A little story:
Once upon a time a man worked at a bakery. He was a good baker, but he was poor. One day he came up with an idea to put cinnamon in the rolls and top them with a sweet icing. He went to the owner with the idea, but he wasn't interested. The man then asked to use the ovens and other facilities. The owner agreed that for one month, he could use the ovens on Saturday if he worked for one extra hour per day and reimbursed the owner for any supplies used.
Next Saturday came and while the man was tired, he was eager to make his new cinnamon rolls. He worked all day and then on Sunday he took them to the village market to sell. People loved them. The man was charging $2.00 for these rolls and they only cost $.50 each. He sold out right away. This continued on each of the Saturdays. By the end of the month, the man had amassed $6,000 selling his rolls.
At this point the owner of the bakery came to discuss the use of the ovens. He was going to open the bakery on Saturdays and our hero couldn't use the ovens anymore. The man was unhappy. What could he do? The owner told him about a portable oven he could buy for $5,000. The man was happy again. He bought the portable oven and set up in the local part after obtaining the required permits. Now he was able to support himself just by selling these new cinnamon rolls, but he had to work every day.
Over time, he had built up quite a bit of money. People really liked those cinnamon rolls. He decided that he would use the money to buy a second portable oven. But how would he opperate both? He decided that he would hire his friend who used to work at the bakery. His friend hadn't had the idea and hadn't worked all those extra hours to earn the money for the cart, so the man only let him keep part of the profits he made. After all, it was our hero's cart, and idea. And he was buying all the supplies and aranging for the permits.
This continued for many years. Every so often when the man could afford it, he bought another cart and hired another person. Some of the people he hired were unemployed and were having trouble finding work. The money they made selling cinnamon rolls allowed them to support themselves. Eventually the man had $250,000 stuck under his matress.
One day one of his best employees came to him with an idea. He wanted to make muffins. All different flavors. The trouble was, the man had no money, and our hero had no extra ovens to lend him. So the man suggested that he could borrow the money. This time though what was needed was an actual store. It was going to cost $200,000. This was most of what the man had saved from years of long hours selling rolls and managing his business. What if this employee's idea didn't work? What if he lost all the money? Our hero was counting on that money. He was going to retire on it in a few years. If he lost it, he wouldn't be able to retire as soon. The money was safe (so the man thought) under his matress. It was risky to lend it to this employee, even though our hero thought the idea would work.
Our hero decided that he needed compensation for this risk. He would lend the money and the man would pay him back plus a little bit extra over time.
The idea worked and the employee made lots of money and employeed a dozen people. He repaid his debt and interest on time. botgh of them were happy. The employee was successful, and our hero benefitted from the risk he had taken. He had taken a quantity of the fruits of his labor, lent it to another, and had been rewarded for doing so. It wasn't a sure thing, and could have gone wrong, but our hero had taken a chance.
What if our hero hadn't lent the man the money? He wouldn't have if he hadn't been able to charge interest. He was quite content with the money under his matress and had no need to risk it with no hope of gain.
A little defense of lending, employing, borrowing and finance in general. I will continue it at need, but I realize it is getting a little long. Let me know if you think anything in this story is evil or wrong.
freedom.
