Cash-strapped Berlin stalked by 450-year-old trillion-Euro debt

Reuters ^ | July 19, 2012 | Reuters

[JerseyanExile]

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.L, the debt would amount to 11,200 guilders today, which is roughly equivalent to 112 million euros.

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

Town historian Vera Schmidt found the centuries-old debt slip in the archive, where it had been filed in 1963. Though the seal is missing from the document, Schmidt told Reuters that she was certain the slip was still valid.

[Jonty30]

Yes, I remember my great, great, and a few greats grandfather signing this loan document.

I’m here to collect what is owed to me now.

No small bills or loose change. I am willing to negotiate a couple of zeroes off, out of good will.

[SunkenCiv]

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Thanks JerseyanExile. Mittenwalde lent Berlin 400 guilders on May 28 1562, to be repaid with six percent interest per year. It would be cheaper for Berlin to just annex Mittenwalde. ;') Just adding to the catalog, not sending a general distribution. To all -- please ping me to other topics which are appropriate for the GGG list.

[Revel]

It looks like Greece and the rest of them are going to have to to the end of the line.

[The Antiyuppie]

Maybe they could pay it in Weimar-era money. I think I have some 200 billion Deutschmark stamps (uncancelled) downstairs, which an older neighbor who collected stamps gave to me when I was a kid. I remember thinking that with that kind of money, I could buy a sizable German city with it!

[Shamrock498]

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

I know it makes for a more interesting story but, debt service isnt adjusted for inflation after the loan is made. you make a loan, set the interest rate and the payment terms and off you go.

[CharlesWayneCT]

I don’t know why you would adjust for inflation. A debt is a debt, it had an interest rate associated with it, and the total owed now would be the original principle plus all the accumulated interest.

It does look like the interest rate was high enough to cover inflation though.

[j. earl carter]

In addition to your point, the guilder was a gold coin in 1562, so there really wouldn't be any inflation anyway. The amount of gold in a guilder from 1562 is worth about the same today as it was then.