Friday, June 17, 2011

Here's Why Our Long-Term Growth Expectations Are Absurd

Investor Jeremy Grantham of GMO illustrates this in his recent apocalyptic commodity analysis with an anecdote about ancient Egypt, which was one of the most successful civilizations in human history.

Grantham asked a group of mathematicians how big Ancient Eqypt would have gotten if its economy had growth 4.5% a year for the 3,000 years the civilization lasted.
The mathematicians were directionally correct: Very big.

But not one of them came even remotely close to the actual number (which is mind-boggling).


I posted on @Quora: Here's Why Our Long-Term Growth Expectations Are Absurd http://qr.ae/7Xjhm #Math #Business


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