From: Ron Kean (ronkean@juno.com)
Date: Tue Apr 20 1999 - 10:34:43 MDT
On Tue, 20 Apr 1999 09:08:25 -0500 "Billy Brown" <bbrown@conemsco.com>
writes:
>Immortality would give everyone a chance to let compound interest turn
>their
>pennies into dollars, and their dollars into riches. Of course, if
>it
>becomes common for people to retire and live off their interest the
>economy
>is going to start looking pretty strange.
>
>Billy Brown, MCSE+I
>bbrown@conemsco.com
>
>
Interest rates are set by supply and demand. If almost everyone were
trying to lend substantial amounts, and almost no one creditworthy was
willing to borrow similar amounts, real interest rates for sound loans
would be extraordinarily low compared to what we are used to. Likewise
for return on capital invested in stocks.
In the economic world, immortality already exists in a sense.
Corporations, banks, foundations, endowments, perpetual trusts,
governments and other such entities are potentially immortal. Some few
of those entities which have been in operation for a century or more have
compounded their gains into enormous wealth. (Example: DuPont, GE) But
that was in an environment where safe real returns on capital were in the
range of perhaps 4% to 8% per year.
Ron Kean
.
.
.
.
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