All,

Inspired by Jeff's question about arbitrage, it knocked some thinktank
bubbles loose.

Namely, what is a decent proxy for the risk-free interest rate in the
Golden Age 3I?  What is the lnterest rate demanded for a loan with no
possibility of default (non payment)?

In other words, what interest rate can the _Third Imperium itself_ 
typically borrow at?  (Or the Solomani Confederation, or the Zhodani
Consulate, or the Hiver Federation, etc - I'm limiting this discussion
to multi-sector sovereign interstellar states)

Although in the farthest bounds of theory, a central government does
have the option of not meeting its debts, the 3I is built on the rubble
of, and lessons learned from, the 2I, in which goverment defaults (such
as intra-Treasury punchups) helped propel the wheels clear of the chassis.

A _functioning_ 3I will thus go to extreme lengths, I posit, to avoid
even considering default.

For pre-starflight analogues here on Terra, consider the rate of return
of 3-month US Treasury bills, 10 year AU goverment bond yields, the
Eurozone Short Term Rate, etc.

The mortgage rate offered to Ethically-Challenged Merchants (5.57% pa)
serves as an upper bound on the 3I risk free rate, since the 3I itself
would (generally) tend to be at least a good a credit risk as J. Random
Dodgybastard et al.

GT:Far Trader p6 mentions "The Imperium ... maintains an average annual
growth rate of less than 1%".

p7, ibid, mentions "The Third Imperium has replaced the central bank
structure with a monetary board.  The members of the board are all
retired bankers and economists, many of noble birth, but all chosen
primarily for their hatred of anything that smacks of using monetary
policy to meddle with the economy.  Their task is to carefully control
the long-term growth of the money supply so as to mirror the long-term
growth of the economy.  Too much growth in the money supply creates
inflation; too little creates deflation."

p7, ibid, mentions "The return on Imperial bonds (considered risk-free)
is so low that people only invest in them to avoid keeping cash around"

That's great, but what in blazes _is_ said rate of return?

Alex

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