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Compound Quote or Compounded Misquote? February 17, 2008

Posted by Matsu in News and politics, Random, Web.
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For all of the misinformation found on the Internet I can’t help but appreciate the ease at which I can either verify or dismiss a quote by doing a quick search using the web. (Notice I did not use Google as either a verb or a noun – see previous post for explanation.)

Albert Einstein

My latest search for the truth was about a quote I heard on TV. Yup, TV’s not aways the best source of truth, but that’s where this tale begins.

I heard a TV reporter talking about the importance of personal savings and he made the statement that Albert Einstein said compound interest was one of the greatest human inventions. When I heard it I immediately wondered if there was any truth to that quote. So, I turned to one of my favorite protectors of truth and debunkers of myth, Snopes.com. According to this snopes.com article, there is no record of Einstein ever making a statement about compound interest.

Further research on the Internet turned up this website that thoroughly dissects the quote attributed to Einstein and details reasons that it is totally unlikely  that he said anything about compound interest.

One of the strongest arguments that Einstein never said anything about compound interest was the term first appeared in print about 30 years after his death. So, if Einstein had said it, he would have been the founder/creator of that phrase. Such a unique statement would have been documented in his own writings or by reporters of the day.

It turns out that according to this blogger, even the Albert Einstein Institute says that Einstein never said anything about compound interest. It also seems that there are as many versions of this quote as there are people misquoting Einstein.

Of course, whether or not Einstein said that compound interest was the best human invention the truth is that it can be the friend to an investor and the bane of a borrower (just ask someone who has a mortgage and looked at the total cost they will pay by the end of the mortgage). For proof of the power of compound interest, check out this Wikipedia page that explains the Rule of 72.

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Comments»

1. Philip J. Murphy - December 19, 2008

Einstein could well have joked about the power of compound interest but he would never say it is “the best human invention.” Frederick Soddy, a nuclear physicist, and like Eintsein aware of how feedback systems (such as breeder reactors) work, warned of usury’s shaky foundation some time ago. Take the silver Judas threw away as an example. If a gold equivalent (1993 value) were invested at 5 % compound interest for 2,000 yrs. it would equal 800 trillion earth’s made of solid gold. You cannot have exponential growth of anything indefinitely without the danger of it becoming explosive. Figures are from: Living Within Limits, Garrett Hardin, Oxford Univ. Press, 1993

2. will - December 5, 2009

I don’t know if he ever said the quote, but there is a possible second meaning to the quote. If Einstein said this, he may have been talking about the compound interest of knowledge of information. As we learn more about he world, the universe and ourselves, we are able to discover even more about those subjects. The rate of growth in technological industries has exploded in the last century, and even the last few decades because of this fact. Again, I have no information as to whether anything along the lines of the quote actually cam out of Einstein’s mouth, but many quotes that can be traced to him deal with deeper issues than science, so why should this quote be limited strictly to economics?


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