Interest vs Currency Debasement
Nominal growth is not purchasing power. Interest expands a balance; debasement erodes the unit.
Interest is the growth rate of deployed capital. Debasement is the erosion of the unit you measure that capital in. Confusing the two is how a rising balance becomes a shrinking standard of living.
Interest — expansion
GrowthCompensation paid for the use of capital over time. It prices time-preference, credit risk and opportunity cost. Compounding then puts interest to work on itself.
Debasement — erosion
DilutionWhen the monetary base expands faster than real output, each unit buys less. Historically this was clipping coins. Today it is M2 growth and fiscal monetisation.
If capital earns 5% and the unit expands 8%, purchasing power is falling. Always subtract debasement before celebrating a nominal gain.