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What is the price of consuming the future today, Economist?
A daily chat about tomorrow / #24
P: Good morning, Economist.
E: Good morning, Photographer.
P: Why do we have to pay interest when we take out a loan?
E: Are you in debt, Photographer?
P: I am not. So tell me, why is there interest in our world?
E: Essentially, because whoever gives you the loan is giving up something today. They can’t buy things now because they are giving their money to you. This waiver is compensated in the form of interest.
P: The interest thus compensates for the suffering of renunciation?
E: Exactly. From an economic point of view, the interest rate indicates present preferences for consumption versus future consumption plus a premium for the uncertainty that one may never get their money back.
P: But can't the temporary renunciation also be something nice? Without it, there's no joyful anticipation, right?
E: Interesting point. We like to plan our vacation well in advance because we can look forward to it for a long time.
P: Then there should be negative interest rates on it. If you book in advance, you have to pay more.
E: Don't let the tourism industry get silly ideas.
< silence >
E: Where did you take this somewhat strange strawberry photo, Photographer?
P: I was invited to a silver wedding these days. While all the speeches before dinner, I always had to squint at the bowl – in anticipation.
E: And were they tasty?
P: In the hustle and bustle of dinner abundance and party mood, I finally forgot to eat some.
E: At least you had anticipation.
P: At least.
E: A strawberry-rich day, Photographer.
P: I wish you too, Economist.
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