Imagine going on a bike ride with a friend.
Only you were on a tandem bike. And both of you were pedaling at different frequencies.
It would be frustrating. You’d be much better off on two separate bikes, so you could pedal at your own rate.
Back in the days before banks became speculation machines, they had something called “duration mismatch.”
People would deposit their money to earn interest. And then the bank would loan out that money, to earn MORE interest.
The theory was that the bank made their money from the difference. If they paid out 2% interest on deposits, and charged 5% interest on loans, they’d pocket the 3% difference.
Only the loans (money going out) were for fixed terms. Usually long terms. Car loans are five years. Home loans are fifteen or thirty years.
But the deposits (money coming in) could be pulled out at any time.
Even if people got a CD (certificate of deposit) to get a higher interest, it was for only a year.
So the money coming IN was short term. The money going OUT was long term.
The trick was to make sure it was always in balance.
When the Great Depression happened, all the money was pulled out, and plenty of banks went out of business.
When humans do things, (or try to do things) there are always different “levels.”
Like in the short term, it feels good to eat pizza (or nachos or whatever).
In the long term, we’d rather be fit and in shape.
Kind of like a “duration mismatch” of our wants.
Often times what we want in the SHORT TERM is different than what we want in the LONG TERM.
Usually the opposite.
This is the heart of what most people call “self sabotage.”
Like two people on a bike pedaling at different speeds.
Instead of combining their efforts, they cancel each other out.
Putting in all that effort for nothing.
When you have different parts of you fighting each other, it sucks.
But there’s a way to fix it.
A way to start slowly, and improve slowly, so that EVERYBODY involved (all the different parts of you wanting things at different times) are FINALLY working together.
And just like two people pedaling together on a bike, you can get going pretty fast.