Re: poly: Re: Why interest rates may stay low

In a message dated 3/24/98 10:25:30 PM, phoenix@ugcs.caltech.edu wrote:

>That's aggregate growth of the economy; should that be synonymous with rate
of
>return?

No. The aggregate growth of the economy's assets *constrains* the value
of any particular asset in the very long term. If a given asset is currently
1% of the economy's assets, it can't grow by more than a factor of 100 unless
the economy's assets as a whole grow. Normally, of course, this is a dud
issue; the economy just grows along with the assets. Sometimes, with things
like real estate, you can view the productive capability of the economy as
a limitation on the potential value of the asset. When we start talking
about using every scrap of matter around, however, total-economy limits count.

>Bugger. And of course we think you can't go to the entire galaxy in 1000
>years. More realistic for us might be colonizing the solar system: a 0.7%
>growth rate (starting from Earth's economy) will overrun the solar system in
>5000 years (you'd be using the mass of Jupiter and 10 times the output of the
>Sun); 2.8% growth would drop that to 1250 years, or rather less.

With the miracle of compound interest, even the whole universe doesn't look
so big.
Received on Wed Mar 25 07:10:04 1998