4 ms·

Physics is not financial economics.

• jdmichal 11y ago
  I truly do not understand your argument. First, nothing in my comment alludes to physics, except for maybe the involvement of time, which I can assure you is very much a concept in financial economics. Second, financial economics is in no way unfamiliar with exponential growth. For instance, the compounding interest formula: p-next = p-start * (1 - rate) ^ time
  • tosseraccount 11y ago
    I'm not sure I get yours. Are you saying there is "nonexponential growth" ?
    • jdmichal 11y ago
      Of course there is non-exponential growth. Easiest counter-example is linear growth, or perhaps in the real world a steady paycheck: p-next = p-start + growth-amount * t
      • tosseraccount 11y ago
        A steady paycheck is wage growth? Indeed, I am missing something.
        • oscilloscope 11y ago
          The formula implies constant wage, not wage growth. But it can model growth in savings. An example: I save $200 per week. I have $800 saved already. How much will I have saved in 3 weeks?
        • jdmichal 11y ago
          Of course not; it's wealth growth. To be fully explicit: wealth-next = wealth-now + wages * time I am starting to think that you are being purposefully obtuse.
  • phaemon 11y ago
    I think you mean "(1 + rate)"...
    • jdmichal 11y ago
      Yes, of course. Thanks for the correction. Looks like it's too late for me to edit the original.