Do You Believe in Usury?|
|Date:||February 4th, 2009 03:44 am (UTC)|| |
I've got my profit already, but my capital is still at risk, so really I'm not anything like in the clear on this transaction yet.
But halfway through the loan, the borrower has probably already paid the lender more than the original value of the capital. Whether or not the lender still has capital "at risk" at that point is a matter of debate.
|Date:||February 4th, 2009 04:33 am (UTC)|| |
Time has value. The total number of dollars isn't the only factor; there's also the date on which they're paid.
Remember the Russian million-dollar lottery?
Halfway through the loan, the borrower hasn't paid the lender more than the value of the loan. (The value of the loan in 15-years-later dollars is around $250,000, being $100,000 plus interest.)
|Date:||February 4th, 2009 02:43 pm (UTC)|| |
The lender has either his capital, or his profit, at risk. I take as obvious that he wouldn't have made the loan if he didn't have a reasonable expectation of receiving his capital back, plus some profit (in a commercial loan; if we want to end commercial loans...that's a HUGE change, and would probably completely change the social fabric of society in ways I would hate, since the only way to get big things before retirement age would be to suck up to rich people).