Nice one John. I remember a slim volume by Margrit Kennedy deconstructing the impact of interest rates in the 1990s. I also published a journal article on the historical condemnation of usury, where one factor was its role in discounting. Islamic economics and banking provides an interesting equity based alternative.
P.S. you may want to fix the typo of Kate’s surname
KSR is spot on. As a young investment banker/lawyer building the financial models and spreadsheets financing major infrastructure projects in Africa in the early 1980's, DCF was basically there to compensate for the opportunity cost of not earning interest on the money being invested e.g. if the gilts or treasury return was anticipated to be average of 3% over the 10/20 year period of the investment, then I would plug that into the IRR equation. But, as we now know all too well, the opportunity cost of NOT investing in technologies, infrastructure and mindset/culture shifting technologies and methods, is some 8-9 times the current cost of investing in those technologies and methods. A penny spent now is worth up to ten in the future. That is one helluva reverse discount rate - but of course the financial sector is the most risk averse, close-minded of all, so my concept of True Future Value (replacing EVA- Economic Value Added) advanced in several of my books has never really gained any mindshare in any of those heads, sadly.
From a conversation today with prof Robert Bunge in Seattle:
Those four anthrocapitals (human, relationship, intellectual and social), which are also virtues and resources, are the key to Regenovation- and completely ignored by sustainability, which is one of the main reasons we’re in a much worse position every year in absolute terms on every metric that matters
Robin Lincoln Wood
Absolutely- and the return on anthrocapital invested in scaling regenerative biotechno capitals (infrastructure, manufactured, natural) is huge. Working smarter and slightly harder, a regenerative $ spent today avoids $10 of harms 20 years down the line. And this is not even considering the beneficial impacts of disruptive innovations that are game changers. The challenge is that until the shit hits the fan for the 1% personally, they will continue to discount the future and value their returns from fossil fuels etc today much more highly than returns from investing in regenerative projects. Only social capital=trust will save us and the 1%, because building bunkers only delays their inevitable demise without communities that can benefit from regenerative antifragility. Our current mindsets and economic models are literally killing us. Hence Regenovation!
Hello - really appreciate this framing John, thank you! Also just to mention that Simon Sharpe’s book, Five Times Faster, is also excellent on failures of economics in context of climate change and the error of failing to see economies as ecosystems rather than equilibrium seeking machines.
Nice one John. I remember a slim volume by Margrit Kennedy deconstructing the impact of interest rates in the 1990s. I also published a journal article on the historical condemnation of usury, where one factor was its role in discounting. Islamic economics and banking provides an interesting equity based alternative.
P.S. you may want to fix the typo of Kate’s surname
Thanks for typofingering : )
KSR is spot on. As a young investment banker/lawyer building the financial models and spreadsheets financing major infrastructure projects in Africa in the early 1980's, DCF was basically there to compensate for the opportunity cost of not earning interest on the money being invested e.g. if the gilts or treasury return was anticipated to be average of 3% over the 10/20 year period of the investment, then I would plug that into the IRR equation. But, as we now know all too well, the opportunity cost of NOT investing in technologies, infrastructure and mindset/culture shifting technologies and methods, is some 8-9 times the current cost of investing in those technologies and methods. A penny spent now is worth up to ten in the future. That is one helluva reverse discount rate - but of course the financial sector is the most risk averse, close-minded of all, so my concept of True Future Value (replacing EVA- Economic Value Added) advanced in several of my books has never really gained any mindshare in any of those heads, sadly.
From a conversation today with prof Robert Bunge in Seattle:
Those four anthrocapitals (human, relationship, intellectual and social), which are also virtues and resources, are the key to Regenovation- and completely ignored by sustainability, which is one of the main reasons we’re in a much worse position every year in absolute terms on every metric that matters
Robin Lincoln Wood
Absolutely- and the return on anthrocapital invested in scaling regenerative biotechno capitals (infrastructure, manufactured, natural) is huge. Working smarter and slightly harder, a regenerative $ spent today avoids $10 of harms 20 years down the line. And this is not even considering the beneficial impacts of disruptive innovations that are game changers. The challenge is that until the shit hits the fan for the 1% personally, they will continue to discount the future and value their returns from fossil fuels etc today much more highly than returns from investing in regenerative projects. Only social capital=trust will save us and the 1%, because building bunkers only delays their inevitable demise without communities that can benefit from regenerative antifragility. Our current mindsets and economic models are literally killing us. Hence Regenovation!
https://bit.ly/RegenovationIntensiveProgram
https://bit.ly/robinwoodauthor
Hello - really appreciate this framing John, thank you! Also just to mention that Simon Sharpe’s book, Five Times Faster, is also excellent on failures of economics in context of climate change and the error of failing to see economies as ecosystems rather than equilibrium seeking machines.