rates should be set by an assessment of the financed enterprise; its return on investment and likelyhood of failure. So, for instance, the Crusades should have had an extremely high interest rate; land reclamation and canal dredging in the Low Countries, a low one. It doesn't seem, reading the history books, that there was a problem with liquidity back then; risky ventures such as wars and transatlantic voyages were constantly being financed. Shortly after the Black Plague, Europe rebuilt and reflourished; impossible to do with no liquidity and such high interest rates.
As far as my backyard mine, the Spanish Empire had just such a mine in the form of their American colonies; much good did it do them. Still, was there such an effect on liquidity in the European money market?
Gold, I think, will spontaneously remonetize in the next 10-20 years, so these are not idle wonderings.
No, there is no going back to the Middle Ages. Bad money always displaces good money, Grisham's Law. Gold will always be hidden somewhere in the basement and those bad paper bernankes will be circulating.
I don't know if Gresham's law applies on a global scale. I mean, why aren't we seeing Mexican pesos or some other piece of shit currency in global circulation?
On a tangent, I am dying to know this: Elizabethan England, a small, frozen dingleberry hanging off the rump of Eurasia, with a ludicrously debased currency, was able to achieve military, political and economical parity with the Spanish Empire. How?
Recently, there was a dirty madness edition of Econtalk on immigration. But later there was a super-awesome one on all aspects of gold as money. Most of all, on how France and America screwed up the world gold system and helped cause the Depression, Nazi Revolution, and so on.
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