If you owe your bank manager a thousand pounds, you are at his mercy. If you owe him a million pounds, he is at your mercy.
Interpretation
The level of debt you have to someone can determine who holds the power in a relationship.
This quote by John Maynard Keynes highlights the dynamics of power in financial relationships. It suggests that owing a smaller amount puts you in a vulnerable position, while being indebted at a larger scale can shift the balance of power, indicating that the one who owes more might have more leverage in negotiations or decisions.
In practice
This quote could be used in a financial literacy class to explain the implications of debt.
As time goes on, I get more and more convinced that the right method of investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes.
The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is generally understood. Indeed, the world is ruled by little else.
The disruptive powers of excessive national fecundity may have played a greater part in bursting the bonds of convention than either the power of ideas or the errors of autocracy.
We will not have any more crashes in our time.
This long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.
The book, as it stands, seems to me to be one of the most frightful muddles I have ever read, with scarcely a sound proposition in it beginning with page 45 [Hayek provided historical background up to page 45; after that came his theoretical model], and yet it remains a book of some interest, which is likely to leave its mark on the mind of the reader. It is an extraordinary example of how, starting with a mistake, a remorseless logician can end up in bedlam.
The Vanguard Experiment was designed to prove that mutual funds could operate independently, and do so in a manner that would directly benefit their shareholders.
When the market is just going up, up, and up, we all tend to be blind to the holes in the market. They're all papered over by the rise.
When our financial system - essentially our money managers, marketers of investment products and stockbrokers - put up zero percent of the capital and assume zero percent of the risk yet receive fully 80% of the return, something has gone terribly wrong in our financial system.
Your most expensive advice is the free advice you receive from your financially struggling friends and relatives.
The miracle of compounding returns has been overwhelmed by the tyranny of compounding costs.
Our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from the active to the patient.
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