On the impossibility of time travel.

Here’s the citation, abstract, and synopsis of a "classic" finance journal article concerning the financial “impossibility” of time travel. This article does a nice (as well as entertaining) job of reinforcing the “no arbitrage” pricing principle which we have been discussing in Finance 4366…

Enjoy,

Dr. Garven

P.S.: It is left as an exercise to the reader to determine whether the current (negligible) interest rate environment in which we currently find ourselves may be due (at least in part) to time travel :-)…

Is Time Travel Impossible? A Financial Proof

Reinganum, Marc R.

Fall 1986

Journal of Portfolio Management

Volume 13, Number 1, Pages 10 – 12

Abstract. Current economic conditions rule out the possibility of past, present, or future time machines. The interest rate would always be zero if time travel were possible, because of the arbitrage opportunities that time travel would permit. Positive rates of interest are positive proof that time travel, unlike space flight, is pure fantasy.

In his tongue-in-cheek article, "Is Time Travel Impossible?: A Financial Proof," Marc Reinganum argues that the existence of positive interest rates prove that human beings will never travel backward in time—not now nor at any time in the future. Reinganum’s logic goes something like this: If time travel were to become possible in, say, 1000 years, a time traveler from 3003 could carry $1 in his pocket, travel to 2003, deposit the dollar in a 4% money market account, and then travel back to 3003. When he arrived back home, the balance on his passbook account would be over $100 quadrillion. And if that amount were too small to satisfy his needs, he could take some of the funds back to 2003 again and repeat the process as many times as he liked. Therefore, if time travel ever became possible, interest rates throughout history would have to be 0%.

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