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Interest Is Eternal
Most businesses either have to keep up with the times forever or can't grow big. But as long as there are people there is production, and as long as there is production there is interest — lending is a business that can last for generations, with no ceiling.
1. What business can make money "forever"?
What business makes the most money? What business can keep making money over the long run? Go one step further: what business can make money for generations — or, put another way, "forever"?
2. Add the word "forever," and 99% of choices fall apart
Warren Buffett once said, "Our favorite holding period is forever." What was he really getting at?
Once you add the word "forever," you find that 99% of choices no longer hold up.
Take running a restaurant. It's a business, but it's hard to imagine one family running restaurants generation after generation, isn't it?
3. Keeping up is hard; not keeping up means staying small
Most business models share one problem: they need constant innovation, and they have to keep up with the times, year after year.
And businesses that don't need to keep up with the times are limited in scale. They can't grow big.
The oldest company in the world, for example, is in Japan. It's called Kongō Gumi, it has existed for more than 1,400 years, and it specializes in building temples. That's a very long time — but its scale really is limited.
So it is extremely hard for a business model to keep up with the times; and if it doesn't, it can't get big.
4. Interest is eternal
Now put this together with what the earlier posts covered.
First, money is the most fundamental, most flexible means of production, so it should be put to work producing. Once it's put to work, there's interest to compensate for the opportunity cost and the cost of trust.
Next, as long as there are people, there will be production. Production needs means of production, and demand for means of production creates interest. So interest can never be abolished.
That is what we mean by interest is eternal.
5. A business for generations
Combine that with what we just said. When we search for a business that can be carried on for generations, take one small step further and you reach a simple conclusion:
Lending money for interest is a business that will certainly last, and it doesn't really need to "keep up with the times."
Yet in fact, this business model keeps up with the times remarkably well. Let's set that aside for now; we'll come back to it later.
Most important of all, it has no ceiling, and in modern society it has many advantages.
The word "lending" has been demonized in all kinds of books and novels. So, just as before, in the next post we'll break with tradition once again and rethink what lending really is.