Interstellar Finance
Let's say an astronaut is in a spaceship traveling at a relativistic speed such that for an observer on Earth, he ages half as quickly. This type of scenario is commonly found in sci-fi literature, and can make for interesting plotlines. But what happens to the laws of economics?
For instance, let's say that astronaut put $10,000 in an account that pays 5% interest. From the perspective of the relativistically accelerated space-farer, he is gone only one year, so he should get $10,500. But to those on Earth, he will have been gone two years, so he gets (about) $11,000. What is the "correct" interest rate? The astronaut's discount rate is different depending on your frame of reference.
Check out this cool discussion on the Marginal Revolution blog to ponder this, and other interstellar finance and trade issues.
For instance, let's say that astronaut put $10,000 in an account that pays 5% interest. From the perspective of the relativistically accelerated space-farer, he is gone only one year, so he should get $10,500. But to those on Earth, he will have been gone two years, so he gets (about) $11,000. What is the "correct" interest rate? The astronaut's discount rate is different depending on your frame of reference.
Check out this cool discussion on the Marginal Revolution blog to ponder this, and other interstellar finance and trade issues.
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