🎉It's the 50th Edition!
Stories about Compounding, the Dollar, Santa Clause, Farmers and Interest Rates
Hi there,
Guess what? We've hit a milestone! Welcome to the 50th edition of this newsletter!
To celebrate this, I wanted to write something different. Today’s edition is a collection of interesting stories and facts which I feel are a fascinating way to understand how our world works.
My hope is that these stories spark your curiosity, prompting you to question and delve deeper into the information you consume. As a writer, I've learned that questioning the information I absorb is an invaluable skill.
So please sit back and immerse yourself in these stories. Let me know which ones resonated the most with you.
1. Understanding the power of compounding
We've heard the phrase “compounding magic”. However, we are so focused on our short-term needs we forget that for compounding to work we need to give it time - preferably decades - to grow.
In one of his newsletters, Vivek Kaul, the writer behind Easynomics, demystifies compounding and exponential growth with an array of examples that brings the concept to life.
A favorite story of mine is of the Native Americans who sold Manhattan to the Dutch back in 1626. The price? A humble $24 in trinkets and beads.
Now, consider if those Native Americans had the option to invest their $24 at an annual interest rate of 8%. By 1988, that modest sum would have skyrocketed to a mind-blowing $30.17 trillion!
If they'd stayed invested until 2022, it would have swelled to an astronomical $413 trillion - surpassing the entire global economy!
In our minds, we see money growing linearly, but exponential growth is possible if the investment is left to grow.
Kaul explains exponential growth by walking the reader through real life numbers of how COVID spread, Ponzi schemes and investing in the public provident fund.
It’s truly an entertaining read and will leave you wondering, “Why didn’t I start investing even earlier?”
Read it here- Smart Money Can Also Be Dumb by Vivek Kaul
2. How did we end up with the word “Dollar”?
The word dollar doesn’t stem from the USA, it has roots stretching back over 600 years.
This captivating story begins in a quaint little town nestled in the Czech mountains, in a region known as Bohemia in Central Europe.
In 1516, silver was discovered in Joachimsthal, Bohemia. The town was named after Jesus' grandfather "Joachim", the local patron saint of miners, while "thal" means valley. The silver coins minted here were called "Joachimsthalers" or "thalers" for short, literally translating to 'a thing from the valley'.
Back then, Europe was a tapestry of smaller city-states, each conducting trade in their own unique currencies. To encourage adoption among other nations, the thaler's metal content was altered to mimic another popular coin used across Central Europe.
This tweak along with the 12 million thalers minted in Joachimsthal – out numbering any other currency on the continent ensured by the mid-16th century - the thalers were immensely popular across Europe.
The thalers facilitated trade, such was their acceptance that when the Holy Roman Empire, the rulers of the time, sought to establish a standard size and silver content for their kingdom, they chose the thaler.
For the next 300 years, countries around the world modelled their currencies after the thaler, renaming the thaler in their own languages. In Denmark, Norway and Sweden, the thaler became known as the “daler”. In Iceland, it was the “dalur”. Italy had the “tallero”.
In the 17th century, Dutch colonists introduced “dalers” to what is now the USA when they settled in the Thirteen Colonies. They began referring to all similarly weighted silver coins - including the Spanish piece of eight - in circulation as dollars.
It's from the widespread usage of the thaler that we get the word dollar.
I guess globalization was happening even before the word globalization entered our vocabulary.
Read more about the town which lent its name to the dollar here- Welcome to Jáchymov: the Czech town that invented the dollar by Eliot Stein
3. How Coca-Cola created the modern Santa Claus
Ever notice that Santa’s suit is the exact same red as the label for Coke?
That’s because the beloved jolly red ho-ho-ho Christmas icon is an image concocted by the sugary drink selling behemoth. The Coca-Cola Company even holds a patent on the color.
Prior to Coca-Cola’s messaging of how Santa looks, Santa was depicted in multiple ways such as a tall gaunt man or as a spooky-looking elf. Interestingly, during the American Civil War, Santa was even depicted as a small, elflike figure who was a supporter of the Union.
The image of Santa changed to one we all know today in 1931.
This was when the illustrator Haddon Sundblom was commissioned by the Coca-Cola Company to draw advertisements of St. Nicholas delivering Cokes to the thirsty children of the world.
Sundblom envisioned and brought to life an image of Santa Claus as a jolly, bearded person donning a cap, a vibrant red suit, and boots.
For years others had painted their version of Santa prior to Sundblom’s illustrations, but none of them captivated the audiences the way Sundblom’s did.
For inspiration, Sundblom turned to Clement Clark Moore's 1822 poem "A Visit From St. Nicholas" (commonly called "'Twas the Night Before Christmas"). Moore's description of St. Nick led to an image of a warm, friendly, pleasantly plump Santa dressed in the company’s trademark Red colour.
The company wanted to associate coke with all things Christmas so that when we see the logo on a Coca-Cola can, we feel good, and the positive emotions augment the taste of the soda. It’s an incredible marketing tactic due to which Coca-Cola has sold millions of bottles of cokes.
From 1931 to 1964, Coca-Cola advertising showed Santa delivering toys, pausing to read a letter and enjoy a Coke, visiting with the children who stayed up to greet him, and raiding the refrigerators at a number of homes.
To me, it's astonishing that Coca-Cola created an asset nearly a century ago that continues to yield dividends to this day. The sheer power of marketing and its ability to shape people's beliefs to boost product sales is truly visionary.
Read more here- Five Things You Never Knew About Santa Claus and Coca‑Cola
4. “Illegal” seeds or livelihood of farmers what is more important?
This complex question is something I've been mulling over since reading a 2019 column by Amit Varma.
He writes about a situation in 2002, when all cotton crops in Gujarat failed, except for the 10,000 hectares that had been planted with BT Cotton. This was an unauthorized, genetically modified (GMO) variety of cotton that was pest-resistant.
However, its 'illegal' status wasn't due to any proven harm. The agricultural authority had simply not verified whether these crops were safe for consumption or if there would be any adverse environmental impacts from growing GMO crops - despite abundant evidence suggesting that GMO crops are safe.
The authority ordered the crops worth approx. $30 million destroyed - steadfast in its stand - banning its use and sale in India.
Since decades prior to planting BT Cotton, farmers were losing money, as their crops were destroyed by pests. To keep pests away more and more pesticide was used demanding more labour- and often the crops would fail anyways.
As a way out of poverty and hunger, they planted BT cotton seeds.
In 2002, the farmers succeeded in getting BT Cotton approved through protests and the work of grass roots organisations supporting the rationale of farmers. This decision helped the farmers get more value from their harvests and led to India becoming one of the leading cotton exporters in the globe.
The issue we must tackle is that often we fail to question why people do what they do.
Why was BT cotton declared illegal? Who will be affected? What were the policy makers' concerns?
While the intent behind certain policies might stem from noble intentions - consider demonetization aimed at eliminating black money and combating terrorism, or in this case, avoiding potential harmful effects - it's the outcome of these policies that truly matters.
Addressing the heart of such problems sometimes calls for precision like a scalpel, other times for the force of an axe - not merely a single authority declaring something illegal.
Read the story here- Farmers, Technology and Freedom of Choice: A Tale of Two Satyagrahas by Amit Varma
5. Are low interest rates enough to spur the economy?
Sometimes when we read articles talking about interest rate changes, we tend to think about interest rates as a very abstract concept, something that affects the macro economy at large but not us directly.
But it took an article by Vivek Kaul to drive home the point- who gets affected when interest rate changes and how.
It’s a great example of second order thinking, going beyond the basic narrative of rate cuts are good for the economy→ will boost consumption→ stocks go up→ spurring economic activity→ increasing GDP.
Let me leave you with a teaser from the article,
“So, the bank’s letter told her that the tenure on her home loan had gone up to 782 months (65 years). But once I ran the numbers, I realized that the bank wasn’t telling her the truth, at least not the whole truth.”
Read the article explaining how interest rate changes affect home loan tenures here- What ‘they’ did not tell you about home loan interest rates by Vivek Kaul
Also, complementing the above article is what factors need to align to drive people like you and me to borrow- surprise it’s not only low interest rates- Who Moved Your Interest Rate? by Vivek Kaul
What am I watching?
Naruto - It is a Japanese anime series; I love the character building the creators of this series have done. The characters arc keeps me hooked and coming back for more. You can watch Naruto on Netflix.
ERB - It is a YouTube channel featuring historical and fictional characters performing a rap battle against each other. Getting to learn something new about people and ideas who influenced us while being entertained is awesome!!!
What am I Reading?
Narratively- It is a Substack newsletter that makes me fall in love with storytelling. The true narratives written show me a sliver of humanity which would otherwise be inaccessible to me, and thanks to that I can understand experiences which others have. I highly recommend getting the 7-day free trial to start and paying the $50 subscription fee, it’s worth it.
The below article is how the US Government overthrew the Guatemalan President in 1954. It’s an incredible story.
Finshots- Detailed and easy to understand article on current topics pertaining to India. I love how they have crafted their tone and honed their writing, making it engaging and informative.
Hope you enjoy the above articles and if you did, I would be grateful if you could share it. Your support not only helps the newsletter grow but also keeps me motivated to continue delivering engaging content.
Filtered Kapi #50
It is your 50th and yet you gifted the readers with so many resources! Thank you and congrats! On to the 100th!