I'm starting this thread and asking for investigative help from fellow Kossacks because I'm sick of hearing various versions of a supposed quote from Albert Einstein about the miraculous power of compound interest.
This irrelevant and very possibly apocraphyl appeal to Einstein's authority as a physicist and all-around genius has become a basic talking point in the conservative drive to privatize Social Security.
John Snow has been giving speeches like this one http://www.ustreas.gov/press/releases/js2294.htm
in which he says "Albert Einstein believed, and the President and I agree, that compound interest is one of the most powerful forces in the universe."
Dick Army, in a piece called "Why Liberals Hate the Ownership Society Agenda" here http://www.freedomworks.org/informed/issues_template.php?issue_id=2039
which says "Large [private retirement accounts] are the best way to let all Americans build wealth because they maximize the impact ofcompound interest-what Einstein called the most powerful force in the universe."
But a simple Google search shows that there are many versions of this quote floating around the internet and they don't at all---even on their surface---say the same thing. And even if they did, without the original context, we have no idea what Einstein might have meant by it. It could very well have just been a joke, or a sarcastic remark about greed.
Anyway, I've already found the variations that I'll post below and I'd like help in sorting through all this and developing a definitive strategy for combatting this pernicious talking point. Here are my initial thoughts:
- No one, as far as I can see, can pin down the quote to any legitimate reference source.
- There are many variations which don't at all mean the same thing. Further, there appears to be a process of inflation that takes the quote from "the most fascinating mathematical concept" to "the human race's greatest invention" to "the ninth wonder of the world" to "the most powerful force in the universe." The differences here are exponential!
- Even if Einstein could be pinned down to saying the last version, there's no way to know how he meant it (ironically, jokingly, sarcastically, etc.) without the original context.
- Even if he said it and meant it seriously, the appeal to him as an authority figure is spurious. He's a physicist, not an economist. His legendary "great brain" does not give him the power to transfer his authority in one field to another unrelated one.
- Most troubling is that the myth of Einstein as the iconic figure of god-like intelligence is being used to conflate economics with metaphysics. Snow, Army and others are using this meme to imply that compound interest is some kind of sublime, magical, transcendental force, capable of annulling the most basic kitchen-table conceptions of economics. The appeal is essentially to the "mystery" that is relativity theory. Here the resonance of that "mystery" is being transferred to the magical power of compound interest,which can supposedly make everyone rich without anyone paying the price.
- Does compound interest even relate to the privatization plan Bush is pushing?
P.S. Can someone who understands the economics explain to me how compound interest can be viewed as some sort of benign force in the universe? It's a social construct---your money only "grows" in value if the rest of the economy recognizes and enforces the investment and its terms---right? And why can't the same principle be used to put people into ever-greater debt----as with people holding credit card debt or the victims of the sharecropping system? Am I being economically naive? Am I missing something here?
Here are the quotes I've found and the URL's:
Einstein is widely rumored to have once said that the most powerful force in the universe is compound interest. While this rumor lacks any verifiable basis, he is documented to have said something almost as compelling: that compound interest is the greatest mathematical discovery of all time. (http://www.allsoulsnyc.org/publications/sermons/ggsermons/compound-interest.html)
Albert Einstein is credited with discovering the compound interest rule of 72. Referring to compound interest, Albert Einstein is quoted as saying: "It is the greatest mathematical discovery of all time" (http://www.ruleof72.net/rule-of-72-einstein.asp)
Depending on the source, Albert Einstein referred to compound interest as the eighth wonder of the world, the human race's greatest invention, or the most powerful force of the universe. (http://en.wikipedia.org/wiki/Compound_interest)
John Snow: Albert Einstein believed, and the President and I agree, that compound interest is one of the most powerful forces in the universe. (http://www.ustreas.gov/press/releases/js2294.htm)
Dick Army "Why Liberals Hate the Ownership Society Agenda" --- Social Security program is the opposite of ownership: workers send their payroll taxes to an imaginary trust fund, and Congress spends those resources. Instead, we want to create large Personal Retirement Accounts (PRAs) which individual workers own and control. Large PRAs are the best way to let all Americans build wealth because they maximize the impact ofcompound interest-what Einstein called the most powerful force in the universe. (http://www.freedomworks.org/informed/issues_template.php?issue_id=2039)
Albert Einstein supposedly said that compound interest was the greatest wonder of the universe, or words to that effect. No one seems to know exactly when he said this, or to whom, so maybe the story is apocryphal (today's vocabulary word). On the other hand, if he didn't say it, he should have. (http://www.fool.com/foolu/askfoolu/1999/askfoolu990915.htm)
It is reported that Albert Einstein called compound interest the ninth wonder of the world (http://www.frugalfun.com/compoundinterest.html)
Many years ago, someone asked Albert Einstein what he thought was the human race's greatest invention. His reply?
"Compound interest." (http://www.aarp.org/financial-investsave/Articles/a2002-10-08-compoundint.html)
Einstein was asked what he considered to be the most fascinating mathematical concept. Without hesitation, he replied, "compound interest." A man known for his wit, the reporter laughed out but when he looked at Einstein's serious face, he relented. (http://niazi.com/Neurons/einstein.htm)