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from the article one might conclude the rate is "naturally" 20%, and on artificially inflated environments (eg Roman empire, big wars' aftermath) it gets lower
by gcb0 11y ago
from the article one might conclude the rate is "naturally" 20%, and on artificially inflated environments (eg Roman empire, big wars' aftermath) it gets lower than 2%
- kijin 11y agoThe "natural" interest rate is whatever rational people expect the risk to be, plus whatever profits they can add on top of that without losing too much business to a competitor. In societies without good statistics and calculators, that could just as well have been 10% risk + 10% profits, or some other combination of round numbers. If you're unsure what the exact numbers are, better err on the side of making more money. Better information, more efficient markets, and computers can make calculations more precise, so I don't think there's any more need to use round numbers anymore, even without government intervention.
- gcb0 11y agoi meant to write "normal" in the quotes. as in the normal line thru time