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Thursday, September 8, 2011

At infinity any public company will become a bank

At infinity (or maybe just a couple of centuries later), any successful publicly listed company will willingly or unwillingly turn into a bank.

If you give any board of directors of a publicly listed company ample time, they will eventually open a bank if not turning that very company into a bank.

Simply because this is what we love to do (create wealth) and a bank is the pinnacle of a 'money-based' world. Here, on planet Earth, Money is the common denominator and practically anything can be described in money terms.

Don't get me wrong, doing all sorts of business is fun but in the business of making money, there is no better place than a bank. It's quite effortless compared to other businesses. Basically all you have to do is to borrow money on some terms and lend that same money on some other terms favorable enough for you to profit on the spread between the 2 terms.

In doing so, the first commandment of every business, the profit motive, can perpetuate.. until the day you hit the fate of the Dodo or even worse Lehman Brothers (1850-2008).

Strange world, isn't it?

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