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Key To Economic Theory - The Number 72

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...interesting arithmetic....

Is 72 the answer to life, the universe and everything? It's definitely the answer to a few economic questions, says Michael Blastland in his regular column.

You know the joke from The Hitchhikers Guide to the Galaxy in which the answer to the ultimate question about life, the universe and everything is 42?

It was a typo. Should have been 72. The author, Douglas Adams, was secretly an economist and statistician who pretended to be a sci-fi writer of comic brilliance to hide his shame. Possibly.

So, 72. Why 72? Because the rule of 72 helps clarify half the serious economic issues of the day. Compared with a famous joke, this is a dull practicality. But boy it's one really useful dull practicality.

The rule of 72 helps reveal the full effects of change. What it particularly shows is how repeated small changes can blow up.

For example, we're worried at the moment about inflation. How long before inflation, of say 6% a year, halves the real value of your savings? Easy - take 72 and divide it by six. The answer is 12, twelve years before £1,000 under the mattress dribbles into purchasing power worth £500.

Another example. We're also worried about economic growth or growth we're missing while we struggle to rouse ourselves after recession. How long before economic growth of say 2.5% a year would make us collectively twice as rich? Take 72 and divide it by 2.5. The answer is 29, about 29 years at this rate to double the size of the economy.

http://www.bbc.co.uk/news/magazine-14217443

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The author, Douglas Adams, was secretly an economist and statistician who pretended to be a sci-fi writer of comic brilliance to hide his shame. Possibly.
:lol:

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:lol:

...good way to get it across to the masses..after all what credibility do economists have..?....and let's face it ...it is only simple arithmetic which highlights the danger of inflation in simple terms...this may be helpful to Mervyn King ...oblivious as he is....?... :rolleyes:

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Guest sillybear2

It's a nice number, divide by 70 and you easily get the doubling time. If you apply that to anything growing exponentially like debt, population, water use, energy demand, etc, you can quickly appreciate just how f***d we are. Not to mention just how stupid people are when they believe in the deluded never ending nature of bubbles.

Useful.

Is this the Beeb subtly hinting that the BoE is trying to inflate our debts away? But just don't tell the bond markets lest the vigilantes bitch slap us <_<

Edited by sillybear2

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Guest sillybear2

It is interesting. But not exclusive nor even accurate....but a decent rule of thumb.

http://en.wikipedia.org/wiki/Rule_of_72

Good job we don't run a debt based monetary system reliant on such things, otherwise people would quickly realise that the projected growth will quickly hit physical constraints at some point, and all those claims on future output (debts, bonds, fiat currency) will be worth a lot less than people are hoping for. That's why I have respect for environmentalists, the sandal wearing, muesli-munching, bike bothering tree huggers do have a fundamentally valid point.

That 2% v. 2.5% graph illustrates how a bit of skimming each year really adds up, i.e. how fund managers are robbing people via fees.

_54173903_increase464x353.gif

Enough of this, I need to know if Jordan has a new car / pair of tits / husband / book.

Edited by sillybear2

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Guest sillybear2

Nice one. I'm sure Jordan's tits are growing at a rate of about 2% a year. How many years will it take for one to be larger than the size of the earth?

We'll run out of silicone long before then, but it really would be a sight to behold from outer space, very symbolic.

All this makes you appreciate why the central banksters pull all their extend and pretend tricks and obfuscation, they're either stupid or they really do understand the logical absurdity of the system, but they just don't want it to blow up on their watch.

Edited by sillybear2

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Guest sillybear2

:D

I hadn't realised I had posed a problem that proved your point. We're doomed!

Quite, it makes you look like a right tit (or left). :P

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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