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<blockquote data-quote="mmadsen" data-source="post: 831676" data-attributes="member: 1645">My comments weren't about inflation; they were about the time value of money.&nbsp; If you're going to buy a piece of capital equipment today that performs the work of one man until the end of time, it is not worth one day's wages times infinity.&nbsp; Money today is worth more than money tomorrow, either because you want to spend the money frivolously now, because you want to spend it not-so-frivolously on durable goods now, or because you want to invest it in something that will return even more money in the future -- not just because of inflation.&nbsp; People are willing to borrow money at 19.8% interest, and they're not willing to lend it at 0% interest, because money now is worth more than money later.If we assume that people discount the future at about 10% per year -- ten gold pieces now are worth eleven gold pieces next year -- then a golem that does the work of one man forever is worth ten men's yearly wages -- not an infinite amount.If we assume that people discount the future very little, say, 1% per year, then a golem that does the work of one man is worth 100 men's yearly wages.To tie this in with <a href="http://enworld.cyberstreet.com/showthread.php?s=&amp;threadid=47324" target="_blank">another thread</a>, short-lived, risk-taking human adventurers would discount future gold dramatically.&nbsp; What's a king's ransom to me, if I may die tomorrow?&nbsp; More wine, women, and song!&nbsp; Long-lived, risk-averse elves, cloistered away in their sylvan sanctuaries, on the other hand, would happily invest in the future.&nbsp; An elf society might very well rely on golems and other expensive, long-lasting capital investments.&nbsp; They can expect to see the benefits.</blockquote>

[QUOTE="mmadsen, post: 831676, member: 1645"] My comments weren't about inflation; they were about the time value of money. If you're going to buy a piece of capital equipment [i]today[/i] that performs the work of one man until the end of time, it is [i]not[/i] worth one day's wages times infinity. Money [i]today[/i] is worth more than money [i]tomorrow[/i], either because you want to spend the money frivolously now, because you want to spend it not-so-frivolously on durable goods now, or because you want to invest it in something that will return even more money in the future -- not just because of inflation. People are willing to borrow money at 19.8% interest, and they're not willing to lend it at 0% interest, because money [i]now[/i] is worth more than money [i]later[/i]. If we assume that people discount the future at about 10% per year -- ten gold pieces now are worth eleven gold pieces next year -- then a golem that does the work of one man [i]forever[/i] is worth ten men's yearly wages -- not an infinite amount. If we assume that people discount the future very little, say, 1% per year, then a golem that does the work of one man is worth 100 men's yearly wages. To tie this in with [url=http://enworld.cyberstreet.com/showthread.php?s=&threadid=47324]another thread[/url], short-lived, risk-taking human adventurers would discount future gold dramatically. What's a king's ransom to me, if I may die tomorrow? More wine, women, and song! Long-lived, risk-averse elves, cloistered away in their sylvan sanctuaries, on the other hand, would happily invest in the future. An elf society might very well rely on golems and other expensive, long-lasting capital investments. They can expect to see the benefits. [/QUOTE]

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