Another casual coffee shop setting with my three friends
Eva, Sid and Nance.
Me: Have you guys heard even coffee making not a
profitable business anymore? What is going on all around us?
Sid: Yeah and funny thing that there are many
many financial articles on how millennial are throwing away their damn
retirement income at overprized coffee. The so called elders are not able to
make an overpriced coffee profitable and they just keep worrying about what
will happen to us after three decades or so.
Eva: How is this possible? Don’t they know simple
math. $5 in and $4 out so $1 profit?
Nance: I think
this is all a big corporate fraud and everyone is getting better at it every
passing day. Open a business, show it has potential, take all money in from
banks and gullible investors, launder it to some island country and show all
loss. It’s that simple.
Me: Oh damn you
just figured out entire modern business model!
Eva: He he he! Not funny. Gullible investors Nance
is talking about is us! We lose all our money which we saved by not sending out
clothes to laundry, walking 8 blocks instead of taking uber, keeping my
shopping limited to only once a month and cutting down all pricey yummy drinks
at coffee shop. Oh wait.. it doesn’t look that bad when I am taking about it.
Sid: I am telling
you, the last one would definitely save your health for retirement 😃
Me: Seriously guys. Think about it. We are more in
debt comparing to any past generations. Corporate debt is highest ever.
Nance: Why only
corporate, credit card, home loan even education debt is at all-time high
levels and it seems no one care. We are borrowing from future and spending now.
Sid: Who is future and from where this person got
all this money? 😃
Me: Very funny!
Eva: No actually
if you think about, it is not. If everyone is in debt so who is giving all this
debt? Answer would be no one or collectively all of us. So actually we are
borrowing from our future us so we need to keep making money to pay off our
present infinitely.
Me: Oh Damn! This is looks very complicated and
scary. So are we ever going to retire?
Eva: Yes. If we trick similar way as our elders are
doing now. By making our next generation keep borrowing from us and paying us
premium now, the interest income.
Sid: That
is not going to happen. Generations are already getting smarter and many places
interest rates are already going negative. So you really pay bank to keep your
money.
Nance: So you
would not be able to lend money and live on based on someone else back just
because that person did not had money when he started working. This sounds fair
to me. If you have money you can exchange it for goods fair transaction. You
cannot keep getting new money just because you already have money.
Me: Right now
interest keep a check on borrowing, if no interest what would stop me to borrow
high amounts?
Sid: This would
not be a big issue. Banks can check pay-ability same way they do now just no
interest and as always pool of money would be same so no over borrowing.
Me: It sounds so simple when you say it. I don’t
know why this simple concept is not implemented yet.
Sid: As Eva put before, our elders tricked us and
we just keep giving them our hard earned income for no reason. They can just
give us money because they are anyways not doing anything with it and we can
pay them back later same amount no extra please.
Nance: Yes I
think this extra seems main reason behind income gap and social divide. People
who got money will continue to get more and more even if they will do nothing.
Me: Hmm Interesting. So what about real old
people. They would never able to retire. Oh no. They would by saving similar
way and retire and use money but they would just not get interest. No interest,
no inbuilt inflation, all prices depends on real demand and supply. I think
this can work.
Sid: Yes money was invented to have a simple
exchange mechanism instead of hauling goods for exchange. Interest was never
intended part of it.
Nance: I still
have a question. If I am not getting anything back why would I give you my
money anyways?
Eva: You would not give me money. You would pool
money in some social place just like today in Bank. They would handle lending
and recovery just like they do today. Any difference will be offset by
inflation in long run but with supply side and human social efficiency
improvements inflation will still be close to zero or negative.
Me: So it would be like you work, you buy whatever
you need save some for future. If you want to buy or do something extra for which you need money, you can
borrow, buy that and return money no interest, sounds simple.
Sid: Yup this will remove lot of unnecessary
uncertainty about future and also handle income inequality to some extent.
Nance: Maybe we
are heading that way, who knows!
Eva: So future will remain uncertain no matter
what 😄
Sid: Yeah who know we would also able to get away
by kicking this can down the road for our next generation to handle 😃
Me: Yeah with the same message we got “We love
you and we care about you!”
All laughed. Paid for our overpriced coffee hoping this
chain would remain here tomorrow because we love it, no matter if it even cost
our retirement income!
