Re:Frighteningly Ambitious Startup Ideas (2012)
by sobani on Tuesday May 23, 2017 @07:03AM
(#14400274)
Assume my bank gives me a linear interest of $10 per year.
Then going from $100 to $110 that would be 10%.
Going from $110 to $120 would be ~9%.
Going from $120 to $130 would be ~8%.
In any year you could conclude my savings grow exponentially. 10%! 9%! whoohoo! But if you look over a longer time frame, it clearly isn't.
And as nevdka mentioned, the population growth is less than linear. If my bank gave me $10 of interest last year and $9 this year, and $8 the next, there is definitely no exponential growth.
You are describing the shift from a steep exponential growth curve to a lower exponential growth curve that I mentioned earlier.
If you get 10% compounded interest on your money it grows exponentially at 10%.
If you get 9% compounded interest it grows exponentially at 9%.
And if you _were_ getting 10% and the bank changes the rate to 9% your money is now growing exponentially at 9% interest, assuming only that the interest is reinvested.