
5000 Years of Interest Rates - okfine
http://www.businessinsider.com/chart-5000-years-of-interest-rates-2015-9
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koliber
Interesting thought exercise:

If you took $1 in year zero, and invested it in an interest-bearing instrument
which yielded 2% annually, you would have $213,474,546,813,934,272 today. This
does not take inflation into account :).

No interest-paying instrument survived that long. It almost makes you think
that period devaluations are a must-have.

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euyyn
> you would have $213,474,546,813,934,272 today

That's only assuming zero risk. An investment with risk so low to survive two
millennia can safely yield 0%.

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koliber
Exactly the point I am aiming for. Gradual inflation and catastrophic
devaluations are two things that prevented this from happening.

~~~
facepalm
The entity that owes you the money could simply die. Not that catastrophic
(for the entity, yes, but I mean no global catastrophe is necessary).

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ukoki
Putting your money in someone else's hands was probably a lot riskier in those
days, and that is priced into the interest rate. If there's a real chance a
passing army or crooked king might walk in and take your money, you need to be
better compensated.

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jeffdavis
Except the risk is relative. What else are you going to do with your money?
What government is backing the money?

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iwwr
If the money is a precious metal (gold or silver) then there doesn't need any
backing.

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jsprogrammer
So, where can I borrow for 0-0.25%? Shouldn't this be standardized by the
entity capable of receiving a loan at the given rate?

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hacknat
I translated some of the Amarna texts in College. One of them was a loan with
70% interest. I kept thinking I had mistranslated, but I was correct.

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gcb0
from the article one might conclude the rate is "naturally" 20%, and on
artificially inflated environments (eg Roman empire, big wars' aftermath) it
gets lower than 2%

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kijin
The "natural" interest rate is whatever rational people expect the risk to be,
plus whatever profits they can add on top of that without losing too much
business to a competitor.

In societies without good statistics and calculators, that could just as well
have been 10% risk + 10% profits, or some other combination of round numbers.
If you're unsure what the exact numbers are, better err on the side of making
more money.

Better information, more efficient markets, and computers can make
calculations more precise, so I don't think there's any more need to use round
numbers anymore, even without government intervention.

~~~
gcb0
i meant to write "normal" in the quotes. as in the normal line thru time

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techbio
Terrible, terrible arrangement of ads alongside, and hilarious chart in
article graphic.

Read this instead.

[[http://www.amazon.com/Debt-The-
First-000-Years/dp/1612191290](http://www.amazon.com/Debt-The-
First-000-Years/dp/1612191290)]

~~~
madawan
It's a great audiobook too.

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cryogospel
the generation of americans that were in their earning prime years during the
late 70s and the 80s were the lucky ones...and their kids are lucky, too.
Those earners in that time frame were able to stash their earnings into nearly
risk-free certificates, which over the years increased and doubled and doubled
again. And now their children are inheriting that money.

We may never see the like of that financial boon again, at least not here in
america.

Economic growth here in america now depends on population growth. And since
americans are not having many children, the establishment is looking to bring
in people from outside in order to obtain growth. However, some americans
don't want this. It is the establishment vs the american majority on whether
america will return to growth via population importation or whether we will go
the way of japan. This is the new war.

~~~
pmiller2
That's completely untrue. In the late 1970s and early 1980s, we also had
crippling inflation to go along with those high interest rates.

~~~
marincounty
Yea, the inflation in the 70's really affected my adult life. I remember
saving up for a toy, and going to the store and it went up in price. I didn't
understand, but later in life I found myself buying stuff I might need just
because it was a good price.

I got some money in the 90's and was going to buy a Harley. I was going to
ride across the United States. I kept telling myself, the minute I really see
inflation kicking in, I'll buy the bike. Well, I never bought the bike, but it
wasen't because of inflation.

