I continue to read Thomas Sowell's Basic Economics, and it's extremely interesting. I do find that I already know much of what's in the book, but how he says it is so clear and his examples so illustrative, it really solidifies what I know about economics. There are still areas that I'm learning, and I don't doubt that the bigger knowledge payout will come when I read Sowell's follow-up book to this, Applied Economics.
The book review, however, will come later when I'm done. In the meantime, an almost off-hand fact I learned from the book already is worth mentioning. It seems that in the early days of credit cards, there were millions in New York City who had them before the large department stores would accept them. Obviously, that's changed and the department stores have even gotten in to the act with their own credit cards. What I hadn't realized was how a large enough chain of stores supporting it's own credit card business can mean they are making money from the interest they earn off those loans as well or even better than their main line of business.
The examples Sowell uses is that in 2003 Sears made half its money from credit cards, while Circuit City made all its profit from its credit cards while losing $17 million in consumer electronics sales. It seems that it should be a basic business tenet to think about new ways for the business to make money that might be less than obvious.
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