450 years of compound interest sure adds up!

All the talk of a European economic crisis has obscured the fact that Germany’s capital city, Berlin, has a debt problem all its own.

The sleepy hamlet of Mittenwalde in eastern Germany could become one of the richest towns in the world if Berlin were to repay it an outstanding debt that dates back to 1562.

A certificate of debt, found in a regional archive, attests that Mittenwalde lent Berlin 400 guilders on May 28 1562, to be repaid with six percent interest per year.

According to Radio Berlin Brandenburg (RBB), the debt would amount to 11,200 guilders today, which is roughly equivalent to 112 million euros ($136.79 million).

Adjusting for compound interest and inflation, the total debt now lies in the trillions, by RBB’s estimates.

. . .

Schmidt and Mittenwalde’s Mayor Uwe Pfeiffer have tried to ask Berlin for their money back. Such requests have been made every 50 years or so since 1820 but always to no avail.

. . .

The debt-laden German capital would have difficulty meeting Mittenwalde’s demands anyway. According to a report released by the senate finance administration in June 2012, Berlin is already close to 63 billion euros in the red.

There’s more at the link.

Wouldn’t it be fun if Mittenwalde sued Berlin for payment – in a European court rather than a German one?  It’d be even more fun if the little town won . . .


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