We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
... thanks to an eccentric New York lawyer in the 1930s, this college in a corner of the Catskills inherited a thousand-year trust that would not mature until the year 2936: a gift whose accumulated compound interest, the New York Times reported in 1961, “could ultimately shatter the nation’s financial structure.” The mossy stone walls and ivy-covered brickwork of Hartwick College were a ticking time-bomb of compounding interest—a very, very slowly ticking time bomb.
Strikes me as a silly doomsday argument that greatly exaggerates the heft of a trust in perpetuity. It assumes that the size of the national economy is static, when it will grow as rapidly as such a conservatively invested trust if not faster.
Exactly. It's disappointing that supposedly learned men would panic over something so silly.
It seems that people don't understand how the interest accumulates. It is not some subterranean mushroom, that simply consumes the nutrients around it. Rather, it does so by investments in the economy. A business loan that lets someone establish or expand Under-Armor or Sam Adams.
They pay back at a greater rate b/c they've made more money. Thus the economy grows, as does the investment.
Just look at the numbers in the article...millions of pounds for Philly and Boston in 1990! Imagine that! Oh wait, their annual budges were in the billions!
The notion is interesting. The concerns are ludicrous.
The other significant assumption is that the seed money will be invested in an institution that would not have gone bankrupt in the 1890s or 1930s or any of the numerous financial disasters before, between, or after. It's typical ivory tower thinking, completely in the abstract. Yet there are people with MBA degrees who believe such rubbish and an ignorant fool with a high school diploma could just as easliy see through it. Assuming he wasn't intimidated by his intellectual "betters" into believing otherwise.
The most likely investment would be bonds or a bond fund that allows you to reinvest the interest. The most likely type of bond fund would be one of US debt. It is the most likely to ALWAYS pay the interest and supply would continue to grow!
The thing not mentioned is that the buying power of this "huge" investment would take a considerable hit over the years.
Good point. However, the bond fund would need to be managed by several generations of people competent enough to run it and competent/honest enough to select the next generation of competent/honest fund manager(s). I don't know the history of US debt, but could you guarantee that there would never be a time when the US didn't need to borrow money? Wouldn't most bonds in the past have stopped paying interest after 30 years or so? Granted you could roll that over into new bonds, but who's to say the US would never default on its debt? Could happen. Couldn't guarantee it not to happen from a time horizon of 200 years.