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

I wrote:
>I don't see that you've offered any reasons to think that the time
>itself is important, beyond the uncertainty that usually goes with it.

Perry writes:
>If the rate of return is very uncertain, a short investment may be
>worth a "gamble", since at worst you are out within a short time, but
>a long one is simply too hard to figure out -- there will be no exit
>strategy for the investor. ...
>Long time scales have a synergistic bad effect -- without a way
>to quantify the likely rate of return, we might as well have a low or
>nonexistant rate of return if the investment is far enough off. If you
>are risking the money for two years, that isn't a big deal, but it is
>different if you are risking it for three hundred.

I've read this several times, but still only see the claim repeated.
I don't see any reasons I understand.

Robin Hanson
hanson@econ.berkeley.edu http://hanson.berkeley.edu/
RWJF Health Policy Scholar, Sch. of Public Health 510-643-1884
140 Warren Hall, UC Berkeley, CA 94720-7360 FAX: 510-643-8614
Received on Wed Mar 25 19:37:41 1998