Chapter 620 Theory of money rolling

This is a what concept? Small workshop manufacturing profits are less than ten percent, and even many are even less than five percent.

Already belongs to the financial field to sign a betting agreement annual interest is generally only 12%. Why would it be set at 12%, rather than several dozen percent?

The reason is actually very simple, we are all smart people, professionals, who is not stupid. How much is the normal profit margin has long been calculated clearly by each of them.

What has not been clearly calculated is that some of the man-made uncontrollable future variables in the factors. Therefore, the two sides sat down to sign the paper betting agreement, betting on some of these uncontrollable future variables.

Soros, Warren Buffett so famous financial investment masters each year to bring the return, but also an average of more than twenty percent.

Could it be that there are even more awesome average people than them? The reason why the average person’s money is thus scraped away by a very small number of people is that they do not know how to do the math, they do not understand it at all, after all, they are dominated by the inherent way of calculation first.

Otherwise, it is forced by a strong personal desire to buy. As for the other consequences, it is already not cared about. Banks are not too afraid of the bad debt rate of issuing credit cards, because the high profit is already able to make up for it.

As long as the bad debt rate of credit card can be controlled at a certain level, will never lose money, only make money. Because it will also lead to another concept, called the rolling theory of funds (that is, in a certain period of time, the total amount of money involved in the market is relatively certain, these funds in the up and down two different directions to roll, triggering transactions).

This is how banks, microfinance companies, loan sharks, underground money changers, etc. operate when applying the rolling theory of money.

Each month, they will collect a portion of the principal + interest from the lender. So, they will take that money and lend it out in the same way towards new lenders.

The next cycle, a new one is collected, and so on, and so on, and so on. As an example, in the first month $200 million was lent out, based on the equal principal and interest repayment method.

In the second month, some of the principal and interest will be recovered. Similarly, in the second month, I put out part of the recovered principal and interest. At this point in time, my total capitalization is necessarily greater than $200 million.

In effect, this would be $200 million + 1/12th of the principal of the $200 million capital put out in the first month + the 2% fee on the $200 million capital put out in the first month = $220.6 million, which is $20.6 million more.

This 20.6 million dollars, and can be the same way to be able to lend out profits. 20.6 million lending out profits of the next month’s money, and can continue to + plus the previous 200 million dollars lending out the recovery of the second month part of the principal and interest together and then continue to roll towards the next month ……

In the U.S., it’s been played out in all sorts of new ways, with payday loans, quick money, easy money …… They can be found in poor and working class neighborhoods at check cashing locations and street level offices.

They have formed at least a dozen national chains, and they earn the equivalent of 500% APR. They also offer an emergency service.

Let’s say you’re short of money and your bills are piling up, with some lost notices among them. However, payday isn’t for another two weeks.

Until then, your phone goes out and so does your electricity. The guy who runs the check-cashing kiosk at the local convenience store will throw you a lifeline.

To borrow $100, you have to write a check for 120. Two weeks later, he takes the $120 check to the bank and cashes it for $120 cash.

That means two weeks at a whopping 20% interest rate, which is 1.428% per day, or 521% per year. If, after two weeks, the check bounces (i.e., you’re not able to get that one $120 check written and cashed), that’s fine.

You add another $20 and rewrite a check for $140, again cashing it in two weeks. In short, you borrowed $100 for four weeks and paid $140 for it.

If you’re an Ivy League college student, you’re able to receive calls or text messages almost daily from banks inviting you to apply for credit cards with various offers.

The reason why poor people stay poor all their lives is because many of them fall into the poverty trap of high interest rates. The amount of money they earn every day is not enough to pay the interest on one day’s loan.

As a result, they are even lazier to think about and calculate things that are not clear to them. This becomes directly attached to their bones.

The great Korean director Kim Ki-duk’s representative movie work “Holy Gotham” inside the reaction. A hardware store street in Seoul, South Korea withered, either forced to close, or by loan sharks to collect debts, ordinary self-employed operators one by one into the middle of the predicament.

One of the things I remember most is the calmness of one man before he committed suicide. He said he came here to work at the age of 16.

Fifty years had passed and still nothing had changed. He had no intention of repaying the money he had borrowed, and while he was talking, he walked straight up to the upstairs rooftop and jumped towards the bottom.

And then there’s the one who’s been chased for debts to the point where he’d rather cut off his own hands, after all, having been forced by the loan sharks to buy an accidental personal injury insurance policy.

Even the loan shark’s hero doesn’t want him to pay back the money in the end, and after he receives a phone call and hears that his wife has given birth to a child he chants that he will be using quite a bit of money in the future and can’t let the child grow up in a state of pennilessness and poverty like he did.

So he even crushed one of his hands himself. The interest rate on credit cards is no higher than that of loan sharks. I am afraid that those who go down the road of loan sharks have long ago completely killed the road of credit cards.

Credit card issuing banks will blacklist those who are three months overdue in paying their credit card debts, and they will not be allowed to use their credit cards for life.

Otherwise, the debt will be sold to a debt collection agency to collect the debt. The credit card debt of a family of four could be as high as 15 million yen, and there was even a tragedy in Korea in which the whole family committed suicide after being forced to pay the debt.

Even if Masayoshi Kishimoto was aware of this, he did not intend to be merciful. First of all, this series of Korean social and financial problems are not self-inflicted, but they are caused by themselves.

Flies don’t bite seamless eggs. At first, the South Korean government and the central bank of South Korea is not eager to let the domestic from the Asian financial turmoil in the middle of the economic recovery, to take a radical and loose financial policy in the credit card restrictions above, will not be later planted this time bomb.

Since South Korea revealed the problem, then they can not miss the opportunity to loot. This wants to grow itself, inevitably must be like a glutton to eat eat eat eat.

He also believes in the Chinese “Zeng Guang Xian Wen” in the sentence, benevolence is not a businessman, righteousness is not to keep money; love is not to establish authority, goodness is not to reside in the officialdom; mercy is not to take charge of the army, and softness is not to supervise the country.