I also want 100 of that.

And of course the difference is the money that he had to spend on tax.

Interest on loans is high at present.

If our earnings are 350,000.

It just so happens we got your money, man, plus interest.

Accrued interest will be paid into your account.

So this is lending some cash.

He paid the loan with interest.

That's why we say it compounds.

Let's say they have no interest expense.

A bank lends us money at interest.

So just as a review, let's say I'm running some type of a bank and I tell you that I am offering 10 interest that compounds annually.

Interest. Weekly.

It's generating a good bit of cash, but let's say, these guys eat up interest.

During normal times in the economy, the Fed tries to control the amount of economic activity that's occuring by targeting the federal funds rate the fed funds rate.

I guess you could say non cash assets, right?

So, for an extra 20 ...

This is actually the power of compounding interest.

It can go out there, perform open market operations, and buy, usually, Treasury securities out from the general market, and what that does is it increases the amount of cash that is in circulation. which decreases the demand for cash, increases the supply, and it should lower the interest rate.

A bank says, OK, sure, I'll give you a 500,000 home equity loan, and in exchange, get 8 interest on that loan.

So 5 on 100,000 is 5,000 per year in interest.

Interest is nothing but rent.

So this little thing that I just created here, this little reconciliation between the positive 200 in income and the negative 200 of cash, it's showing how we got from this starting point in cash to this ending point.

The last area is profit itself.

That's 100 , right?

Cash only.

My mortgage actually might be something like 4,000 a month.

My share in cash. Now.

Cash.

Cash.

Number of payments per year

Well I'm paying 750,000 times 6 a year.

Six percent home loans represent the industry average now.

A mortgage rate of six percent is becoming the current industry average.

This debt was not paid off with the interest until 1947.

We all have heard of it.

So the customer is going to give you cash in the future.

We borrowed money at high interest.

Yes, exactly.

Cash, please.

Cash!

Oh, my rate right.

I'll have to take a 750,000 mortgage.

Remember, this is the annual interest rate but this is an overnight loan.

This is cash above and beyond what's needed in the cash register.