Interest Rates Are The Inverse Of A Curfew

During their latest episode of the VALUE: After Hours Podcast, Brewster, Taylor, and Carlisle discuss Interest Rates Are The Inverse Of A Curfew. Here’s an excerpt from the episode:

Jake: I was going to share Tom Gayner gave a talk and had a pretty good analogy that I hadn’t heard before. Maybe you guys have. But he said that interest rates, whatever they’re set at, is a lot like the inverse of a curfew. So, rates are really high. He made the analogy, when him and his wife bought their first house in the early 80s, he had a 15% interest rate and he said once you made your payments, there wasn’t a whole lot of money left over really to do anything.

Tobias: [laughs]

Jake: He said those high rates are like a 06:00 PM curfew. It’s really hard to get into trouble when you work and then you get off and you have to be in the house by 06:00 PM. You just go home and go to bed, basically.

Tobias: [laughs]

Jake: Whereas really low rates, he said it’s an equivalent of like a 02:00 AM curfew for a 16-year-old boy and you’re giving him alcohol and a fast car and putting attractive girls in that car. Of course, he’s going to end up–

Tobias: [laughs]

Jake: It’s a recipe for mistakes. There’s going to be some problems that happen with that. I hadn’t heard that one before. I thought it was a nice framing of it.

Tobias: Yeah, it’s a good analogy. Nothing good happens after midnight. I conducted an extensive survey over decades. I think I can confirm that’s the case.

Jake: [laughs] Rigorous.

Tobias: Very rigorous.

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