1 - if you have $100 and choose to loan it out, you no longer have access to that money for your own purposes. you might miss an opportunity to put that $100 to some good or desirous use for yourself.
2 - because there's a risk that you might not get your money back in a timely manner, or at all. the borrower might go bankrupt, or run off to another country, or die, in which case your $100 is gone. interest payments help defray this risk, and indeed that is why interest charged (or earned) is indexed to perceived risk.
interest makes sense in a couple of ways.
1 - if you have $100 and choose to loan it out, you no longer have access to that money for your own purposes. you might miss an opportunity to put that $100 to some good or desirous use for yourself.
2 - because there's a risk that you might not get your money back in a timely manner, or at all. the borrower might go bankrupt, or run off to another country, or die, in which case your $100 is gone. interest payments help defray this risk, and indeed that is why interest charged (or earned) is indexed to perceived risk.
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