20-01-2009, 04:58 AM
I googled NEGATIVE INTEREST and here is a quick summary as I understand it.
It is a scheme whereby a LENDER lures BORROWERS to borrow money
by PAYING THEM TO BORROW. Then, to pay off the loan, the borrowers
must PAY A HIGHER RATE AT DUE DATE than they received when they
were lured into the scheme. Thus IN THE END, the LENDER MAKES A PROFIT.
An illustration was given where financial whiz Warren Buffet used the
scheme to PAY INVESTORS to invest in his company...but in the end
the investors received less on their investment than if they had not
borrowed...and Buffet pocketed the difference.
That is how I understood it. You get money right now, but you have to
pay back more in the future. Am I wrong?
Jack
It is a scheme whereby a LENDER lures BORROWERS to borrow money
by PAYING THEM TO BORROW. Then, to pay off the loan, the borrowers
must PAY A HIGHER RATE AT DUE DATE than they received when they
were lured into the scheme. Thus IN THE END, the LENDER MAKES A PROFIT.
An illustration was given where financial whiz Warren Buffet used the
scheme to PAY INVESTORS to invest in his company...but in the end
the investors received less on their investment than if they had not
borrowed...and Buffet pocketed the difference.
That is how I understood it. You get money right now, but you have to
pay back more in the future. Am I wrong?
Jack