[voodootrucker]

It took me a while to get it, but this all works in the opposite direction as well.

The time value of money can be negative: A dollar today can be worth more than a dollar tomorrow.

It's not pretty. When the pie is shrinking the incentives get ugly rapidly.

Let's hope this can be a "good" deleveraging, we fix metrics that don't positively correlate with non-zero-sum productivity growth, and on top of that pull the next rabbit out of the hat where we can keep exponential growth happening for another cycle (spacex, EVs, etc).

Otherwise, we'll be fighting over a shrinking pie, which is nature's way of adjusting the population to the modified carrying capacity.

[rland]

We're going to have to, at some point, stop relying on exponential growth, and move to a sustainable (i.e. 0% rate of return) environment. For the biosphere's sake that ought to happen sooner rather than later.

If we continue growing the economy at 2-3% YoY we will be extracting all energy from the Milky Way in 1000 years and applying it to the economy. Not probable!

Clearly there is some transition to the upper part of this S-curve and things need to change when we get there. I wouldn't be surprised if we already are there for most sectors.

[gruez]

>If we continue growing the economy at 2-3% YoY we will be extracting all energy from the Milky Way in 1000 years and applying it to the economy. Not probable!

gdp growth =/= energy consumption growth

Also 1.03^1000 = 6.810^12, but wolframalpha says the number of stars in the milky way is 310^11. Considering that we're nowhere close to capturing even 1% of the energy output of energy that reaches the earth, let alone all the energy that the sun emits, your estimate of 1000 years is probably off by a few orders of magnitude. Finally, if we're actually capturing all the energy of the milky way, presumably we'd be a space faring civilization and can therefore colonize other galaxies, making that a non-issue.

[vbarrielle]

> gdp growth =/= energy consumption growth

As far as data is concerned, the correlation is pretty big though: https://theshiftproject.org/wp-content/uploads/2020/05/gdp_e...

[bzbarsky]

True, but for the US, for example, energy consumption has been pretty much flat for the last 20 years, and decreasing in per-capita terms. See https://www.bloomberg.com/opinion/articles/2021-01-28/beyond...

It's interesting to see how world trends look as more and more of the world ends up in the position the US was in 20 years ago in terms of economic mix.

[teruakohatu]

> If we continue growing the economy at 2-3% YoY we will be extracting all energy from the Milky Way in 1000 years

That argument is built on the fact that we don't find efficiencies. A lot of economic growth is simply much more efficient use of resources, ie less resources and much greater return. A couple of decades ago you needed a lot of expensive copper to connect a city with phone and slow internet access. Now all you need is cheap thin plastic for gigabit+ speeds.

A computer 70 years ago was an enormous contraption made of of literally tons of expensive metal components, while a raspberry pi zero has a tiny bit of copper, resin and silicon. The latter is vastly more powerful and cheaper.

Sure, growth can't last forever, but we have a long way to go.

[johbjo]

> The time value of money can be negative

The time value is positive by definition, unless you somehow get penalized by having money in the future. Inflation and purchasing power is a separate phenomenon.

Negative interest rates is entirely artificial. Not in any way a market phenomenon.

[bananaboi]

I think you meant to say "A dollar tomorrow can be worth more than a dollar today".

[sudosysgen]

That would be positive time value.

[ahepp]

I believe it would be negative time value?

It is generally assumed that in an inflationary economy, a dollar today is worth more than a dollar tomorrow

The post above seems to talk about deflation.

It's possible we're just using a different sign convention (or perhaps I've missed something more fundamental)

[sudosysgen]

Yeah, I do think we're just using different sign conventions here, because of inflation and opportunity cost a dollar today should be worth more than a dollar tomorrow.

[chordalkeyboard]

A dollar today is worth more than a dollar tomorrow, thats why I have to give you $1.1 tomorrow in exchange for you giving me $1.0 today.

[mindvirus]

I would think a dollar today is necessarily at least as valuable than a dollar tomorrow, since a dollar today can either be a dollar tomorrow or a dollar today - i.e. it has optionality built in.

[jsweojtj]

What is a dollar worth besides what it can purchase?

Put another way, if the number of dollars is constant in your account between today and tomorrow, but you can purchase less with it, you've lost wealth.

[mindvirus]

I understand but given the OPs comment, I would think it's always the case. Given the choice between a dollar today and a dollar tomorrow, you should always choose a dollar today since you can choose not to spend it. So it's strictly better than a dollar tomorrow.

The only time I see that it wouldn't be true is if there was risk in carrying it - taxes, negative interest rates, or theft. I could see for example a tonne of gold tomorrow being more valuable than a tonne of gold today since you'd have to deal with storage and security and such.

[chordalkeyboard]

Everyone is right, there is a marginal bias so that the natural rate of interest is always positive but when storage costs and risk and fungibility/hedges/insurance are factored in the rate can be positive or negative. Like when the cost of oil was positive recently last year.