| What is Interest rate?
It is explained that currency has value with economic transaction. Next,
how to describe change of value of the currency is needed.
If currency used in economic transaction as ¥100 is used as ¥110
in next transaction, value of the currency is increased 10%. Change ratio
of value of the currency is called [interest rate].
For example, when salary in exchange for labor is received via direct
deposit, it is banked as deposit. Interest is paid because of deposit rate.
So, we use salary as amount of money bigger than salary itself in economic
transaction.
When full amount of salary is used in this way, value of salary is increased
by interest.
In this example, interest rate is defined as [Change ratio of salary.].
However, the interest rate is decided when full amount of salary is used
in economic transaction. Before then, interest rate can’t be decided because
economic value doesn’t necessarily occur.
Interest rate can be decided after economic transaction. Therefore, interest
rate can only be decided after the fact. So, present deposit system in
which interest rate is decided before the fact is not right system.
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