Joseph's Penny

The Parable of Joseph's Penny

There is an old Chinese curse – “May you live in interesting times.”

As I’m sitting back and watching the ongoing global banking meltdown, I am reminded of the “interest-ing” riddle/parable of “Joseph’s Penny,” which clearly indicates why the US, and the rest of the world, are now dealing in the trillions of dollars of debt, and, have no way out of complete financial collapse (or the more likely - complete economic reorganization) within the next decade.

The riddle goes like this - If, at the time of the birth of Christ, Joseph had invested one penny in a bank, and the bank had given him an annual interest rate of 5%, how much would be in the account if Jesus returned today to close out the account?

Any idea? Think big…astronomically big.

By now the penny would have earned the equivalent of 3,560,953,279,792 balls of gold, each weighing as much as the earth!

Read that last sentence again – over 3 trillion planets of solid .999 gold, the size of the Earth. (calculated at $900 per ounce) Now that’s the magic of compound interest we were all taught in school!

To further stretch your imagination, since the Earth has a width of 8,000 miles, imagine a trail of rather large gold balls that would stretch 28,487,626,238,334,800 miles out into the universe…a cool 4895.96 light years!

This means if you left the Earth now, and traveled at the speed of light, it is now theoretically impossible to travel from here to the end of the trail of gold, since the number of planets, and therefore distance, is now increasing faster than the speed of light.

Being a bit of a skeptic, when I first heard the story, I didn’t/couldn’t believe the amounts, so, I prepared a computer spreadsheet, which confirmed them. (click here for the Excel spreadsheet)

In examining the exponential growth rate of one penny at 5% compounded interest, I noticed that by 100 years A.D. the penny grew only to $1.25. By 200 AD, it had grown to $164.69. But, by 300 A.D. it showed over a 2 million times increase over the original investment of a penny - $21,657.10

It was at that point I finally understood why any monetary system that has an “interest” component attached to it is doomed to eventual collapse. I also immediately understood why many religions consider the charging of interest, usury, a damnable sin – Islam, Judaism, and, for centuries, Christianity. For Christians, that sin disappeared around the time the banking industry was formed and I suspect, church leaders of the day were persuaded they could perhaps increase the wealth of their coffers by simply saying the charging of interest is now God approved, as long as you include the new slogan – In God We Trust.

Now, instead of a singular penny collecting interest, imagine millions, and billions and trillions of dollars collecting 5, 10 or 15% interest per year. Just how long do you think it would take for the temples of the money lenders to come tumbling down by themselves, without the helping hand of Jesus? And, just how long has our current economic system been in play? A few hundred years, at best.

Yes, the “den of thieves” is now shaking at its foundations, and, while the baling wire bail-out may still the economic waters for the time being, the global devaluation of the US dollar has now begun in full force.

Finally, when you consider the entire gold supply on the planet is estimated to be able to fit in less than one third of the Washington Monument, it would seem gold is severely undervalued at the moment…..compared to say the value of a rectangle of paper with In God We Trust on the back.