4 ms·
Interesting thought exercise: If you took $1 in year zero, and invested it in an interest-bearing instrument which yielded 2% annually, you would have $213,474
by koliber 11y ago
Interesting thought exercise:
If you took $1 in year zero, and invested it in an interest-bearing instrument which yielded 2% annually, you would have $213,474,546,813,934,272 today. This does not take inflation into account :).
No interest-paying instrument survived that long. It almost makes you think that period devaluations are a must-have.
- euyyn 11y ago> you would have $213,474,546,813,934,272 today That's only assuming zero risk. An investment with risk so low to survive two millennia can safely yield 0%.
- twcooper 11y agoI think you missed the section in Algebra where they teach the time value of money. Nobody is going to give up money today for the same amount at a future date.
- titzer 11y agoDepends on if it is possible to lose that money in the mean time. If there are lots of robbers in your neighborhood, it might make sense not to have a lot of cash under your mattress.
- twcooper 11y agoOkay, but that's not what he said: >An investment with risk so low to survive two millennia can safely yield 0%. If risk-free assets garnered 0% interest rates, then the U.S. Treasury would not have to pay a real rate of return on its debt.
- koliber 11y agoExactly the point I am aiming for. Gradual inflation and catastrophic devaluations are two things that prevented this from happening.
- facepalm 11y agoThe entity that owes you the money could simply die. Not that catastrophic (for the entity, yes, but I mean no global catastrophe is necessary).
- markild 11y agoIncidentally, what you would get for $1 in year zero would differ hugely from what you'd get today.
- Raphael 11y agoDon't the years start at one?
- koliber 11y agoI could have started at -1, -2, or 5 to illustrate the point. It's the order of magnitude that is interesting, not the nitpicking of when we should start counting years.
- reycharles 11y agoYes, year zero is not a thing in the usual calendar. https://en.wikipedia.org/wiki/0_(year) https://en.wikipedia.org/wiki/0_(year)
- Marazan 11y agoThat's only if you were able to reinvest the interest. In reality if you have a 2% yielding bond taken out in year zero you'd have $40.30 of accrued interest plus the $1 principal of the bond.
- koliber 11y agoYou are correct. While I did not mention it, I arrived at this figure by compounding annually.
- nroets 11y agoNow let's apply the same result to demographics: Suppose there was a small clan in the year zero and their culture and technology allowed their population to grow at an average annual rate of 2%. Then the earth would be overpopulated long ago. Suddenly many of the bad things we are trying so hard to prevent seems not so bad anymore: disease, war, hunger and restrictions on immigration.
- cup 11y agoExcept people die after x years and the life expectancy over the first hundred generations would be miserable.
- nroets 11y agoSay the initial clan consisted of 25 couples, aged 1, 2, 3, ... to 25 years old. And people die after 25 years. And each couple between 18 and 25 years have one baby per year. Then the population will quadruple in less than 25 years. That's more than 5% population growth. So, people dying of old age does not limit population growth rate to less than 2%.
- Altay- 11y agoAny interest bearing instrument includes risk. To put it another way: On a long enough timeline the survival rate for everyone [or any investment] drops to zero.