Wednesday, October 15, 2008

Finance - So Simple a Caveman Could Do It

Finance - So Simple a Caveman Could Do It: "Imagine you live in a cave in hunter-gatherer society. Og is going to spend the day hunting. You have previously harvested some berries, lived frugally, and now have an extra handful of berries you can give Og to eat while he hunts all day. You and Og make a deal. When he returns from the hunt, he will give you two handfuls of meat. That’s debt. If instead of promising you a fixed amount of meat, you agreed that he would give you a fixed share — say half — of what he brings back to the cave, that’s equity."