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RE: Danish Bank offers negative interest rate mortgages basically paying people to borrow money to buy assets.
What about the time value of the money? What if the customer pays in due time? Not sensible to me.
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Please explain the term “time value” of money. Sometimes definitions answer questions.
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Time value of money = Interest rate
Suppose interest rate for deferred account is monthly %2 in an economy. If you lend your surplus money to someone for a month and get the same amount in due time, this is not reasonable in the financial aspect.
Because if you deposited it in a deferred bank account, you would get %2 much more money at the end of the month.
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Good question.
I think that as long as the characteristic of a vehicle include capitol preservation and the interest you earn on loaned or invested capitol is greater then or at least equal to inflation, it’s a good investment.
Thank you for your comment. I think it’s an important one. The point is assets are not the only way to protect yourself from the depreciation in value of fiat. Investment vehicles which pay interest or earning greater then inflation or at least equal to inflation protect you from depreciation of fiat since inflation rate equals fiat depreciation unless other larger forces intervene.
Thank you, this is why we interact and engage: to share our knowledge and understanding of world events.