I’ve always been puzzled by interest rates. They say it’s the price that relates future goods to present goods. Simply put, it’s a price tag on the ability to consume goods now rather than later (for example, a saver who defers the purchase of his marshmallows will get an interest on his savings for more marshmallows in the future.)
Opportunity cost is something we encounter early in our transformation into zombies economics majors. Another thing that we learn is that there is no such thing as a free lunch. Every minute spent not doing anything is a minute not spent gorging ourselves on marshmallows (or some other worthwhile activity; although there is nothing more fulfilling than marshmallows). Most activities incur time as an opportunity cost. This is why we prize present consumption; it’s because we have a limited time on this earth to allocate efficiently among activities.
Now that leaves me thinking: what if everyone turned immortal? What if someone found the elixir of life? Would interest rates disappear (meaning no one would care about consuming right then and there), or would something else in the human psyche still make us yearn for present consumption?
Sometimes the noise is more important than the signal.
On Video: Trial & Error and the God Complex
It seems so obvious when you listen to him, but it’s when you look around and see everyone trying to fix the world’s problems with their own preconceived master plans that you see how few people grasp the beautiful heuristic process of variation and selection.
On the Power of Prices
: Informative, Summative, and Coordinating
It is only through the voluntary coordination of the efforts of various economic agents that we can make the products we use today.