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ON THE SUBJECT of Peter Minuit’s legendary purchase of Manhattan for 60 guilders, “RepubAnon” writes,

I’ve heard it said that those same 60 guilders, if invested at 5% annual interest compounded monthly, would allow one to repurchase all of Manhattan at the current market prices.

Dr. Boli understands how mere mathematics might lead one to that conclusion, but he believes it is in error. If you had put those 60 guilders in a bank account in 1626, your bank would have started charging inactivity fees after six months, and overdraft penalties when the inactivity fees exceeded the original deposit; and you would now owe the bank all of North America except for Jacksonville, North Carolina, which nobody wants. Banks aren’t in business to hand you money on a silver platter, you know.

. 5 comments.

Comments

  1. P Farmer says:
    May 25, 2011 at 11:32 am

    Dr Boli,

    Thank you for your trusted advice in relation to explaining the above financial transactions. The banks certainly do complicate things, but I guess it is due to the wonders of the weird and enchanting system of exchange we have today.

    My banker recently gave me a tip about the benefits of our wonderful monetary exchange system. He said the reason it is so successful and all-encompassing, is that you do not have to like someone to do business with them; you just have to trust them to complete the transaction.

    A little green in areas of finance, I asked how do you trust someone you do not know? Not a problem the banker remarked. “We take care of that via our 1000 point identity check and once passed we give lines of credit and business can flow uninhibited and the system works for you. Trust is the cornerstone of our system. You cannot beat it!” I jokingly asked what if I have no fixed abode, have no assets and busk for a living how many points would one get? He sternly remarked “0”. We do not trust such people with our money, as they are deadbeats and system frauds; they don’t qualify. Bit harsh I muttered and I thought the poor people must feel like outsiders.

    Dr Boli thanks again for your trusted advice. Our financial system relies on trusted authentic advice…in relation to the inactivity fees, I think I might take it up with my banker Billy…or was it Will, does not matter as an esteemed banker I trust him as after all he is looking after my money and it is in his best interests to ensure it stays secure.

    Reply
  2. Greybeard says:
    May 25, 2011 at 7:35 pm

    Now that we know how banks work, can you tell us how Stock Brokers make us broker?

    Reply
  3. RepubAnon says:
    May 25, 2011 at 11:46 pm

    How do stock brokers make us less affluent? Simplicity itself – they are the broker, we are the brokees…

    Reply
  1. ASK DR. BOLI. « Dr. Boli's Celebrated Magazine. says:
    May 26, 2011 at 10:14 pm

    […] Dr. Boli: Now that we know how banks work, can you tell us how stockbrokers make us broker? —Sincerely, […]

    Reply
  2. ASK DR. BOLI. — Dr. Boli’s Celebrated Magazine. says:
    January 22, 2014 at 5:17 pm

    […] Dr. Boli: Now that we know how banks work, can you tell us how stockbrokers make us broker? —Sincerely, […]

    Reply

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