It's actually a useful mindset to have. The truth is that most of the times we are offered a chance to make (or save) money without effort there is a catch. Mark Knopfler's legendry hit Money for Nothing was ironic.
But those of us with that economist's mindset also miss out on the much rarer, absolutely genuine opportunities to get money for nothing that do exist, sometimes right under our noses.
One of them is available right now, under the noses of Australians with mortgages. It isn't $20 on the footpath; it is the opportunity to save literally tens of thousands of dollars, as good as risk-free.
Unusually, at the moment fully featured three-year fixed-rate mortgages are cheaper than fully featured variable-rate mortgages...
The Commonwealth Bank, for example, advertises its three-year fixed-rate mortgage at 6.79 per cent. Its standard variable rate is 7.32 per cent, often discounted towards 6.81 per cent.
It should only make sense for a bank to offer a cheaper fixed-rate mortgage than a variable one if it expects the variable rate to fall. But the Commonwealth Bank, among others, expects the variable rate to rise. Its forecast is for an increase in the Reserve Bank-controlled variable interest rate within the next few months. None of the bank economists surveyed by Australian Associated Press last month expected the variable rate to fall.
So unless rates turn down quite dramatically in the years beyond the banks' forecasting horizons, switching from a variable-rate to a fixed-rate mortgage seems an extraordinarily attractive deal. Usually fixed rates are a bad deal.
The economist Nicholas Gruen has examined what would have happened to people who took out a three-year fixed-rate rather than a variable-rate mortgage for each month during the 1990s. He finds that 86 per cent of the time that decision would have cost the mortgage-holders money. They would have ended up paying more.
Banks build an extra profit margin into their fixed-rate mortgages. They do it partly because they can (it is very hard for ordinary customers to work out whether they are being overcharged) and partly because their customers are prepared to pay more for the certainty of fixed monthly repayments.
In his role as the head of the discount mortgage broker Peach Home Loans, Gruen had been advising his customers to stay away from fixed-rate products. Economic theory told him that the rate would be set at about the best guess of the future variable rates plus a profit margin.
Then he noticed something that unnerved him - the fixed rates were falling lower than made forecasting sense. As he put it in his newsletter to clients: the fixed rate no longer reflects the best expectation of future rates.
Since sharing this epiphany with his clients his business has changed direction. A year ago he was steering only 10 per cent of his clients into fixed-rate loans. Now it's 35 per cent.
He is not alone. Australia's largest mortgage wholesaler, AFG, is now putting one in five of its clients into fixed-rate mortgages. A year ago it was one in seven.
Surely there has to be some sort of catch. It could be that we are about to head into an unforseen economic downturn - even a recession - which will force the Reserve Bank to cut variable interest rates a year or so down the track. There's a lot of talk about this in the United States, which also has fixed rates that are lower than variable ones - a so-called "inverted yield curve". Professor James Smith of the University of North Carolina has several times been recognised as that nation's most accurate economic forecaster. He says an inverted yield curve has preceded each of the past four US recessions. In his words: "When the curve inverts, run for the exits."
The other view, subscribed to by Gruen and also by the new head of the US Federal Reserve, Ben Bernanke, is that these are indeed unusual times. The world is awash with excess savings, much of it from Asia, looking for a home. Bernanke calls it a global saving glut. In earlier days the money would have been invested in projects within Asia, but after the economic crisis there, those opportunities dried up. It has come flooding instead into countries such as the US and Australia which appear to have good prospects, allowing us to borrow incredibly easily. (And allowing Australia to clock up the near-record $2.47 billion monthly trade deficit for November revealed yesterday.)
When you borrow from an Australian bank or mortgage provider these days there is a high chance the money ultimately comes from a lender in Japan, China or the Middle East. So much of this foreign money is washing in to Australia that it appears to have landed unevenly. It is available to Australian financial institutions more cheaply for three-year terms than it is for immediate repayment.
For once, a low three-year fixed mortgage rate might signal nothing whatsoever about the future course of the variable rate. It might signal a genuine bargain - the unlikely equivalent of a $20 note lying on the ground.
But it mightn't last. As they become more popular, the price of fixed three-year mortgages is climbing. The Cannex research service reports that the Adelaide Bank is still offering a fully featured fixed three-year loan for 6.55 per cent. But that offer is about to end.
The notes on the footpath are being picked up.
