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

At 03:46 PM 3/26/98 -0500, you wrote:
>> If, however, I only care about the financial return, then if I have a
>> good feeling about the investment and knew and trusted the people involved,
>
>But that's part of the point.
>In 200 years, the same people will not be involved,...
>
>> and if there was a liquid market for selling my stake later,
>
>But that is largely contingent upon an investment becoming
>"mainstream". It is very hard to make a market in extremely
>speculative securities, and thus the liquidity goes down.

You and I agree that investors are less attracted to longer term projects.
We seem to disagree about direct vs. indirect causes of this.

My claim is that the main direct cause is that all else equal there is more
uncertainty about long-term assets. It seems to me that this fact is
sufficient to explain all the other correlations you focus on, such as
less investment, lower liquidity in markets trading them, and general
skepticism about them.

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 Fri Mar 27 00:15:02 1998