Compound Interest 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
Without 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 rates.