50/50

So how should we spend the money. You know wars are winding down. What kind of accounting should we use. Should we shuffle half our income to debt and half to economic development as Obama proposed the other day? Do we need to think a little harder?


Whats the right way to raise the rate of return?

For me the idea is simple. If you have an investment, does it grow better if you apply simple interest or compound interest. There are 5 different calculations for ROI on the Wiki.


http://en.wikipedia.org/wiki/Rate_of_return#Multiperiod_average_returns

The first one is what I'd call simple interest. Its a flat type of accounting understandable by elementary school students and the general public.

As we grow in understanding and age we get exposed to the idea of compound interest, possibly in our first algebra class in 9th or tenth grade. A little further on we learn that our earlier compound bliss was only an approximation and the concept of periods is introduced. While easy to do with a calculator, it takes some simple calc to get an accurate answer by hand. Finally the Wiki shows us Internal rate of return which takes into account cash flow.

Tbh I'm just learning about this one today.

Why can't we look at our country as an investment and try to maximizes its return? First thing I learned about compound interest was to reinvest my returns, the second thing was to payoff high interest debt. Of particular importance was to look at my interest rates. If I had debt that was costing more than my investments were growing I could actually continue to go down hill even though I was putting money in the bank.

Debt therefore was important but by comparing interest rates another idea came about if you could borrow at low rates and earn at high rates, debt could actually make money!!!

Quote:

When the cost of capital is smaller than the IRR rate , the investment is profitable, i.e., . Otherwise, the investment is not profitable

Now O laid out an idea http://youtu.be/8nIFExKIhLA?t=1m45s (4 min)

buts its way to vague but it could be the start of discussion. I'm sure you have a lot more tricky accounting up your sleeves. Whats important? Growing as a country, redistributing wealth, increasing productivity, liquidating our inventories. If you don't agree we should grow, what should we do and how?