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DavidAgain comments on A Story of Kings and Spies - Less Wrong
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To be charitable, it says that he'd be making 'payments' on 200 coins for the rest of his life. So possibly this means that he can pay off the interest, but not the capital? This would assume that he can pass on the debt to his children or somesuch, or just that banks grudgingly lend money to people who owe the paranoid king and then just extract as much money as they can from those people...
This was calculated with 0% interest rate. With 200 capital never shorteend and 200 total interest paid the interest rate would be about 1.43% which isn't that unreasonable. Even with 5% interest rate Orin would earn 10 coins a year and the population would be 12166.