Rothschild trillions

Here’s a simplistic technique for estimating the wealth of the Rothschild family, or for estimating the long term growth in value of any well-managed, diversified investment portfolio. Applying this technique, I suggest that the Rothschild family’s present day wealth is most likely equivalent to trillions of British pounds, and possibly as much as hundreds of trillions of British pounds.

I learned about the rather impressive results of applying this estimation technique to the Rothschilds through SGT Report. Credit for the featured image of Waddeson Manor, above, goes to Colin Park.

Throughout I will use the example of the Rothschilds, but more generally, I’m describing a modeling strategy. This modeling strategy can be used as a general rule of thumb to approximate the growth in value of a diversified, well-managed investment portfolio over a long period of time. Looking at historical performance of such portfolios illustrates that the rule of thumb is often true to some approximation. For an example, take a look at the Growth of 10K charts for American Funds Mutual Funds (for example, AMCAP Fund).

The modeling technique I’m describing starts from a conservative estimate of Rothschild wealth at some point in the past. It assumes that we can reasonably model the change in Rothschild wealth over time by applying a compound interest calculation to the initial wealth estimate.

The model depends on the following parameters: initial wealth date, initial wealth amount, present date, interest rate, and compounding frequency.

For example, let’s choose an initial wealth date of 1815, when Nathan Meyer Rothschild lent 9.8 million pounds to the British government, according to Wikipedia. Let’s choose as our present date, 2018.

Let’s choose an initial wealth amount of, say, 30 million pounds. This conservative estimate assumes that in 1815, Nathan Meyer Rothschild lent a third of the Rothschild family wealth to the British government and its allies. In my opinion, this number greatly underestimates the Rothschild family wealth in 1815. At that time they were an established banking family operating in multiple countries. I would guess they did not lend a third of their family wealth to the British and their allies to fund a war effort. In short:

All of these estimates are low-balling the initial wealth amount. Maybe by a factor of 10 or more.

Working off of the given initial wealth date and initial wealth amount, we can see what estimates the model gives for present day Rothschild wealth, for different values of the two remaining parameters. The two remaining parameters are interest rate and compounding frequency.

You can try out different parameters using a compound interest calculator. Here’s an example calculation:

Compound Interest Calculator(1)

 

In this example we’re assuming the following parameter values:

initial wealth date = 1815

initial wealth amount = 30 million British pounds (equivalent to, 1815 value)

present date = 2018

interest rate = 7%

compounding frequency = 1 per year

 

With these parameters, the model estimates present day Rothschild family wealth as being equivalent to 27 trillion British pounds (2018 value).

The model assumes we can approximate the change in Rothschild family wealth over time by an exponential curve. This curve models the growth of an investment where the investor is receiving compound interest payments and reinvesting their income. This graph shows the curve at various compounding frequencies, assuming a 20% interest rate and a time period of 10 years:

800px-Compound_Interest_with_Varying_Frequencies.svg

This type of model can’t possibly be a perfectly accurate model of the change of the value of a diversified investment portfolio over time. We can assume the Rothschilds have made many investments, which have yielded varying returns. We can assume the Rothschilds have also had expenses, and that they have incurred losses from investments.

The model relies on the hypothesis that the long term changes in the wealth of an old banking family such as the Rothschilds can be modeled reasonably well by one compound interest curve. The hypothesis is that this curve will capture the long term trend of their changes in wealth well enough to provide meaningful and interesting estimates of present day Rothschild wealth.

The hypothesis says, in other words, that if we blur out the complexity of numerous investments with varying returns and losses, and if we factor in expenses, the long term trend of Rothschild wealth change looks a lot like a compound interest curve.

I consider this to be a reasonable hypothesis. It can’t be proven or falsified without access to Rothschild financial records. I think it’s a reasonable hypothesis because the Rothschilds’ situation can be compared to the situation of an investment portfolio manager. A well-managed, diversified investment portfolio will tend to blur out various gains and losses to get something resembling a distorted compound interest curve. I am speaking from my experience working in the investment industry. You can decide for yourself how reasonable you think the hypothesis is. I previously pointed out the American Funds Individual Investments Web site, particularly the Growth of 10K charts for the funds, as a place where you can look at historical changes in some investment portfolios.

Let’s look at what the model gives us for our chosen initial wealth date (1815) and initial wealth amount (30 million British pounds), with varying interest rates and compounding frequencies.

 

10% compounded annually => over 7 quadrillion pounds

8% compounded annually => over 182 trillion pounds

7% compounded annually => over 27 trillion pounds

6% compounded annually => over 4 trillion pounds

5% compounded annually => over 600 billion pounds

4% compounded annually => over 86 billion pounds

 

From these examples you can see that over 203 years, the final result of the calculation is highly sensitive to small changes in the interest rate. An interest rate of 10% provides a model that is very hard to believe, which I would estimate is not accurate. I would estimate that 5% or lower is likely too small to provide a realistic model, because even publicly available mutual funds have historically been able to provide better returns, and without doubt, far better investment opportunities are available to the Rothschilds than to the average small time investor. In addition, we can assume that investors with the wealth and influence of the Rothschilds have access to more and better information than the average investor. Probably they can even influence markets to move in their favor in many cases, especially if they collude with other large investors to do so. In my opinion, interest rates around 5% through 8% provide the most conservative models which are likely to be realistic, after accounting for waste, losses, and expenses.

 

Now let’s look at the effect of changing the rate of compounding.

 

6% compounded annually => over 4 trillion pounds

6% compounded twice annually => over 4 trillion pounds

6% compounded 12 times annually => over 5 trillion pounds

 

8% compounded annually => over 182 trillion pounds

8% compounded twice annually => over 246 trillion pounds

8% compounded 12 times annually => over 321 trillion pounds

 

As these examples illustrate, the final result is not as sensitive to the rate of compounding as it is to the interest rate, but the sensitivity of the result to the rate of compounding appears to increase as you increase the interest rate.

Without access to Rothschild financial records, we don’t know which of these models is most accurate. I’ve hypothesized the models are most likely accurate which assume the Rothschilds had wealth equivalent to at least 30 million British pounds in 1815, and which have interest rates around 5% through 8%. According to most of these models, the Rothschilds presently hold wealth equivalent to trillions of British pounds, and possibly hundreds of trillions of British pounds.

These models make the Rothschild family out to be richer than Jeff Bezos, who is widely reported as the world’s richest man in 2017, with a net worth around $100 billion USD. There is some logic to the idea that a centuries old banking family, with the opportunity to accumulate immense intergenerational wealth, which centuries ago was wealthier than the British government, might today be wealthier than a man who amassed paper wealth through a couple decades of running a successful business.

One reason these models might overestimate Rothschild returns is that it may be that when you have as much money as the Rothschilds do, it’s hard to find enough good investment opportunities to generate good returns on most of that money. Large investment organizations like BlackRock and Capital Group are able to generate good returns on quite large amounts of money; for example, BlackRock manages $5.7 trillion of assets. As another example, the stock market itself generates overall good returns over time for its whole body of investors. Still, if a group controls an amount of money that rivals or exceeds the total volume of global economic activity, then they may well run out of investment opportunities, and the compounding effects of that lack of opportunity would have a large negative impact on their wealth growth, compared to a situation where they don’t lack a sufficient number of good investment opportunities. Shortage of opportunity may well be a limiting factor in Rothschild wealth growth. This consideration suggests against the higher estimates of Rothschild wealth, such as those in the quadrillions of dollars.

I’ve estimated that the Rothschilds have wealth equivalent to trillions of British pounds, and maybe even hundreds of trillions. Personally, I find these estimates of Rothschild wealth to be staggering. I am not certain that they are at all accurate. It’s possible that these models significantly underestimate expenses, poor management, loss, and waste in the Rothschild family finances, so that actually the Rothschilds are far less rich than the models predict. I have tried to present the most honest and clear-eyed estimates that I can. I rather hope the Rothschilds are not as financially successful as I’m guessing they are.

A final observation about elite banking family wealth is that some of those in the financial elite have control over the central banks and banks which create most of the world’s money supply through issuing debt. As the website Illuminati Official says, “Money means nothing to those who print it.” You can form your own opinion as to whether Illuminati Official is the official website of the real Illuminati, or whether it’s a work of fiction. I have no opinion on that question; I don’t feel I have decisive evidence one way or the other. I do think it’s fair to say that those who can create money are unlikely to be wanting for money.

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