Rebirth 79: I opened a bank in the United States

Chapter 219 We Still Make Money

"Don't worry, I know what you're worried about. Think we're losing money, don't you?"

Carter smiled lightly, and after throwing a cigarette to Goodman, he motioned for him to sit down first.Don't be so impatient.
"From the current point of view, my interest rate is indeed a loss. But isn't the situation very clear now? Why did the Fed raise interest rates? Or, what will happen after he keeps raising interest rates like this? What will result?"

As mentioned earlier, Goodman also understands Carter's logic on the impact of the Fed's interest rate hike.It’s just that understanding is understanding, but no matter how you think about it, Goodman feels that this is a completely unreliable thing.

So, Carter heard Goodman mutter with a little resentment:
"It will cause us to release loans, not only not making money, but also losing money!"

"Losses are just a matter of the past few years. Wait until the inflation rate comes down in two years, and then look again! You know, our contracts are ten, fifteen, or even twenty years long!"

"If you lose a little in the first two years, you will lose a little. After the interest rate returns to normal levels in the future, our interest rate, right? In a normal year, can you sign such a high interest rate contract?!"

Carter spread his hands, his thinking was extremely clear.

In normal years, the interest rate of long-term real estate loans hardly exceeds 4.4%, and my 12% interest rate has almost tripled.Just looking at the past few years, it seems to be losing one percent, two percent every year.
But what about after all these years?

When the interest rate of 4.4% in the same period came, a large number of 12% interest rate contracts.
"Goodman, you think so! Isn't the latest inflation rate now 12.9%? There are still half a year until the end of the year, and I think it will rise to 13.5%! How many loans have we put out now?"

"680 million, it is estimated that tomorrow, no, it will break [-] million in the afternoon! You don't know, the number of people who have taken out loans has increased in the past few days, and I am worried that the [-] million by then, even if the bank's original Money, this loan is not enough.”

Goodman is still depressed. He always feels that the more he borrows, the more pain he feels.I can't feel Carter's joy at all.
"The current 680 million is actually enough to open 44 stores. There is not much left to reach your goal of 50 stores. Let's stop when the demand for opening [-] stores is met!"

"No, no, no, we can't stop! Fifty stores can't expand much. Really, Goodman, you believe me, the more loans you lend, the greater the profit!"

Hearing that Goodman intends to shrink the loan, Carter waved his hands in fright.How can this kind of opportunity to pluck wool be stopped? !

"Listen to me, let's do the math. Let's take 1000 million as an example. Suppose the inflation rate reaches 13.5% from this year to the end of the year, and it will rise to 14% next year. It will continue to rise in the next year to 15%, and then it will start to stabilize."

"In this case, after three years, 1488 million will have the same purchasing power as our current 1000 million. Isn't that right?"

"uh-huh."

Goodman snorted and didn't speak, as he agreed with Carter's point of view.

"Okay, let's make a comparison. Do you think it is 1488 million, which is released at the top interest rate of 4.4% for ten years, and the profit is higher, or 1000 million, which is released at 12%, and the profit is higher?"

"First calculate the book income in ten years. 1000 million, the total income in ten years will be 1200 million. Of course, this is not the case of reducing the principal. The theoretical total income is 1488 million."

"The factor of inflation is now added. The 1000 million is our current lending model. The first three years are 13.5%, 14%, and 15% per year, and the next seven years are calculated at about 5%. After ten years, the The total inflation is about 109%. That is, the actual income of 1200 million, if it is doubled, it will be calculated as 600 million.”

"Then it's 1488 million. After ten years, the total inflation will be about 62.8%, or 655 million, and the actual income will only be 402 million. So, Goodman, 12% annual interest is not low! If you increase it again, no People who dare to borrow money are at a loss!"

"The question is, why are you so sure that high inflation will only last for three years? If in the future."

The theoretical model, everyone understands.Goodman is naturally aware that the actual unit profitability of the current loan model is definitely not as good as that of low-interest loans in normal years.But as long as the scale is up, it will be like small profits but quick turnover, and the total profit in the end will definitely not be weak.

But if this inflation rate does not last for only a few years as Carter thought, if it continues, let alone 10 years, even if it lasts for about five years, they will not only not make money, but will lose money. money situation.

"Why else? With the current interest rate, how many people dare to borrow money? Goodman, not every bank dares to do what I do! Not every bank has our kind of financial support!"

After a trip to New York, Carter is now particularly confident.Not to mention Peter Lynch, just for the Quantum Fund, the account splitting day is almost here!At that time, at least a few million dollars will come into the account, and the funds will be abundant.

Don't be afraid of such a small loss!

"Combined with the rise in deposit interest rates, on the one hand, banks are constantly withdrawing money from people's pockets into their own vaults, and on the other hand, high loan interest rates make it impossible for the money in these vaults to go out. Under the circumstances, the consumption power in the market will inevitably drop sharply.”

"The consumption power of the market is insufficient, and the goods produced by the factory cannot be sold. How can it continue to raise prices?! Besides, how many years has it been, and the price has been rising endlessly, and it is time to end Already!"

"The current situation is just the darkness before dawn. Don't be intimidated by the darkness at this time"

"Hey, all right. Since you're so sure of your judgment, what else can I say?"

Goodman sighed and got along with Carter for a year.He also understood the personality of this little boss. When he was undecided, it was easy to persuade him, but once he made up his mind, he would not be able to pull back eight cows.
"The future belongs to you young people after all. Perhaps your decision is the most correct, especially in the hearts of the people. By the way, I suddenly remembered that the last time you communicated with Mr. Benjamin about restricting naturalization, you still remember?"

"of course I remember!"

"The regulations have not yet been issued, but more and more people have poured into Douglas and Pearson recently! I guess that in addition to the job problem, our low interest rate during the same period is also a core factor that attracts them."

Goodman scooped up his messy hair due to recent disturbances and carelessness:

"Last night, I heard my neighbor Mrs. Brownie praised that our bank has a conscience. It is a real savings bank for citizens. I listened to it as a courtesy at the time, but now think about it, if you insist on this low interest rate , may be a blessing in disguise.”

"For example, some people have come to the bank to inquire about the land beside our road recently, asking if we can sell it. They hope to buy the land close to the outskirts of the city and use it to build houses, and then apply to become citizens of Douglas."

(End of this chapter)