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Erschienen in:
2016 | OriginalPaper | Buchkapitel
Government Guarantees
verfasst von : Paul Armstrong-Taylor
Erschienen in: Debt and Distortion
Verlag: Palgrave Macmillan UK
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All investment involves risk since cash must be given up for uncertain future returns. The more uncertain these returns are, the greater the risk. Riskier projects are not necessarily worse than safer ones if they offer the prospect of higher returns. The challenge for both individual investors and the economy as a whole is to trade off risk and return in an optimal way. While minimizing risk may seem like a good idea, it will also tend to lead to lower returns and slower growth. Excessive risk, on the other hand, exacerbates economic swings by generating strong returns in good times and major losses during bad ones.