Thursday, June 02, 2011

Being too literal-minded

If genius is being comical and melancholic simultaneously, Tim Harford defines:
“Dad, we need a savings account paying more than 25 per cent interest. Is there one?”

“Not at the moment, dear.”

“Anything close?”

“No. Actually, the banks are grumbling that they can’t begin to compete with the 0.5 per cent interest, after tax and inflation, on offer from the government.”

“I’m not sure what your demonstration of compound interest is supposed to be teaching me, Dad. Is there any way to get a 10 per cent return?”

“You can take more risks. But the thing about this savings bond is it’s backed by the government and is therefore completely safe.”

“I see. Is that because governments always pay back their debts?”

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