{"id":19607,"date":"2016-04-07T10:22:14","date_gmt":"2016-04-07T15:22:14","guid":{"rendered":"http:\/\/olduvai.ca\/?p=19607"},"modified":"2016-04-07T10:22:42","modified_gmt":"2016-04-07T15:22:42","slug":"19607","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=19607","title":{"rendered":"Going Into Debt to Invest Into Debt\u2026"},"content":{"rendered":"
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Going Into Debt to Invest Into Debt\u2026\u00a0<\/a><\/h3>\n<\/div>\n
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Bankers\u00a0Hate\u00a0<\/em>It When You Hold Cash<\/strong><\/p>\n

In an extraordinary turn of events, last week we were contacted by our local bankers. Since we were turned down for a mortgage in 1982 (our business finances were thought to be \u201ctoo shaky\u201d), we have had little truck with them. We pay cash. They mind their own business.<\/p>\n

\"cash-reserves1\"Too many Benjamins! \u00a0 \u00a0\u00a0Photo credit: Andrew Magill \/ Flickr<\/p>\n

But for the first time we can recall, not just one but three suits came to visit. Personable and intelligent, they were worried when they saw how much cash we were keeping on hand. No kidding. They came to visit to propose ways we could \u201cput it to use.\u201d<\/p>\n

\u201cYou really should take some of that cash and invest it in municipal bonds\u201d was the motion on the table.<\/p>\n

\u201cWhat if the municipalities can\u2019t pay?\u201d we asked.<\/p>\n

\u201cDon\u2019t worry about that. Historically, the odds of default are extremely remote,\u201d one of them answered.<\/p>\n

\u201cBut what if interest rates turn up? Wouldn\u2019t the default rate go up?\u201d<\/p>\n

\u201cWell, maybe. But we keep the maturities short and invest only in the most creditworthy municipalities. The risk is very low.\u201d<\/p>\n

\u201cOh\u2026 but what if we just need some cash.\u201d<\/p>\n

\u201cNo problem. We\u2019ll give you a line of credit.\u201d<\/p>\n

\u201cLet me get this straight. You\u2019re proposing to put me into debt so that I can keep my money invested in somebody else\u2019s debt?\u201d<\/p>\n

\u201cUh\u2026 well\u2026 yes\u2026 and we\u2019ll charge you less interest than you will earn from the municipal bonds.\u201d<\/p>\n

\u201cWait. You can earn a fee for putting my money in bonds\u2026 and earn another fee for lending me money\u2026 and I still end up ahead?\u201d<\/p>\n

\u201cYes. We just try to find ways to help clients with their financial needs.\u201d<\/p>\n

\u201cOh.\u201d<\/p>\n

\"peopleofpuertoricopublicimprovbondvig\"If unlucky, you\u2019ll end up with one of these\u2026 \u00a0 \u00a0\u00a0Image via scripophily.net<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Going Into Debt to Invest Into Debt\u2026\u00a0 Bankers\u00a0Hate\u00a0It When You Hold Cash In an extraordinary turn of events, last week we were contacted by our local bankers. Since we were turned down for a mortgage in 1982 (our business finances were thought to be \u201ctoo shaky\u201d), we have had little truck with them. We pay […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[5728,63,6190,1035,175,195,200,431,4086,690],"class_list":["post-19607","post","type-post","status-publish","format-standard","hentry","category-economics","tag-acting-man","tag-banks","tag-bill-bonner","tag-cash","tag-credit","tag-debt","tag-default","tag-interest-rates","tag-investments","tag-risk"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19607","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=19607"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19607\/revisions"}],"predecessor-version":[{"id":19609,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19607\/revisions\/19609"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=19607"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=19607"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=19607"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}