Billionaire is the new millionaire
Being a billionaire isn鈥檛 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鈥攁 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鈥檚 鈥楳ississippi Bubble鈥� to describe those making vast fortunes in Law鈥檚 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鈥檚 Banque Royale, crashed and Law was forced into exile.
Like Ben Bernanke, Law believed France鈥檚 economic problems as being one of not enough money. He started small with his privately owned Banque G茅n茅rale, within a year all royal revenues were to be paid in the Banque鈥檚 notes and these notes were to be cashed on sight at government offices, making these offices essentially branches of Law鈥檚 bank.
Two years into Law鈥檚 system, the livre was devalued again, by 40 percent. Despite the devaluations, Law鈥檚 reputation continued to rise and by the end of 1718, the state took over Law鈥檚 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鈥檚 plan to extinguish America鈥檚 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鈥檚 colonial empire, relieved the debt-ridden government of its debts, and was making money for himself and his patrons.
Law鈥檚 system unraveled a mere four years after it began. People fled Law鈥檚 paper for the safety of gold and silver, despite Law鈥檚 attempts to demonetize and confiscate specie. Ultimately, Law鈥檚 system would only serve to forestall France鈥檚 bankruptcy, not solve it. Law himself would die near poverty a decade later.
What were once Law鈥檚 millionaires are now Bernanke鈥檚 billionaires. 鈥淟aw is the precursor of the inflationist redeemers,鈥� Flynn explained. 鈥淟ike all the inflationist salvations, his career was short.鈥�
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?
