There was a time several years ago, when my fellow passengers in
the Mumbai local trains raised an eyebrow at my reading a
financial newspaper. Today, macro-economic indicators have
become the subject matter of dining table conversations. Knowing
that I am a teacher first, readers write to me asking for
explanations. Since interest rates are in the news, I thought it
may be useful to understand the debate regarding interest rate
and what it means to investors. Interest rate is the price that
a borrower pays a lender for using the latter's money for a
specific period of time. Assume you have 100 today and can use
it to buy something. Instead, you choose to lend it so that
someone else can buy what he needs. He can return the money to
you, say, a year later . At that time, you should be able to buy
what you had postponed. The interest you receive on your lending
should compensate you for the change in prices of things you
would buy. The market for money is not defined by this straight-
line flow of funds from th