You've probably seen phrases like "Ye Olde Tavern" or "Ye Olde Shoppe" scrawled across English-language signs, trying to evoke a sense of the medieval. But the practice of naming shops this way didn't start until the late 19th century and it was done to make things sound, well, old.
Photo by George Rex, CC-by-SA.
I actually came across a claim in David Wolman's (otherwise excellent) book Righting the Mother Tongue, that the word "olde" spelled O-L-D-E didn't exist at all until the 19th century. Spellings of "old" in premodern English, he explains, include "alde," "auld," "awld," and "ole." "Olde," not so much.
The entry for "olde" in the Oxford English Dictionary would seem to confirm this, defining the word thus:
Used as an archaism, originally commercially, later also freq. ironically, for old adj. Sometimes with other words spelt archaistically, as Olde English(e) . Occas. as n. in of olde: in an earlier time or period (cf. old n.1 4). Cf. olde worlde adj.
However, that's just the modern usage of "olde." The OED entry for "old" tells a different story. There are examples in the 15th and 16th centuries of people using "olde" as a noun to refer to old people (e.g. "This olde hath ouerthrowe me and slayn me with hire ax."). And as early as the 13th century, "olde" pops up as an adjective. It may not be common, but it's not unheard of, which isn't surprising given that English spelling has only recently been standardized.
But here's the truth of the matter: phrases like "Ye Olde Shoppe" aren't really designed to be historically accurate. After all, it's less common to see "Ye Auld" taverns and stores. Most likely, the phrase "Ye Olde" came about for the reason Wolman suggests: people were aware that, in older forms of English, words tended to resemble modern words with the letter "e" tacked onto the end. So the phrase isn't used to copy actual pre-modern English but to evoke pre-modern English. And it eventually became so common that people began to treat the spelling O-L-D-E as the conventional pre-modern English spelling. And so "olde" has become, if not a word myth, then at least a word exaggeration.
Advertising. Sometime around the mid-19th century (the OED pegs the first printed modern usage of "olde" to 1852 and "ye olde," referring to a public house, to 1896), English-speaking business owners wanted their establishments to seem old-timey, so they started giving them names like "Ye olde Bagnigge Wells." At some point, someone painted the words "Ye Olde Mint" on the Philadelphia Mint to signify that it was such an old government building.
Eventually, though, this "olde" business worked its way into literature as well. Ezra Pound's 1930 A Draft of XXX Cantos includes the line, "Ye spirits who of olde were in this land" to evoke a sense of the ancients. But its origins are more playfully archaic.
Today, "ye olde" seems kitschy and dated — and it is. It's less an artifact of genuine antiquity than a phrase selected and wedged into the language because it's clearly understandable to modern English speakers and it lends an air of something older. But there's still that pesky "ye" to contend with.
The other thing about the phrase "ye olde": you're probably pronouncing it wrong. Originally, the English word "ye" was spelled "þe." The symbol þ represents the letter thorn, a letter which no longer exists in English. It had a sound somewhat similar to the Greek letter θ, which is to say a th- sound. The word "þe" is an early spelling of "the."
Over time, the writing of þ changed, so that it looked more and more like another letter, wynn (ƿ), and eventually because indistinct from the letter y. So, you can pronounce the "ye" in "ye olde" as "the." There is, after all, an English word "ye" that functions as a plural form of "you." On the other hand, you could simply go ahead and keep pronouncing it "ye" with a y-sound, while acknowledging that the word made a comeback thanks to a cheesy bit of marketing.