Quote:
Originally Posted by uasish
Read some where in Net:= How simple interest can effect whenever time horizon increases.
Note: In the case of a monotonically increasing series, such as the balance of a US dollar bank account with daily compounding interest, every price is above all its predecessors. You can make a claim, then, that no matter how you measure it, the trend is always up.
However, in a larger scope, in a world in which the US dollar fluctuates in value relative to other currencies, and in which banks sometimes fail, a bank account may not actually continue to be a long-term monotonic up-trend investment.
Say we compound one penny at a three percent per year interest rate from year Zero-AD to the present. We get about $5.48 * 10^23, or around a half trillion trillion dollars. Clearly someone in those early days has a penny earning interest, per stories of money lenders in temples. That no such investment survives today indicates severe financial setbacks, from time to time, in which people and whole societies experience collapse and have to start over. Compounding interest seems to work pretty well for a few hundred years at a time.
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May be we had no banking systems then or nobody invested ...
only money lenders gave loans ...
Moreovers as the rulers and law might have changed, those money lenders or land owners might have had their properties seized/distributed.
Like zamindari system came to end here, etc .
9th August 2007, 07:17 PM
Re: Believe it or not
