Being a billionaire isn’t such an exclusive
group anymore. Back in 1998, there were reportedly 230 billionaires
worldwide. Now, according to Forbes magazine, the number has grown to 1,226. The
United States still has the most with 425, but now 58 countries have
billionaires. Russia and China have nearly 100 each.
Nobody seems too excited about billionaires, likely
because a billion is an unimaginable number—a thousand million. There
was once a time when being a millionaire meant real wealth, but no more. Most
financial planners will say that the average person needs to retire with more
than a million dollars socked away to live comfortably in retirement.
The word millionaire was coined in 1720 during John
Law’s ‘Mississippi Bubble” to describe those making vast
fortunes in Law’s Mississippi Company stock that rose from 150 livres to 10,000 in the matter of months. But just as
quickly, the stock and the currency wildly inflated by Law’s Banque Royale, crashed and Law was forced into exile.
Like Ben Bernanke, Law believed France’s
economic problems as being one of not enough money. He started small with his
privately owned Banque Générale,
within a year all royal revenues were to be paid in the Banque’s
notes and these notes were to be cashed on sight at government offices,
making these offices essentially branches of Law’s bank.
Two years into Law’s system, the livre was devalued again, by 40 percent. Despite the
devaluations, Law’s reputation continued to rise and by the end of
1718, the state took over Law’s bank, which became the Banque Royale. A nomadic gambler just three years before,
Law suddenly had immense power, controlling the monopoly on coining money,
the collection of tax revenues, as well as tobacco and salt revenues. His
Mississippi Company (Compagnie du Mississippi)
would buy up the debt of the French government, a proposal John T. Flynn
compares to Roosevelt’s plan to extinguish America’s debt by
having the Social Security Board purchase it.
Law inflated the money supply through the Banque Royale, he created jobs through public-works
projects; he attempted to release the hoarded savings back into business with
the promotion of Mississippi Company shares; he exploited France’s colonial
empire, relieved the debt-ridden government of its debts, and was making
money for himself and his patrons.
Law’s system unraveled a mere four years after
it began. People fled Law’s paper for the safety of gold and silver,
despite Law’s attempts to demonetize and confiscate specie. Ultimately,
Law’s system would only serve to forestall France’s bankruptcy,
not solve it. Law himself would die near poverty a decade later.
What were once Law’s millionaires are now
Bernanke’s billionaires. “Law is the precursor
of the inflationist redeemers,” Flynn explained. “Like all the
inflationist salvations, his career was short.”
Bernanke has been on the job for six years, and the
Gates, Buffetts, and Slims of the world are reaping
the benefit. But for how long?