“Money makes money,” wrote Benjamin Franklin, “and the money that money makes makes money.”
That, of course is the magic of compound interest (plus investment and reinvestment).
Last week, the FT published this extraordinary chart of U.S. household equity ownership since 1990:
It’s striking that the top 1 percent have held close to 50 percent of this wealth across the entire time span, yet the post-2008 acceleration is more dramatic still.
Compounding works, and it works really, really well when you own 56 percent of the wealth (or close to 90 percent, if we look at the top 10 percent of households).
The trend lines are clear, and so is the math. Some kind of debate about whether this is a problem for society can’t wait forever, and, if it is a problem, any attempt at remedy is going to have to be political. That debate is going to continue for a lot longer than eight months.
Colin Steele 