Interesting story, but as a bond holder, you're a lender. As a lender, you are exchanging inflation risk for interest. With this in mind, how could anyone think that a 400 year bond would be a good idea (specially at only 2.5%!). You have to remember that when buying a bond, your principal is tied up until maturity. On a 400 year bond, you're basically never getting it back. So you've handed your money to someone 15 generations in the future for what is initially a bad return and by the end of the bond's life is unbelievably bad.
By the way, if you take the 1,200 Gilder and invest it in an investment vehicle at 4% compounding and wait 400 years, it's worth $7,807,589,396.13 This woman basically traded almost $8 Billion of future return for a total of $5,444 including that principal that is returned at maturity. Ouch.
The original bond says 75 guilders per year until the principal of 1200 was repaid. That's 6.25% per year.
I don't think this investment was anywhere as dire as you paint it as. Especially in a world where monetary inflation was very different... currency debasement didn't typically happen that quickly.
The lender in this case was living somewhere that was likely to flood if the repair works funded by the bond didn't get done, so they might have had some not purely financial motivation for it.
Plus we don't know what other investments Elsken Jorisdochter owned; this was probably a small part of her assets.
Finally, I'm not very convinced by the "400 years at 4% compounding" hypothetical -- could you actually buy an investment with that return at that date which was a safe non-risky one? And if you could, should you as a person with a lifespan much less than 400 years really prefer it over something which gives you a guaranteed income within your life?
By the way, if you take the 1,200 Gilder and invest it in an investment vehicle at 4% compounding and wait 400 years, it's worth $7,807,589,396.13 This woman basically traded almost $8 Billion of future return for a total of $5,444 including that principal that is returned at maturity. Ouch.