AND THE DEBT BUBBLE
"Compound interest is the eighth wonder of the world. He who understands it,
earns it ... he who doesn't ... pays it." Albert Einstein
a comprehensive understanding in this axiom of the financial universe, much of public
policy and finance is incomprehensible. The different positions of the borrower and the
lender is obvious, but the notion that one can earn enough interest on savings to maintain
the purchasing power of the principle is a bygone fantasy in the era of low interest
Here is how
interest works for the
amount of $1,500.00 is deposited in a bank paying an annual interest rate of 4.3%,
compounded quarterly. What is the balance after 6 years?
balance after 6 years is approximately $1,938.84.
the difference between being the lender to that of the debtor and you get a very different
someone came up to you on the street and said they would give you a crisp, new $20 bill,
and the only stipulation is that you give them back $40 tomorrow, youd probably tell
them just what they could do with that $20 bill.
you ask would say thats a bad deal, but when you demonstrate that borrowing money by
using credit cards and consumer debt is exactly the same thing, these same people (who are
in debt) give a puzzled look, and for some a light turns on and they begin to understand.
But for others, they just refuse to see that debt, and the compound interest that comes
with it is a major drag on your finances and ends up making your poorer ever single
the simple distinction between earning next to zero interest on your bank deposits, while
paying usury rates on your consumer debt charge cards or lines of credit, is a guaranteed
formula for personal bankruptcy.
deepen this dilemma with the insights learned from the national Ron Paul effort to educate
the public on the horrors of the privately owned Federal Reserve System.
Padden clarifies the
sham that underpins the monetary fraud that enslaves the entire planet, in Inflation
explained - Dollar Bubble - Government Debt Bubble.
people do not understand that we dont just print the money via the Fed. We borrow it
at interest and it is that compounding interest that is the root cause of the enormous
government debt bubble we have today.
frustrating part of this to me is that it is completely unnecessary. Our currency should
simply be created through our treasury as described in our constitution without interest.
In this way we could pay off our deficit in no time and build a healthy economy.
since the Fed ( a private banking cartel with its roots in Europe ) hi jacked our economy
in 1913 the dollar has lost 98% of its purchasing power due to the constant, systematic
increase in our money supply. Ever increasing Inflation is the only possible result of the
Feds monetary policy."