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this post was submitted on 09 Mar 2025
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A Boring Dystopia
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Yeah, I was calling out savings accounts cause that's what I imagine most people are talking about when mentioning compound interest. The video is talking about the false promise of compound interest and I wanted to call out the real reason it doesn't work.
As for the standard 2-3% inflation the fed targets. I wasn't saying it was bad, just that it means that you loose value if your money isn't growing. I can't say I studied economic theory far enough to have a meaningful stance on if that's good or bad.
I don't think most people think of a savings account as the main example of compounding interest. A bond would probably be a better example.
If you're citing the saving account as the failure of compound interest, it isn't because of a low 5% return, its because its not a fairly consistent return at 5%. If there was a consistent 5% return year over year savings account that would be a great investment even with inflation for the portion of your investment you needed to keep safe. This is essentially what bonds are.