Cash among the martyrs' bones

Florence, autumn of 1433. Cosimo de' Medici is locked in a cell in the Palazzo Vecchio while the Albizzi family debates whether to execute him or merely throw him out of the city. They choose exile. A year later he is back, and the men who banished him are the ones packing their bags.

How does a banker survive a coup against himself? Part of the answer sits in the dark corners of monasteries. Tim Parks describes Medici coin hidden among "the miracle-working bones of long-dead martyrs," tucked beside relics that no sane official would dare search. The money did two jobs. If depositors panicked and ran on the bank, cash was nearby, so Cosimo never had to make anyone wait. If the Albizzi seized the state and came for his fortune, the fortune was somewhere else.

A modern treasurer would look at that arrangement and see waste. Idle cash. No yield. A drag on returns that any competent analyst would flag in the first review meeting.

That analyst would have gotten Cosimo killed.

Redundancy only looks stupid in the years it isn't needed, which is most years. Taleb spends a good portion of The Black Swan: The Impact of the Highly Improbable on the people who confuse the absence of disaster with the absence of risk. Cosimo did not confuse them. He had watched Florentine banking houses like the Bardi and Peruzzi collapse a century earlier, and he built his vaults accordingly.

The efficiency expert is the man who removes the spare tyre because it adds weight.

The king who forgave on schedule

Babylon, 1646 BC. A new year festival. King Ammi-saduqa issues an edict: debt servants are freed, farmers go back to their land, and commissions are established to review real estate transactions.

We can count more than thirty of these royal cancellations across roughly eight centuries of Mesopotamian rule. Hammurabi issued at least five. They were not panic measures. They arrived on festivals and royal anniversaries, as routine as re-tiling a roof before the rains.

Two details make the edict worth rereading.

First, the kings cancelled agrarian and personal debts but left merchant loans fully enforceable. Nobody was chasing equality. They wanted a free peasantry that could farm and could fight, and they knew perfectly well that if you break trade credit, you break the economy along with it.

Second, creditors had already figured out the workaround. Loans were being dressed up as sales to dodge the cancellation. Ammi-saduqa voided those contracts and attached the death penalty for anyone caught trying it. Four thousand years before financial engineering had a name, someone was restructuring the paperwork, and the state was answering with a sword.

To a modern reader the whole ritual smells of populism. Free money for debtors. A moral hazard machine. Rip it out.

I wrote recently about the late nights of month-end close, rolling forward an accrual I didn't understand, in Why That Odd Process Exists: On Fences, Fail‑safes, and Change. The Babylonian jubilee is a fence with a very long history. Remove it, and you learn what it was holding back only when the army has no farmers left to draft.

My Ledger — notes on investing, books, and things I'm still figuring out. The Library is where I keep the books that shaped how I think. The Journal is where I work through ideas in public.

Mandelbrot — the private toolbox behind the thinking.

Hit reply if something here sparked a thought. I read every response and always write back.