05 August 2005

future alex p. keaton?

Tonight after dinner, our not quite 3 year old went up to the playroom to fiddle with her dollhouse and playthings, though only after turning on PBS to the "Nightly Business Report."

I was sitting in the comfy chair doing some work with the laptop. After a bit Claire turns to me and asks, "Daddy, what're 'stocks'?"

I glance up to see an array of up and down arrows on the TV screen, charting today's movements on the NYSE and NASDAQ.

"Umm...well, if you want to have a business or a store or a company and you need money to help pay for making and running things, then you can get money by selling what are called 'shares' in the company." I drone on for a bit about how the value of the shares can increase if the company is doing well.

Claire replies, "Oh..." and goes back to arranging furniture on the third floor of the doll house.

"Did you understand anything I just said, sweetheart?" I ask.

"Yes."

"Really?" My eyebrows go up.

"No." I return to my work as Claire drives a doll-sized bicycle up the stairs of the doll house. I glance up after a few minutes, feeling her eyes watching me.

"Yes, Claire?"

"Daddy, what's 'interest'?" Apparently the Fed is thinking about raising rates again.

This one is a bit easier. "Well...do you remember back on Monday when Mommy took you to the bank with all the spare change?"

Claire nods. "I got a new purse," she says, referring to the token prize Mommy had won by guessing the amount of change within a dollar or thereabouts.

"Well, your money earns interest. By giving the bank your money to look after for a while, they're able to use that money to help other people who need that money. Interest is like the bank paying us a little bit for keeping our money in there so they can use it."

Claire nods, this time with more understanding.

I continue, "And when the bank lets other people use our money for a little while, that's called a 'loan' and they charge them interest." I go on to babble about interest rates, car loans, mortgages. The look of understanding fades as she returns to her dolls, arranging tiny plastic food across the porch.

After a bit Claire looks up again. "People borrow money, because, because they wanna buy stuff?"

"When they really need what they want to buy and don't have money of their own, yes, they borrow money from a bank."

She looks satisfied and ponders her toys. A small frown turns down the corners of her mouth before she looks back up at me. "Daddy, can I have a loan? I wanna buy a car."

Sigh.