Suppose you've got a company that grows at 4% profit per year forever, and a borrowing rate of say 6% per year.
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Suppose you've got a company that grows at 4% profit per year forever, and a borrowing rate of say 6% per year. What is the value of the company (as a fraction/multiplier of its initial investment cost)? integrate(exp(-.06 * t) * exp(.04*t),t,0,inf);
that's about 50. So if you have 1B in profits this year the company is worth 50B today.
Now suppose it grows at 4% for 10 years and then immediately begins declining at 4% after that...
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Suppose you've got a company that grows at 4% profit per year forever, and a borrowing rate of say 6% per year. What is the value of the company (as a fraction/multiplier of its initial investment cost)? integrate(exp(-.06 * t) * exp(.04*t),t,0,inf);
that's about 50. So if you have 1B in profits this year the company is worth 50B today.
Now suppose it grows at 4% for 10 years and then immediately begins declining at 4% after that...
integrate(exp(-.06*t)*exp(.04*t),t,0,10) + exp(-.06*10)*exp(.04*10)*integrate(exp(-.06*t)*exp(-.04*t),t,0,inf);
that's 17.25.
So if a company claims it's gonna grow at 4% per year and people believe it, it can have say a 50 billion dollar market cap, but once people realize it'll decline 4% per year every year after 10 years... its market cap immediately goes to 17B... a 66% crash in the market.
That's an example of what our whole world is facing
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integrate(exp(-.06*t)*exp(.04*t),t,0,10) + exp(-.06*10)*exp(.04*10)*integrate(exp(-.06*t)*exp(-.04*t),t,0,inf);
that's 17.25.
So if a company claims it's gonna grow at 4% per year and people believe it, it can have say a 50 billion dollar market cap, but once people realize it'll decline 4% per year every year after 10 years... its market cap immediately goes to 17B... a 66% crash in the market.
That's an example of what our whole world is facing
Eventually people are gonna realize that most of what we've been growing at a few percent per year is eventually going to hit a peak and then decline, maybe not forever, but decline for the forseeable future (say 100 years) and at the "moment" people realize that... the finance world will implode.
Fascism exists today because the finance/capitalist class already knows this.
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Eventually people are gonna realize that most of what we've been growing at a few percent per year is eventually going to hit a peak and then decline, maybe not forever, but decline for the forseeable future (say 100 years) and at the "moment" people realize that... the finance world will implode.
Fascism exists today because the finance/capitalist class already knows this.
@dlakelan The thing is, more and more "money" is just funny money markers of power, not actually value. It's not like tech companies actually PRODUCE trillions in value. That's just how billionaires keep score. So it can keep increasing forever, because the actual underlying values don't matter. Just keep inflation machines going.
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@dlakelan The thing is, more and more "money" is just funny money markers of power, not actually value. It's not like tech companies actually PRODUCE trillions in value. That's just how billionaires keep score. So it can keep increasing forever, because the actual underlying values don't matter. Just keep inflation machines going.
You can goof with the dollars themselves to make the pure finance issues related to loan contracts work out, but you can't goof with the reality. If you inflate the currency to make the company still worth $50B, then you probably also make a $17 lunch for two into a $50 lunch for two and you make a $50k/yr job able to buy what a $17k/yr job could buy before.
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You can goof with the dollars themselves to make the pure finance issues related to loan contracts work out, but you can't goof with the reality. If you inflate the currency to make the company still worth $50B, then you probably also make a $17 lunch for two into a $50 lunch for two and you make a $50k/yr job able to buy what a $17k/yr job could buy before.
@dlakelan Oh sure. I'm just saying dollars and productivity and wages have gotten all fucked up ever since Reagan
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