My ancestors gave their $1 to the Knights Templar shortly after they were founded in 1129. Using innovating banking techniques (for the early middle ages) that locked in exactly 5%, no more, no less, every year, that $1 grew to $5,630 by 1307 - when the Order was arrested by the French Crown.
Now by this stage, French Royalty had overthrown the Merovignian traditions, and the Carolignians had implemented primogenture, which prevented that $5,630 from being split among the heirs.
As such, growth continued (remarkably, at a consistent 5%), so that when Louis XIV ascended to the throne in 1643 my family had claim to $70.6 Billion dollars. Several key wars, the revocation of the treaty of Nantes, and the Sun King's lavish lifestyle did not affect my 5% at all.
So much so, that by the time his grandson was beheaded during the French Revolution in 1789, my ancestors' $1 was worth $834 Trillion dollars.
Now Napoleon, on crowning himself Emperor, probably should have used that money to buy Europe, instead of invading it. But mindful of the powerful miracle of compound interest he was manifesting for my family, he did not - in fact, his wars of conquest were largely driven by the need to find that 5% each year.
You can imagine the relief in France in 1940 when that amount (which by now had reached $119.8 Quadrillion) was handed over to the Nazis. US Troops located the amount shortly after the landing at Normandy, and decided only the great US of A was able to continue the miracle.
And so the money grew, through Kennedy, Nixon, Reagan et al, until by 2008 it was worth $3,149,637,318,314,090,000. In one of his final acts as President George W Bush handed control of the money into my personal safe keeping (as with Social Security, he firmly believed I would be able to do better investing it myself).
And so it was that on this day, 12 months ago, I invested that entire amount in Lehman Brothers stock.
I should probably check on that soon to see if the 5% came through for the 870th consecutive year.
Humorous, but I think you missed some digits for the 2008 figure, as $3,149,637,318,314,090,000 is "only" 3 quintillion, and it was $119.8 quintillion back in 1940.
That model has the implicit assumption that there has been uninterrupted law, order, conduct of business, and interest-paying accounts for the last five hundred years, which isn't the case.
There's also a more interesting question - what does the notion of "$1 in 1500" even mean?
I remember reading somewhere that one of the latest generation of the Du Pont or Rockefeller family were somewhat surprised to find out that their trust was just a few million dollars, due to the fortune being spread across so many descendants. And I would guess that many family wealth managers focus more on capital preservation and income than growth, so inflation eats away at fortunes over time.
Assuming 3% inflation, $1 in 1500 is over $3.4 million today. So it's a bit of a stretch to say that lots of people had $1 in 1500. That's the miracle of compound inflation!
Miracle, eh? Try "fiction". Unlimited exponential growth is not even theoretically possible in a three-dimensional universe (goes for tree data structures too, BTW).
The solution is option 2: every once in a while, great fortunes are wiped out by great misfortune (if not by plain incompetence): War, natural disaster, hyperinflation, nations defaulting on their debts. You cannot hedge against everything.
A three-dimensional universe (and, I forgot to mention, the speed of light as an absolute limit) does preclude unbounded exponential growth. Anything physical that grows exponentially would eventually (and faster than you think) have to form a sphere whose radius increases faster than the speed of light. Thus, exponential growth is, in the real world, never more than a comparatively short phase.
No. One gold coin bought a good suit of men's clothing in 1500 and will buy a good suit of men's clothing today. That's all you can do. Everything else went to seed.
Now by this stage, French Royalty had overthrown the Merovignian traditions, and the Carolignians had implemented primogenture, which prevented that $5,630 from being split among the heirs.
As such, growth continued (remarkably, at a consistent 5%), so that when Louis XIV ascended to the throne in 1643 my family had claim to $70.6 Billion dollars. Several key wars, the revocation of the treaty of Nantes, and the Sun King's lavish lifestyle did not affect my 5% at all.
So much so, that by the time his grandson was beheaded during the French Revolution in 1789, my ancestors' $1 was worth $834 Trillion dollars.
Now Napoleon, on crowning himself Emperor, probably should have used that money to buy Europe, instead of invading it. But mindful of the powerful miracle of compound interest he was manifesting for my family, he did not - in fact, his wars of conquest were largely driven by the need to find that 5% each year.
You can imagine the relief in France in 1940 when that amount (which by now had reached $119.8 Quadrillion) was handed over to the Nazis. US Troops located the amount shortly after the landing at Normandy, and decided only the great US of A was able to continue the miracle.
And so the money grew, through Kennedy, Nixon, Reagan et al, until by 2008 it was worth $3,149,637,318,314,090,000. In one of his final acts as President George W Bush handed control of the money into my personal safe keeping (as with Social Security, he firmly believed I would be able to do better investing it myself).
And so it was that on this day, 12 months ago, I invested that entire amount in Lehman Brothers stock.
I should probably check on that soon to see if the 5% came through for the 870th consecutive year.