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Financial History
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Interest Rates and Life-expectancy

Interest rates were 20% in Ancient Sumer & Babylon.

In those times, the average lifespan was 28-30. So you had little time to pay your loan back.

Nowadays the average person lives a least twice as long, so has much longer to repay; plus developed legal systems provide recourse to your estate's assets if you die indebted. So your lender needs less interest as borrowers are less risky.

So could lower interest rates today (irrespective of CB's/QE) be a function of longer life-expectancy - especially in rich, indebted countries?

This paper covers it in terms of recent history and in terms of propensity to save. But surely longer life-spans (in terms of recourse) are a factor.

https://www.alliancebernstein.com/library/Why-are-interest-rates-so-low-And-where-might-they-go.htm

US DEMOGRAPHICS

Under the broad term “demographics” are a few key drivers, each of which has a different effect on interest rates. Of all the drivers that structurally influence rates, demographics are the most interesting today because several longstanding trends are stalling or reversing.

Life expectancy—In general, as life expectancies rise, people choose to save more throughout their working lives to fund longer retirements. Those higher savings rates pressure interest rates lower. As life expectancies have risen in recent decades, they’ve pushed rates down.

Fertility—Falling fertility rates work differently but have also pushed rates lower. Lower fertility rates increase the capital-to-labor ratio in an economy, which makes incremental capital less valuable and in turn lowers the demand for funds, and with it, interest rates.

Population growth—Changes in life expectancy and... (More)

Interest Rates Have Changed A LOT

I was looking at this chart and it is absolutely crazy how much fluctuation there is with interest rates 100 years ago. Could you imagine trading bonds back then? 

https://www.longtermtrends.net/real-interest-rate/

Rare 1987 Paul Tudor Jones Documentary

In 1987 a young Paul Tudor Jones allowed a PBS documentary crew to follow him around during one of the most pivotal years of his career. What they made is revealing and fascinating peek into the life of one of the most incredible investors in history. 

HOWEVER Jones ended up hating how he came off in the doc and has since done everything in his power to bury it. Anyways, here it is, buried in some anonymous hero's vimeo account. 

First and foremost, this is a great doc. And if any of you are also interested in investing, you might really dig it. Goes great with a glass of scotch at the end of a quadruple witching day ;)

https://vimeo.com/443873843

The Origin of Short Selling, Dividends (Paid in Nutmeg?), and Bunny Rabbits Trading at 1000x your monthly rent - Breaking down my interview with Jamie Catherwood

Nick "The Dream" Correa and I are at it again - this time breaking down two key concepts from my interview with financial historian Jamie Catherwood: short selling and dividends.

Jamie regaled me with stories about Isaac Le Maire, who waged the first activist campaign against the Dutch East India Company, selling their stock short after they fired him for embezzling funds (allegedly). This campaign worked and let to the company paying the world's first dividend (in nutmeg).

@Nick Correa has two questions for me: 1) what is short selling? and 2) what is a dividend? He and I quickly go beyond the basics as you will see... enjoy!


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