Credit Rating and Required Rate of Return: Suppose you and Warren Buffett borrow money from a bank. The bank will assess your credit ratings differently. Maybe the bank could offer Warren Buffett a loan without interest since it can be advertised as a bank used by the renowned investor. However, it will likely charge you interest because you have a lower credit rating and less fame than Warren Buffett. The interest rate each borrower faces, based on their creditworthiness, is called the required rate of return for creditors. Under the same conditions, the cost of poverty is much higher for the poor than for the rich. Poverty inherently involves costs. - Joseph’s “just my thoughts”
To receive investment or borrow money is to use the “future” in advance. We should be cautious about using the “future” ahead of the present . The way to determine whether a transaction is favorable or unfavorable is to assess whether the time associated with it is beneficial or hostile to you. Time affects both the weak and the strong equally. This fairness is daunting. It embodies the fear that there are no exceptions to this principle. If the amount of sand (time) in both hourglasses is the same and the gravitational pull is equal, but the amount of sand falling is different, the outcome is significantly different. The fairness of time causes those who live in the future rather than the present to consume irretrievable value. The poor either do not recognize or overlook the fact that increases or decreases in wealth inevitably discriminate against those who live simultaneously. There is nothing more foolish than moving forward in time knowingly. - Joseph’s “just my thoughts”