[ExI] Banking, corporations, and rights (Re: Serfdom and libertarian critiques)
anders at aleph.se
Thu Mar 3 00:39:53 UTC 2011
One reason to have compound interest is to get humans to care about
investing in the future.
We tend to discount the future, reducing future values by ~5% per year
into the future. This is likely set by risk and death rates, and was
much higher in the past (also, we have a few hyperbolic discounting
issues, but lets ignore them here). Now, if I have some resources and
get offered a linear growth of them if I invest them somewhere, that
means that the offer is not going to be very tempting beyond a very
short investment horizon. The only way to tempt me to invest my
resources indefinitely long-term is to offer compound interest.
Future of Humanity Institute
Philosophy Faculty of Oxford University
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