# The 6% Solution, Plus Interest : How Statistics and the Three Wise Men Could Have Saved Us From the National Debt

September 28, 1986|JACK SMITH

Recently, I confessed my inability to conceive of phenomena that are either very large or very small.

Even as relatively small an amount as a trillion dollars, which we have already surpassed in our national debt, is beyond me. As I noted, if you spent it at \$1 a second it would take you 31,688 years to spend it all.

I am also humbled by the news that IBM has generated light pulses so short that as many of them could be crowded into a single second as there are seconds in 30 million years.

I am intellectually demoralized by the discovery that a super-tiny subatomic particle known as the "bottom quark" lives only 1.5 trillionths of a second.

Now my mind is boggled by the concept of compound interest.

All of us are familiar with compound interest. If we invest a dollar at 6% interest, compounded, the second year's interest is paid on the principal plus the interest, and so on.

That seems easy enough.

But the potential tyranny of compound interest has been calculated by an economist named E. L. Anderson, author of "The Upright Spike of '79: Doomsday for America."

Maxwell H. Smith of Rosemead has sent me an excerpt from Anderson's book analyzing the product of compound interest.

Let us say, Anderson says, that one cent had been lent at 6% compounded annually by one of the three Wise Men who attended the birth of Jesus Christ.

He says that by 1977 the amount accrued would have been \$1,070,000 plus 42 zeroes. (By now, my son says, it would be \$1,809,041 plus 42 zeroes.)

Anderson says that that is one quindecillion, 70 quattuordecillion dollars. That doesn't help me. All I can say is that it sounds like a lot of money.

Look at it another way, Anderson suggests.

If you made a gold ball out of all that money, figuring gold at its 1977 price, the ball would have a radius of 8.76 billion miles--2.2 million times that of the Earth and 100 times larger than the Earth's orbit .

"If the Earth were placed on the surface of this vast mass," Anderson says, "it would be proportionally the size of a modest house on the surface of the Earth."

I have no idea whether these calculations are anywhere near correct, but since we have been brought up in this century to believe in the magic of scientists and mathematicians, I take them on faith. Anyway, I believe my son.

Anderson's point is of course economic and political. He warns that the national debt must be either reduced or repudiated, neither of which he expects to happen.

"We must prepare for the worst," he advises.

I am just as overwhelmed mentally, but not so disturbed, by the news that before long we will be able to print all the books in the world on an area about three yards square.

This was forecast in a story by Bettyann Kevles reporting that a young man named Tom Newman has already printed the first page of "A Tale of Two Cities" in letters so small that his method could reduce the entire Encyclopaedia Britannica to the head of a pin.

This achievement was inspired by a challenge from the famous Caltech atomic physicist, Richard Feynman, who 26 years ago had offered a \$1,000 prize to anyone who could reduce a book's page to 1/25,000th its size so that it could be read by an electron microscope.

As an owner of the Britannica, which runs to 31 volumes and occupies two 32-inch shelves in our house, I simply cannot imagine the entire text being printed on the head of a pin.

I once expected to read the entire Britannica, so that I would know everything there was to know about our world. Of course, one of the realities of aging is the acceptance of reduced expectations. I no longer hope to know everything, and I know that if I were to read through Britannica tomorrow I would have forgotten most of it the next day.

Besides, people like Feynman keep discovering new particles within the atom, ever smaller than the last. I doubt that the bottom quark is actually the bottom quark, and Britannica is always years behind the edge of this dynamic world.

But the prospect of miniaturizing printed matter gives me some hope for a solution to our problem of clutter at home.

If Newsweek, Discover, Family Circle, Vanity Fair, Smithsonian, Life, Terra, the Skeptical Inquirer and the other periodicals we take could be printed on the head of a pin, my wife could simply put the pin in a cushion and our house would be a lot neater.

Of course we'd have to buy an electron microscope to read it all, but we could probably get one on time from Sears or Montgomery Ward at only 6%.