The Application of Compound Interest To The World's Problems
⊗ Jun 21, 2020 | read time: 2min
In the finance world, compound interest is a well-known principle applied by all investors. This fundamental equation dictates that the accumulated amount will increase by a factor (interest rate) over the number of years. The longer the period, the greater the accumulated amount will be.
What if we reapply this fundamental concept/formula to the problems of the world? It is silly thinking about it, likewise blogging. Here is my take…
The Challenges Of Earth
We’ve been dealing with a few global issues for quite some time. But 2020 became a record year as all those pots of problems seem to simultaneously overflow.
Let us visualize each issue mentioned below as a debt. As time progresses, interest accumulates on each at varying rates. Effectively creating more debt - problems. What if all those debts are getting close to the due date?
First, we have Climate Change. Halfway through 2020 and it is already shaping up to be another record year. May was known as the hottest year on record. This was a major step up from 2019, another record year. Last year we also noticed some significant events. Remember the Australian fire to name a few? While a few nations are taking steps to reduce their carbon footprint, it is nowhere close to what is needed. Debates & strategies have changed over the years, but the increase in greenhouse gas emissions remain constant. I think Earth has been accumulating our emissions (interest rate) over the years, with each year compounding the results of the previous. Stack this over a few centuries and the pot is about to keel over.
World Economic Collapse. This has been compounding for several years. Mid 2019, we’ve heard the warnings of a possible recession. It was reported that it would have been drier than the previous.
War and more war. It seems like there is no end in sight. Nations are fighting amongst themselves has become the norm. It seems like the world is heading towards another world war. Top of the lists is the US and China tension. Over the years it has fluctuated, between intellectual property to trade tensions. Then you have the US-NATO Ally ready to kick things off in the artic. Next is the Middle East; every day there is a conflict. At the time of writing, Israeli jets are attacking Syria. Now don’t forget cyberspace. Nation sponsored cyberattacks are on the rise, again. Reports have shown that this will be adding more fuel to the fire.
Still not done yet. The next battleground is aerospace. At this point we’ll start waiting for Justice League to join the fight; Superman help!
Social unrest. People continue to voice & demand change from their leaders. 2019 started off with the Hong-Kong protests, all the way to the protest in Iran. Then came the COVID, the big compounder in 2020.
But that didn’t stop #BlackLivesMatter protestors. The issue of police brutality and people of color was brought into focus after the killing of Mr. G Floyd. With the world on lockdown, this issue took center stage and blossomed into a global issue.
COVID-19 The Tipping Point
The world was on its knees and COVID came and pushed on its face. The world became aware of this deadly disease in late 2019. Based on reports the number of lives lost is staggering; not to mention unreported numbers. No nation was speared and the impact of this disease is ongoing. We’re six months in and COVID is gearing up to apply another round of compound interest.
In closing, when you apply the effects of compounding on issues of the world, you get an unpleasant answer.
Walk good, keep safe, and wash your hands.