Understanding Compound Interest Using Nature’s Examples

compounding miceHumanity’s first experience with compounding – the accumulation of vast numbers through the systematic addition of small sums over a period of time – came from nature, not mathematics.

Thousands of years ago in the Fertile Crescent of the Middle East, ancient humans abandoned their nomadic ways, formed the world’s first communities, and began to till the ground, raising wheat, barley, and other grains. Growing seasons concluded with reaping and storing grain, which was used during months when agriculture was not possible and other food sources were scarce.

But because the large amounts of grain were stored in roofed buildings (silos), they provided an irresistible food source to Mus musculus – the common house mouse – which would feast protected from their natural enemies by the shelter of the silos. As a result, mice became extremely prolific, eventually leading to the spread of mice around the world as they followed migrating agriculturalists. In fact, a single pair of mice can produce 70 offspring during their two-year life, with an average litter of seven pups, five times a year.

The addition of 70 mice over a two-year span would be bothersome, but not catastrophic. A single mouse eats about one gram of food per day; 70 mice would eat about 70 grams, or less than a single bushel of wheat each year. However, when considering the effect of “compounding”, the mice pose a serious threat.

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10 Tips to Save Money & Stay Safe When Holiday Shopping

Christmas shopping woman holding giftsThe holiday season is also the biggest shopping season of the year. The time period from Black Friday through December 24th can mean the difference between an annual profit or a loss for some retailers. As a consequence, retailers advertise sales, extend store hours , and open online Internet storefronts to fulfill the demand for Christmas gifts. Almost two-thirds of shoppers will “showroom” their purchases by checking and comparing products online before venturing into a brick-and-mortar store, and according to The Christian Science Monitor, online retailer Amazon has aggressively matched or beat prices of retail giants such as Best Buy and Walmart.

The holidays are filled with emotion, not the least of which is a desire to give your loved ones the best gifts possible. Unfortunately, we tend to associate value with price and, as a result, spend much more than we can afford. Retailers understand how to trigger your emotional buttons, encouraging you to spend more, rather than less. So in spite of all the hubbub, it’s paramount to protect yourself and carefully watch how much you spend this season.

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What Should You Tell Your Kids About Santa?

Santa Gets a Bear HugParents are often conflicted during the holidays when Santa Claus is ever-present in the media and community. Should the belief in an imaginary, mythical figure be encouraged? How will your child feel when he or she discovers the jolly figure in the red suit carrying a big bag of Christmas presents is not real?

While there are no definitive answers, the following information may help you make the right decision for you and your child.

The Development of Imagination

Between the ages of two and three, children begin developing imagination and engage in some form of play-acting or pretend. Most parents have experienced being served an imaginary meal, and few question whether the child actually believes the food is real.

Researchers agree that imagination is an essential tool children use to learn about things and people they don’t directly experience. Dr. Paul Harris of the Harvard Graduate School of Education says that imagination and role-play appear to have a key role in helping children understand someone else’s perspective: “Whenever you think about the Civil War or the Roman empire or possibly God, you’re using your imagination. The imagination is absolutely vital for contemplating reality, not just those things we take to be mere fantasy.”

Dr. Jacqueline Woolley at the University of Texas in Austin has conducted a number of child studies on imaginary or mythical characters such as Santa Claus, the Tooth Fairy, and the Easter Bunny. Her research indicates that children as young as age three can distinguish between reality and fantasy, but lack the ability to accurately assess the difference when presented with available evidence. In other words, children learn by what they see, what they hear from others (testimony), and inference, the latter becoming more reliable as they grow older. Studies suggest that belief in Santa Claus begins around age three, peaks at about five, and declines thereafter, so that by nine, only a third of children still believe.

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The Failure of America’s Political System – Understanding Hyper-Partisanship

govt shutdownIf you are frustrated, disgusted, and fed up with the failure of Congress and the President to address the primary issues facing the country, you’re not alone. According to a Pew Research Poll, more than 80% of citizens don’t trust the government to do what is right most of the time. The fiasco over raising the federal debt to maintain America’s unrivaled credit standing was just the latest example of a Federal Government so polarized that basic legislation and critical appointments are almost impossible.

International worries about our political dysfunction and its causes have echoed across the world in foreign newspaper headlines. On July 13, 2011, the UKs “Telegraph” published a story entitled “System Failure: U.S. Democracy is Nearing its Limits.” On October 17, 2013, Germany’s “Siegel Online International” led with “America’s political dysfunction threatens its global leadership.” Canada’s “Toronto Star” wrote on October 16, 2013 that “Adversaries turn into enemies in U.S. politics.” And, France’s “Le Monde” ran a story on May 16, 2013 titled “Billionaires unchained.”

The questions naturally arise: How did we get to this point? And can our system be fixed?

SOURCE: Gallup®Politics, June 13, 2013
SOURCE: Gallup®Politics, June 13, 2013

A System Designed for 1787

The Founding Fathers – the 55 delegates who drafted and signed the Constitution – intended to establish a government that was much more democratic than any the world had ever seen. Reacting to the monarchical system in England, they strove to define certain rights for American citizens that could not be taken away.Yet, a government ruled by a majority – and therefore susceptible to mob rule – scared them. As a consequence, they founded a constitutional republic where power is spread and counter-balanced among three branches of government: Congress, the president, and the courts. Passing laws is a slow, deliberate process that requires approval from all three of these branches.

This system of checks and balances enabled America to become a superpower economically, militarily, and morally by the 20th century. Unfortunately, our complicated and overly legalistic system can be a disadvantage in today’s fast-moving world with rapidly changing technology, open borders, dependent economies, and international competition.
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