; eventually This Parkside student on 1 his tricycle lead his section of the parade before school's vend. _ Money puzzles economic experis WASHINGTON (CP) .—. ‘The way it-works with in-- terest rates — when you're looking for a bank loan or buying. on credit — ig simple. In. theory, that” is, and until recently. : Now, even the economists who made up the theory and watchedit work for beet mete or are are baffled - what's hapber and‘ credit“in the, Unjted - Statés.; They “Bay: “interest ~ nates “ought to be lower. ‘They don't really know why they're so-high — and ex- pected to go higher this summer, - ‘Double the puzzle for Cariada and other countries, whose money and lending markets depend heavily on what happens in the United: States, the world's biggest market. The theory goes like this; First,, money is.a com- modity. something like shoes or snowmobiles: Those who : have.money for sale — that is, to lend or invest: — charge a price to those who want it to spend. The price, which is the interest rate, depends on - how: much, money there is arotnd. and how.- much demand there is to borrow it. Second, the deal ‘usually | goes through such: as barks or their credit-card . affiliates, mortgage companies. They middlemen pay: the lender-investor ‘a. . price’ and charge “the ‘pocketing the difference as . * payment for. getting lenders - and. borrowers. together. This, adds. soniething. to “the interest charged. the _ Tender. _ “Third, money's present ‘price ‘also depends. on its likely value, its. buying . lender ‘wants to be sure that -the money he gets back ' from,, . the “borrower -will buy as many. , shoes or snowmobiles then ‘as il now would, «+ ° ~ So the lender tries to add * | ., enough 'to the. lending * ‘price - — ‘the ‘Interest rate — to | ->gover him against any price " inflation in the mearitime. “So: do the. banking ‘mid-- - dlemen ‘in, the deal, . n together, these forces should” produee “a rational ' borrowing . ‘price, " even allowing for inflation. ‘For. example, a falr basic" ‘price for a@ logis used to be: ~~ regarded as about two or . three'per cent a year -- say, $00 for a loan of $1,000, in- ‘eluding a cut’for the mid- diemaii. That’s the so-called Mpéhi’ of -‘‘true” interest - borrower-spender more,. *. ‘power, in the future. The | “theory - of © the. rate, without: ‘anything for future inflation. . The market theory SAYS | ‘that if there. are’ more lenders than borrowers, the ptice of money as a com- modity falls because supply exceeds: demand. In that case, though, more people would seek the -cut-price jeans. - This increases for. money Ppinoney 9 ipo ene guanine iad mt ~ And vice-versa, says,‘ the: “Self. carrécting” money market. Now, add the allowance. for inflation.” In the United States, Tecent experience says this. * should be no more thai” about seven. or. eight per cent a year. That woud’ dictate a total loan charge ‘ of:10 or 11 per cent to cover - the ‘lender, the middleman — ‘and'inflation — say a price of $110 on that” $1,600 ‘ borrowing example. “In. Canada, where’ in- flation is worse, the rational; market: rate ‘works out to about 15 per cent or $150 on the same Joan. ° But the prime rate, a bellwether bank-loan price that. governs other rates, . “was 16.5 per cent in the ~ United States at the start of the week,’ or $165 on. the $1,000-Toan example. The comparable rate is 18.25 per ~ cent in Canada, or $182.50. “Count ’ba‘rridre for' a home * grtytge loan — as much - as 20 per’ cent for a measly" term of one year. And much more ona credit-card - purchase, 28 per cent. That : means paying about as much in.a month as used to _be considered fair for a ' year. Even the .Canadian Kae govermnent is paying 19. 5: percent to citizens who lend — it money by buying Canada Savings Bonds. That indicates lenders are hedging for more inflation, and how.“ And, bewilderingly, at a_ time ‘when the outlook i is for less depressing ‘less’ employment,’ _ represent, _ picking up part of the cost of - under the impact of Tecession —less production, less inflation spending, less borrowing. . What's going on? Nobody’s sure. But economic ideas borrawed by governments have made the simple old market ideas obsolete. That. goes as ‘much for. pays political lip service to market freedom, as for those who acknowledge that gavernment should " goverittients "sich?" ds" Ronald Reagan's, which’ grant toa factory’ to keep it going. -- Such welfare, politically : ” used” "only: to cherak the. “ arrivalot a direct heir to the: _ throne. Se te ye A broadly smiling Queen - Elizabeth, wearing - “a: lavender ‘coat, acknowledged cheers: from ’ the hospital for a first look at her grandson. Charles greeted her ‘in the doorway with 4 kiss on the cheek. After a. 20-minute visit, . the Queen Stepped outside ‘again ‘and shook hands with ” Dr.. George Pinker, . the : «poyal ‘surgeor-gynecologist who delivered the. baby,. before. leaving for - Buckingham ‘Palace. Diana also received visits from her parents, the ath - Earl Spencer and Frances _ Shand-Kydd,and ber ‘sister, hard, ‘to Withdraw, has meant, in recent years that - all” western governments . are spending more than they collect in taxes, especially | recession.. They borrow extensively — in effect.it’s the people This _tends “to. increase . demand for money. and manipulate the market for the greater good of the. public, such’ as Pierre Trudeau’s. : - For one thing, during the last 35 years, mast govern- _ ments have got heavily into- ~~--spending to help the people ~~: industries. they That ‘and ° a family illness through ‘health care or providing a .. F resh_ "Fruit and. "Vegetables! ” -TRLR SERVICE ~ ho Available in ‘case lot or broken. cases | “Phone a 020° 8 Free Delivery Terrace- Thornhill. , Monday— Wednesday-=- a Feriday means" lenders can charge more for what they lend. © “Further, jn the last seven” “years or ‘80, most govern- ments. havi See . page 8 in time of | piereyon wow : " borrowing’ from: themselves": — to get what they need. o adopted a so- called monetarist economic ° -— bady—Jane—Fellowes;—24:—]- . Diana’s parents “were divorced when’ she was a child, -“She looks radiant, ab- grandson is everything his father said he was last night Shand-Kydd after her 30- minute visit. : Telegrams, flowers and bouquets “-gelutely” radiant, and: the~ — a lovely baby," said . from world ; sent amessageto the’ ‘coupl “saying: “Canadians: “rejoice =: m, ao with’ ‘you. ‘on: the ‘happy. ote. “casion ‘of the: birth, of* your son. " : . | “May? Health: and his’ -‘thearttelt congratulations" to ‘the’ royal couple and wished the . baby “health, happiness, - wisdom and love.” Buckingham Palace said. more than 1,00 _bresents _ are doing extremely well.” hap- . ° piness ill all the aay 78 of his the crowd as she arrived-at- life.” * President Reagan offered. J6, Beni the -princess was: ‘determined to reply to. each, Bere ‘séeretarial ‘help. has been jaken on the couple - to deal with the deluge of - good wishes," said-a palace : spokesman. * Buckingham Palace ‘said more. than’ 1,000 presents ‘have poured in since thé birth “Monday” night,” and” that “both mother and child Now AVAILABLE Birchwood - Apartments .. | Adult Oriented © —2. bedroom Stites | —Close to downtown Phone TERRACE REALTY. . LTD. L 4635 Lazelle Ave. 635-4422 it. ere / 638-0371 FD ye Se Nationwide Relocation Service ‘We have a number of repossessed mobile homes for sale. A unique” opportunity for: a good bargain: ” _ ’ Prices ranging from 4 000 to 1 0, 000. “Come | in and enquire _ for details. AYE be w 4 Gordon & Anderson will be closed all day. Wednesday, | June 23rd to reprice all i yearemle __merchandise left i in stock. for_ ~ the-final 30 hours of the. ‘Store Closing Sale.