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Forum Post: Compound Interest: Power to Concentrate Wealth

Posted 5 years ago on Jan. 13, 2013, 10:01 a.m. EST by agkaiser (2097) from Fredericksburg, TX
This content is user submitted and not an official statement

“How is the interest compounded on the money lenders' and other investments? The profit on last year's investment with a manufacturer was added to the cost of production and the price of the goods produced. Next years dividend reflects the cost of service to this years debt or capital financing. The interest or 'vigorish' becomes an exponentially increasing part of the cost of doing business. That is: compound interest to the lender/investor who finances the production and cost increases on the merchandise we must buy to live. The pattern of exponential growth of finance costs to the real economy must hold true for profits on all investment and trade, not just the banking and capitalization [non] industries. The damage investment must do to the real economy of production and consumption is minimized when the community finances its industries of by and for itself on a non profit basis.”

  • PV = Present Value
  • FV = Future Value
  • t == compounding periods
  • i == APR / (# of periods per year)

  • FV = PV(1+i)^t

  • logFV = logPV + t*log(1+i)
  • t = (logFV – logPV)/log(1+i)

  • doubling time:

  • 2PV = PV(1+i)^t
  • t = log2/log(1+i)

Earlier in the day the professor had visited the supermarket to make copies of the formulas above. As he was speaking he handed them out to the pros. “For the future value to be 10 times the present value, at 6% compounded daily, it takes 38 years, 138 days and 16 hours. From 1970 to 2010 the price of hamburger has gone from $0.39 per pound to at least $3.99: higher since then. A compact car was $2000 or less at the start of Nixon's second year. Today it's $20,000 for the same kind of compact. Wages have fallen way behind prices in the past forty years for at least ninety percent of us. In 1970 one income per family could afford the American dream of home, cars and kids in college. Today it takes at least two incomes to barely get by. Does anyone have another way to say that the profit of investors is the loss of everyone else? You can track concentration of wealth over the same period and see for yourself the dead end course we're on.”

Excerpt from: How Does That Work? https://www.createspace.com/3852916



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[-] 6 points by agkaiser (2097) from Fredericksburg, TX 5 years ago

Who receives compound interest on your life?

Read 'How Does That Work' at: https://www.createspace.com/3852916

[-] 3 points by shadz66 (19985) 5 years ago

"It’s the Interest, Stupid! Why Bankers Rule the World", by Ellen Brown :

From the link : "A Radical Solution Whose Time Has Come ; Public Banking may be a radical solution, but it is also an obvious one. This is not rocket science. By developing a sound public banking system, governments can keep the interest and reinvest it locally ... that means public savings of 35% to 40%. Costs can be reduced across the board; taxes can be cut or services can be increased; and market stability can be created for governments, borrowers and consumers. Banking and credit can become public utilities, feeding the economy rather than feeding off it."

Excellent forum-post, thread & links. Thanx.

radix omnium malorum est cupiditas ...

[-] 3 points by Builder (4202) 5 years ago

Here's the "bank" I use by choice. It can be done, people.


CUA (previously Credit Union Australia) is a credit union in Australia. CUA is Australia’s largest customer-owned financial institution, providing an extensive range of banking products and services to over 400,000 customers. CUA is 100 per cent owned by its customers, not shareholders, so all profits are reinvested back into the business in the form of more competitive products, better interest rates and lower fees instead of being paid out in dividends.

CUA has a national presence with around 80 branches across the eastern seaboard and in Perth, 24/7 telephone and internet banking, Australian located call centres, SMS banking and mobile lenders. Customers also have access to over 3,400 ATMs through the rediATM network – one of the largest ATM networks in Australia.

CUA offers a compelling alternative to the traditional Australian banking model and proactively promotes greater competition within the Australian financial services industry to ensure customers get the best deal.

CUA was awarded ‘Credit Union of the Year’ at the 2010 Australian Banking & Finance Awards, the 2010 Australian Financial Review Smart Investor Blue Ribbon Awards, the Your Mortgage Magazine Awards 2010 and the 2011 Australian Banking & Finance Awards.

[-] 2 points by DKAtoday (33496) from Coon Rapids, MN 5 years ago

Yep I also recommend the credit union route/choice. They are local and invest in the community.

Dump the mega-monsters like they were radioactive - and - RUN as fast as you can to a local institution - best would be a non-profit.

[-] 3 points by Builder (4202) 5 years ago

I switched because my former bank of twenty years wouldn't give me a small personal loan, because I'm "too mobile". Their loss.

[-] 2 points by DKAtoday (33496) from Coon Rapids, MN 5 years ago

Hell some day they may send you a letter of apology - NO - Wait - that's not right - OH - yeah - an invitation to borrow from them and get a credit card - funny guys.

[-] 3 points by Builder (4202) 5 years ago

The market is quite competitive here, and a class action just took the major four banks to court for over-charging on late fees. The banks lost.

People need to realise that there are still avenues and opportunities, as long as there's unity and purpose. It's all about attitude, and faith in the numbers game.

The banksters assume that nobody will bother complaining. Hah.

I'm quite willing to start a war with our major telco over a thousand dollar bill. It took me two years, but I won. They rely on people getting frustrated, and giving up.

[-] 2 points by DKAtoday (33496) from Coon Rapids, MN 5 years ago

Yep - long past time to end the apathy in the public of the USA.

[-] 3 points by Builder (4202) 5 years ago

There's a general malaise amongst our younger generation that it's "someone else's job" to look after that kinda shit.

The big dumbing down is what that is all about. Us older bods havta shame them into taking some responsibility for their own future. It's part of being an adult, I guess.

Some of them get it. Some don't. Prolly the same everywhere. But they do need it explained to them, because the school curriculum certainly doesn't make their responsibilities to themselves very clear at all.

[-] 3 points by DKAtoday (33496) from Coon Rapids, MN 5 years ago

It takes a community - some kids get it this is true - others are getting a rude awakening as they find out that - NO - someone else is not gonna step in and volunteer to take care of em - well least ways no one they want to know.

[-] 5 points by Builder (4202) 5 years ago

Agreed. First step is getting involved in the community, and that's why I booted the TV, and any form of gaming device.

If you're not involved in your community, then you're simply a tourist in your own town.

[-] 3 points by Middleaged (5140) 5 years ago

Interesting Max Kaiser Comment about 6 minutes into this Video .... He says we have Financial Aparteid in UK and probably Europe and the USA where ... the banks and 1% get low interest rate or zero Interest Rate loans (congress?) ... while the 99% has to pay much higher rates if they can get Loans at all. Remeber TBTF Banks are not lending to the small guy ...and small businesses don't have access to loans in this economy since tere is the perception that we are in a recession, we are losing jobs overseas, and consumer spending is tight.... And that is right. TBTF and Washington don't care if you get no Interest on your savings account, no earning on retirement accounts, and can't get Credit. You are the 99%.

http://rt.com/programs/keiser-report/episode-391-max-keiser/ (Episode 391 - 10 January 2013)

He ends the episode with Stacy Herbert explining that it is genecide of the poor ...how Downing Street is encouraging gambling and betting houses to replace empty bank store fronts in poor areas of the city.

[-] 3 points by Middleaged (5140) 5 years ago

Without the structure to control Politicians, the polticians are going to continue to act up. We don't hate politicians, but we hate their behavior. If the courts enforce the consitution, the polticians will not be able to act out with their bad behavior.

The founders of this Nation did their best to provide the structure to balance powers with the US Constitution and it's subsequent amendments. If the supreme court doesn't understand the intentions of the laws created through the constitution, then this country is just going to continue to decline for all of us.

There are many angles to practicing law and one principal is to look at the intention of the legislators. It is reasonable to draw the opinion that 1) Drone Strikes are Illegal 2) Kill Lists are Illegal 3) The rights to speedy trial, a lawyer, freedom from cruel punishment, and extrodinary rendition applies to non US Citizens 4) Fruadulent Foreclosures, AAA Rated financial Junk, and passing on financial instruments of low quality as high quality is Illegal and is Fraud 5) Hiring Bankers to work in our government and central bank was always a Risky proposition that demanded constraints and monitoring to prevent fraud, collusion, and conspiracy. To ignore this Risk of banker influence, banker infiltration of government and banker control of legislation through lobbying ... is in itself an Impeachable if not presecutable kind of Negligence.

To your Point on the Interest Earnings on Financial Schemes and the Longest Running Government Ponzi Scheme: It appears the primary focuses of federal government at least back to Ronald Reagan appears to be 1) Military Investment 2) Keeping the Expansion of TBTF Banks and their Financial Instruments going 3) It IS NOT focused on Domestic Jobs or the Future of Jobs for the common man... or as you Point Out not on making or manufacturing products or adding value within the US Economy 4) It is not Focused on the Integrity of US Retirement & Pension Funds or Viability of the Institution of Retirement at 60 years old ... or even at 65 years old.

The exended presence of Eric Holder, Tim Geithner, Jack Lew, Mary Schipiro, Hank Paulson, Larry Summers, Robert Rubin, are huge Signals that this Administration fully supports TBTF, Banker Fraud, the corruption of Lobbying, and that the US Federal Government is for SALE.

See the Democracy Now video of 11 Jan 2013 with Matt Taibbi and William K. Black as my Primary Source Material. http://www.democracynow.org/shows/2013/1/11 (Skip to 15 minutes in to video)

[-] 3 points by Middleaged (5140) 5 years ago

I think William K. Black calls this a "Race to the Bottom".

[-] 6 points by agkaiser (2097) from Fredericksburg, TX 5 years ago

That's the negative way to see it. We're pushed to the bottom by the weight of our debt as the lenders with our money race to the top.

[-] 3 points by Middleaged (5140) 5 years ago

No, I think he means the people commiting fraud in banks are driving the banks into the ground as they take big bonuses, salaries, compensation packages, and retirement packages. I probably didn't remember the exact context when I posted.

He wrote a book called the best way to rob a bank is to own one. But it is not just bankers trying to get everything they can while they can grab it. Some of those guys of course end up working periodically in the federal government, treasury, OMB, and the federal reserve.

[-] 2 points by agkaiser (2097) from Fredericksburg, TX 5 years ago

Either way we end up in debt and they get all the money - back again! I see a distinction but no difference.

[-] 3 points by Middleaged (5140) 5 years ago

Yeah, as someone else was pointing out Financial Interest Money is a Zero Sum Gain. Someone is losing the money and it is probably someone in the poor or middle class. Then we get social problems, social unrest, and no one buys the products in the end (or very few). The economy is ruined at some point.

[-] 3 points by niphtrique (323) from Sneek, FR 5 years ago

Interest causes wealth to concentrate as the poor pay interest to the rich. Interest can be seen as a tax on poverty to the benefit of the rich. Money in the bank is backed by debt, so interest is a fraud that forces the poor into debt if the rich do not take the money out of their accounts and spend it. The following example demonstrates this and also why interest on money is unsustainable and leads to crisis:

If someone brought a 1/10 oz gold coin to the bank in the year 1 AD, and the money remained there until the year 2000 AD, collecting a yearly interest of 4%, the amount of gold in the account would have been 3.6 10^31 kilogramme of gold weighing 6,000,000 times the complete mass of the Earth.*

When interest is charged on a limited scale or over a short timeframe then those problems do not surface. Interest is an insidious process. Over time it is inescapable that it reduces large numbers of people to a state of servitude to the money lenders. This is a long term development that transcends the life span of a human. Interest is the main reason why a number of civilisations have failed and why Western civilisation is about to fail. Therefore all interest is usury and the current financial system is a usury financial system.


[-] 3 points by beautifulworld (22872) 5 years ago

Why Americans can't save a penny, explained by Helaine Olen:


And, I just watched this video. Charles Eisenstein is sort of a philosopher of economics and he lays it all out for us with his "Sacred Economics" which is exactly what I talk about all the time, that what we need is an economic system that works for all people, not profit. Some call it a "gift economy" which would replace our current "money economy."


Great post!!

[-] 3 points by shadz66 (19985) 5 years ago

Thanx for the excellent links and re. Charles Eisenstein, I append :

I highly recommend your links to the short [12m] video & to the NYT piece to all readers. Thanx bw.

fiat lux ...

[-] 2 points by beautifulworld (22872) 5 years ago

"What about a society where safety does not equal security? What about a world where no human being wields an assault rifle? What about a world where we mostly know the faces and stories of the people around us? What about a world where we know that our daily activities contribute to the healing of the biosphere and the well-being of other people? We need a Story of the People that includes all of those things – and that doesn’t feel like a fantasy." Charles Eisenstein.

Amen. This guy gets it right. Thanks, Shadz.

[-] 3 points by shadz66 (19985) 5 years ago

"How can we create an economy that works for all Americans ? Through his new project, 'Democracy at Work', economist Richard Wolff strives to develop a social movement that puts in place a reorganization of the economy built on a foundation of employee control of the workplace. Employees would act together as their own bosses in a fully egalitarian, democratic workplace where workers run the business, share the assets and create a workspace that runs in harmony with not only its workers, but the entire community", from :

I sincerely recommend this article & all its embedded links, two of which I append + rdwolff's own site :

Btw bw, you should treat your dedicated down-voters as a badge of honour, rather than just the petty, spineless, pondlife that they actually are - because what you say here on these threads clearly hurts, scares and annoys all the Establishment, Corporate, 0.01% interests. Good !!! Persevere !! Solidarity !

pax, amor et lux ...

[-] 2 points by beautifulworld (22872) 5 years ago

"Wolff argues that workplaces need to go beyond majority ownership, to "Worker Self Directed Enterprises" (WSDE). He makes a strong case that workers in control of their own workplaces are much less likely to ship their own jobs overseas, underpay employees or pollute their own communities."

"If more enterprises were employee-owned, fewer workers would face daily exploitation. The ratio of average CEO pay to worker pay (currently, an astounding 380:1) would shrink. Inequality, which harms society and hampers economic growth, would lessen."

Thanks, Shadz, for all the great links as usual. Richard Wolff is brilliant on the economy and makes so many good points. And, thanks also for the kind words. The Dem shills, gun nutters, FBI agents, corporate drones, you name it, are all on here working their agendas. Occupy is the most important thing to happen to this country in terms of social change since the New Deal and the Civil Rights movement. It threatens many people whose agenda's are under attack by a movement that seeks social justice and economic fairness. Go figure that not everyone would be for these things....

[-] 5 points by shadz66 (19985) 5 years ago

"Occupy is the most important thing to happen to this country in terms of social change since the New Deal and the Civil Rights movement. It threatens many people whose agenda's are under attack by a movement that seeks social justice and economic fairness." - Amen & re. the excellent Richard Wolff :

Solidarity @ The 99%, to you & all those striving for positive change and democracy.

per ardua ad astra ...

[-] 1 points by beautifulworld (22872) 5 years ago

Richard Wolff is awesome because he is an economist who gets it and who is capable of laying out what a new system might look like.

"As has happened often in human history, what provokes change is less any clear vision of where we go next and more the intolerability of where we are. Capitalism is no longer "delivering the goods" for most people.The circle of its beneficiaries grows smaller and richer and more out of touch with the mass of people than ever."

"Workers have a long history of multiple kinds of cooperatives. That is, workers can cooperatively own, buy ,sell, and manage. All such cooperatives can and often do co-exist with a capitalist organization of production in the precise sense of workers being excluded from the decisions of what, how and where to produce and what to do with the profits."

We can do this. We can create an economic system that empowers all people, that allows all people to live fulfilling and decent lives. There is plenty of wealth to go around. We just need for everyone to share.

[-] 3 points by shadz66 (19985) 5 years ago

"The Crisis of Capitalism with Richard Wolff in conversation with Robert Ovetz Ph.D"(Video) :

Thanx for extracting excellent excerpts & solidarity @The 99% !

ad iudicium ...

[-] 2 points by beautifulworld (22872) 5 years ago

That's a great video. I've seen it and highly recommend it. He explains very succinctly why capitalism is failing today and why we need a new economic system to replace what has now become antiquated.

[-] 4 points by shadz66 (19985) 5 years ago

Prof. Richard Wolff @ OWS :

Solidarity @ OWS & u, bw & agkaiser's video here, also comes highly recommended.

fiat lux ...

[-] 3 points by beautifulworld (22872) 5 years ago

In your first link Wolf talks about how 12 million American students attend public colleges and universities while only 3 million attend private schools and how the entire education system is at risk because of the way the private schools extract profit from the entire system even though they are officially "non-profit." Very interesting.

Thanks for all the great links, as usual. Richard Wolf is well worth reading and watching.

[-] 3 points by shadz66 (19985) 5 years ago

a) "The Academic-Industrial Complex", by Graham Bowley : http://www.nytimes.com/2010/08/01/business/01prez.html?pagewanted=all&_r=0 ,

b) "Public Education - 'Failure by Design',", by Noam Chomsky : http://www.informationclearinghouse.info/article30985.htm ,

c) "Public Education Under Massive Corporate Assault - What's Next?", by Noam Chomsky : http://www.informationclearinghouse.info/article28798.htm (Video & partial transcript),

d) "Neoliberalism and the For-Profit, Predatory Educational Industry - You Can't Regulate a Criminal Enterprise", by Danny Weil : http://archive.truthout.org/neoliberalism-and-for-profit-predatory-educational-industry-you-cant-regulate-a-criminal-enterprise6 &

e) "Can Democratic Education Survive in a Neoliberal Society?", by Henry Giroux : http://truth-out.org/opinion/item/12126-can-democratic-education-survive-in-a-neoliberal-society .

From the last link : "The democratic mission of public education is under assault by a conservative right-wing reform culture in which students are viewed as human capital in schools that are to be administered by market-driven forces." & "Money no longer simply controls elections; it also controls policies that shape public education. One indicator of such corruption is that hedge fund managers now sit on school boards across the country doing everything in their power to eliminate public schools and punish unionized teachers who do not support charter schools. In New Jersey, hundreds of teachers have been sacked because of alleged budget deficits. Not only is Governor Christie using the deficit argument to fire teachers, he also uses it to break unions and balance the budget on the backs of students and teachers. How else to explain Christie's refusal to oppose reinstituting the "millionaires taxes," or his cravenly support for lowering taxes for the top 25 hedge fund officers, who in 2009 raked in $25 billion, enough to fund 658,000 entry-level teachers"

For readers who do not have time for all the links above, I recommend the 1m30s video in my previous comment above as well as the first two links above (NYT & Chomsky) and indeed, as you say, Richard Wolff [ http://rdwolff.com/ ] is a very relevant source on the matter of Education as well as other matters.

fiat lux ...

[-] 3 points by beautifulworld (22872) 5 years ago

Our children's education is under assault as these idiots seek to turn it into a for profit industry, exploiting our children financially and providing them with a sub-standard education. Our society will pay big time for these decisions down the road when these kids are indebted and ill-prepared for the working world.

Thanks for all the great links, and all you do here, Shadz, as usual.

[-] 3 points by shadz66 (19985) 5 years ago

"Indentured for life - The College Conspiracy" (Video) :

The Scumbag Banxters would have their fangs in the kids and make them Indentured Debt Peons even before they get a chance to become Wage Slaves, unless we all resist !!! Oh, for the now halcyon days of mere wage slavery, lol, hmm & hrumph !! Solidarity To The Youth Resistance !

respice, adspice, prospice ...

[-] 3 points by beautifulworld (22872) 5 years ago

I hadn't thought of it that way. Good grief. In debt before they even get to be wage slaves. So, true, Shadz. I recommend kids focus on public institutions in their home states if possible. Go into as little debt as possible, and go part time so you can work to pay your way through if you have to.

Not to mention, that not that long ago "Parent Loans" were unheard of. Today, not only are the students become indebted, so are their parents.

[-] 2 points by agkaiser (2097) from Fredericksburg, TX 5 years ago

Have you seen this animated The Crisis in Capitalism?


[-] 7 points by beautifulworld (22872) 5 years ago

"When you diminish wages then you've got a problem. Where's your demand gonna come from? The answer was well, get out your credit cards, we'll give everybody credit cards....American households, British households, have all roughly tripled their debt over the last 20/30 years."

He says that Capitalism never solves this crisis problem, it merely shifts it around geographically. Hence the sovereign debt crisis.

Here's another good animated video that explains the European Debt Crisis:


[-] 1 points by frovikleka (2563) from Island Heights, NJ 5 years ago

It has been a very interesting journey for me in the last 17-18 months, as I told a group of fellow Occupiers at a meeting last night in NYC. It was my first meeting since returning from AK on the 5th. Anyway I told them, "When I first came to Occupy, I worried that maybe they were a little too radical for me....and now i worry that they are not radical enough." Everyone laughed. As more and more people become educated as to how capitalism has, and continues to fail us, my journey will be repeated by others over and over again. Anyway I blame/credit you most for my slow radicalization. Errr...Thanks. ;-)

BTW, I meant to answer your last comment on that cold 5 degree F Thanksgiving night, but lost it. While everyone else had gone to sleep after a great dinner, i stayed up with my one daughter who stayed overnight at her sister's. As we took time to talk to each other on a host of subjects, she continued working on her graduate level anthropology studies.... and me reading comments and commenting on the forum. I remember you asking me if she had ever thought about doing a study on the 'times' we are in now, which I know that she would not have the time to do anytime soon, but something that she may be interested doing in the future.

We have though recently talked about how her world, the study of anthropology, and mine with my involvement in Occupy have collided with the Idle No More movement, and how indigenous people's rights are being squashed by the same oppressors. I fully realized even before her 'strong insistence' though that their suffering has gone on for much longer, and has been much more severe than ours.


[-] 3 points by shadz66 (19985) 5 years ago

Solidarity & I am more than humbled by what you say. You have consistently 'walked it like you have talked it' and respect to you for your courage and commitment. Your daughters are blessed to call you 'dad', as is 'li'l hafita' to call you 'gramps'. Stay well & aware 'O' & peace, love and light to you and yours.

pax, amor et lux ...

[-] -2 points by aville (-678) 5 years ago

obama just signed a law that gives himself and all former presidents armed guards for life.

[-] 1 points by beautifulworld (22872) 5 years ago

I am no apologist for Obama.

[-] 2 points by Gillian (1842) 5 years ago

I always feel that I'm between a rock and hard place because no matter what I do to save money, some company will punish me for doing so. Remember Obama's finance/credit reform that was supposed to stop those excessive bank fees and credit card fees? During that time, 2 of my credit cards closed my accounts without any warning simply because I didn't carry a balance each month ( I paid off each card every month) and one of my cards decided to raise the interest rate to almost 30 percent!! while also lowering my limit to just above my balance at that time. These actions also affected my credit score and so then my insurance increased. Another thing that has happened to me twice now is that my local utility companies and my county have gone to great lengths to issue cut off notices for amounts that are NOT even due for another few weeks. They pay a man to come out and put ' fake' cut off notices on doors. I'm not talking about past due..I'm talking CURRENT! It's a fear tactic to get people to pay in advance. They will also cut off our water to scare people AND then charge them a severe reconnection fee in addition to super inflated late fees. The county did this right before Christmas..gave no one any notice or warning and yet yesterday, I heard on the news that the state of VA had the best tax income in December which is what they needed to increase their budget for 2013. Lovely. My cable company now charges a 25.00 late fee. But, I can't cancel without being penalized since my internet is included.
FOOD is outrageous and requires that everyone shop very very wisely.
I don't have the expenses that many have because I don't eat out, don't buy designer coffees and all that jazz but even in my dull lifestyle, I can barely keep up and as soon as I create a budget, some company will stick it to me and blow everything. I'm sick of it!
Obamacare will bankrupt me for sure and additionally, I have less income thanks to the increase in SS. It never ends and I'm so tired of fighting the system. My mind and body cannot handle the stress anymore of having to make phone calls to argue for fair treatment.

[-] 3 points by beautifulworld (22872) 5 years ago

I hear ya, Gillian. We're all in the same boat. It really does not have to be this way, so keep fighting as Ms. Olen says:

"So let me suggest another financial resolution, one that will do more for our future financial outlook than simply forgoing a few consumer goods: talk about money. It’s not shameful. Pick a cause, and resolve to fight for change."

[-] 2 points by gsw (3144) from Woodbridge Township, NJ 5 years ago

Thank you for the link to Charles Eisenstein. His perspective on schools was spot on and my daughter might appreciate it greatly, as she had a similar rebellion episode to schooling in her later years. The part 2 and 3 were good. He has a free version of his book online, The Ascent of Humanity, which I look forward to, and sacred economy.

[-] 2 points by beautifulworld (22872) 5 years ago

Anytime. I really appreciated what he said about school, too. Why do kids have to hate Mondays? I never thought it made much sense either. Kids should love school! And, interestingly, it is all interconnected to the way our society is set up and our sick money economy.