The Most Powerful Force on Earth

When the genius that invented the atomic bomb was asked what the most powerful force on earth was Albert Einstein said “compound interest”.  He didn’t say his bomb but the simple mathematical result that occurs when interest is paid on the principal and accumulated interest as well. The enormous financial explosion he was referring to was the simple fact that when you invest a dollar a year for forty years and the bank pays you 10% interest your 40 dollar investment grows to $443 because throughout those forty years 10% is computed not only on the 40 dollars of principal but on the  accumulated interest as well.

Although Dr. Einstein stated his premise on what ordinary people believe to be interest on money, he never meant it to be interpreted so narrowly.   Warren Buffet was judged by Forbes Magazine to be the richest man in the world in 2007. His net worth went from $52 billion in 2006 to $62 billion in 2007.  The increase in this man’s wealth was itself due to “compounding”.  The value of his stock investments grew at a rate of return just as if it were money in the bank.  A recent study indicated that Mr. Buffet’s rate of return on stocks was 24.8% for the last 30 years, almost doubling the rate of return of 12.8% experienced by the S&P 500 stock index for that same 30 year period.

People like Buffet and those with assets and money in the bank have a “pool of capital” that can grow through compounding over the years.  Unfortunately a great segment of today’s population are priced and taxed so heavily that they never can accumulate a pool of capital to benefit from the magic of “compounding”.

Finding a pool of capital for those unfortunate people to use to grow themselves “compounded” millions is not the “impossible” proposition that the church and governments have fed their congregations and subjects throughout the years.  Eliminating poverty through capitalism is possible so long as the unfortunate can get a pool of capital.

Fortunately there is no greater pool of untapped and unused capital on the planet than the 15.3% in payroll taxes confiscated by government throughout the lifetime of those unfortunate workers.  Allowed to remain the property of the individual taxpayer throughout his 40-year working life, your average $40,000 a year household would accumulate a $3.2 million nest egg which would generate a $27,000 a month retirement check by the simple process of compounding at 10% (invested in indexed stock funds).

So one would naturally ask why we haven’t funded retirement to provide substantial nest eggs and enormous monthly checks already.  The clergy and the politicians know all about “compounding” and in the case of politicians they already have their own “personal investment accounts” paid for by the taxpayers. So why hasn’t personal account law been enacted?

Books can be written on why personal accounts have not been mandated. How can the people live with a government that fools them into believing that the pitifully inadequate “safety net” of $1,100 a month is sufficient when a $27,000 a month check can be a reality and a $3.2 million nest egg to boot?

The answer in part lies in the need of the monopolies of government and religion to use poor people as their reason for being. Were there no poor people, the financial needs that government and religion fulfill would be unnecessary. Stripped of the need to cover poverty, those institutions could better concentrate of social organization and spiritual uplifting.  Unfortunately our government today has run up a $45 trillion unfunded liability for Social Security and Medicare because they refuse to entertain the only solution of creating personal accounts.  Such accounts would eliminate almost all the poor people.

Should you be interested in the solution to this dilemma, visit There a think tank, the Ownership Society Institute (OSI), has been formed to promote personal accounts.  Although the certainty that “compounding” can solve the myriad of problems poverty plagues society with, there will be great resistance to such a change, There are those willing to sacrifice the poor and middle-class to the bondage of confiscatory taxation and debilitating inflation. They are willing to continue poverty to retain their political and social power over the masses.  If you are not such a person, join OSI’s cause and contribute what you can to help disseminate the information necessary to motivate the people to force this change at the polls.