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To: Win-Lose-Draw who wrote (899)5/7/2003 11:26:22 PM
From: TobagoJack  Read Replies (1) | Respond to of 4909
 
Hi WLD, <<doesn't look like you read what i wrote>>

I did too, quickly, in cursory fashion.

It is just that zero inflation under central banking regime put in place by fiat as unwittingly sponsored by electorate mob is not likely, and so zero real rate of return is not wise.

<<zero-risk return rate should be less than zero since reinvestment is the lifeblood of capitalism and money that is being hoarded should be penalized ... it is not totally unreasonable>>

OTOH, Ok, you be sure to enjoy that regime of monetary affairs when it succeeds in replacing what worked before;0)

<<i'm not making that case>> ... shouldn't even whisper or think it, for it is bad for constitution, as in health:0)

Chugs, Jay



To: Win-Lose-Draw who wrote (899)5/8/2003 1:58:33 AM
From: gpowell  Respond to of 4909
 
REAL rate of return for zero risk should be zero

I might disagree with that.

Real Interest rates reflect the preference between current and future consumption. Since capital is embodied labor – one could deploy the labor today and reap the benefits today – or one could wait and deploy the labor in the future. Therefore, capital should earn a real interest rate equal to the relative preference between its current and future use.

This is before risk premiums are applied