Why isn’t the time value of money applied to currency in terms of purchasing power? Let’s say I have a dollar from 1930. I should be able to exchange that dollar today anywhere based on its present value, right? Doesn’t make any sense to me but I’m slow
In: 9
Because that would just make money insanely complicated for no reason, and cause people to hoard money even more than they do now. If I have a dollar, but if I hold onto it for two years, it’ll be worth more than a dollar, why would I spend it? The best choice would always be to not spend your money. If people don’t spend their excess money, all the businesses that are based on fun things like tasty food, nice clothes, games, tourism, etc. would all fail. All the people that work for those industries would lose their jobs and stop spending money, causing even the basic necessities industries to start collapsing, causing them to have to lay off workers, making it even worse. You have an economy collapse. All of a sudden all of the countries that rely on American goods and services start having economic troubles. Domino effect. Great depression round 2.
Because that would just make money insanely complicated for no reason, and cause people to hoard money even more than they do now. If I have a dollar, but if I hold onto it for two years, it’ll be worth more than a dollar, why would I spend it? The best choice would always be to not spend your money. If people don’t spend their excess money, all the businesses that are based on fun things like tasty food, nice clothes, games, tourism, etc. would all fail. All the people that work for those industries would lose their jobs and stop spending money, causing even the basic necessities industries to start collapsing, causing them to have to lay off workers, making it even worse. You have an economy collapse. All of a sudden all of the countries that rely on American goods and services start having economic troubles. Domino effect. Great depression round 2.
Because that would just make money insanely complicated for no reason, and cause people to hoard money even more than they do now. If I have a dollar, but if I hold onto it for two years, it’ll be worth more than a dollar, why would I spend it? The best choice would always be to not spend your money. If people don’t spend their excess money, all the businesses that are based on fun things like tasty food, nice clothes, games, tourism, etc. would all fail. All the people that work for those industries would lose their jobs and stop spending money, causing even the basic necessities industries to start collapsing, causing them to have to lay off workers, making it even worse. You have an economy collapse. All of a sudden all of the countries that rely on American goods and services start having economic troubles. Domino effect. Great depression round 2.
it’s present value is $1. It’s a dollar. doesn’t matter if it was printed in 1930 or 2023. A dollar is a dollar. The value of the dollar changes in comparison to other currencies, not to itself over time.
it’s present value is $1. It’s a dollar. doesn’t matter if it was printed in 1930 or 2023. A dollar is a dollar. The value of the dollar changes in comparison to other currencies, not to itself over time.
it’s present value is $1. It’s a dollar. doesn’t matter if it was printed in 1930 or 2023. A dollar is a dollar. The value of the dollar changes in comparison to other currencies, not to itself over time.
The time value of money is just a rigorization of the principle that we prefer having money now to money later. Would you rather have 100 dollars now? Or a promise that you will receive 100 dollars next week? Obviously we would prefer to have the money now. But how much would you pay for the promise of 100 dollars next week? 90 dollars? 95? This is the time value of money in effect
The time value of money is just a rigorization of the principle that we prefer having money now to money later. Would you rather have 100 dollars now? Or a promise that you will receive 100 dollars next week? Obviously we would prefer to have the money now. But how much would you pay for the promise of 100 dollars next week? 90 dollars? 95? This is the time value of money in effect
The time value of money is just a rigorization of the principle that we prefer having money now to money later. Would you rather have 100 dollars now? Or a promise that you will receive 100 dollars next week? Obviously we would prefer to have the money now. But how much would you pay for the promise of 100 dollars next week? 90 dollars? 95? This is the time value of money in effect
Latest Answers