How long can paper dollars keep a house warm?
I was tempted to title this column "What a fool I've been." I wrote an essay for an Internet magazine about how I bought a 10-acre woodlot for $20,000 in 1979 and figured that, even though the price was "more than woodland is worth," it was a good investment for someone like me. I enjoy my woods a whole lot more than I would enjoy following the ups and downs of that money on the stock market.
And by selectively selling mature trees and cutting firewood to keep the house nice and warm in the winter, I think I've got my money back and then some in tranquility and healthful exercise (if a tree doesn't fall on me). But then a reader commented that if I had invested that money in S&P 500 funds in 1979, that it would be worth over a million dollars today.
No wonder everyone I know is richer than I am.
But I got to thinking and wondering if readers would stand to hear a different response to the miracles of capitalism. I know that I am putting myself in the way of criticism and ridicule. Capitalism is the first and most fervent religion of Americans and Americans don't take kindly to questioning their religions.
That million dollar gain comes in hindsight, first of all. True, smart people were sure that investing money in stocks instead of spending it on woodland would steamroll on to a lot more money, especially now that wealthy people have found ways to avoid paying their fair share of taxes. But it was not a foreordained conclusion.
With the present tax system, an investor would pay at least a fourth of that million in taxes if he sold out. In addition there would be yearly taxes and brokerage fees. Let's say the million paper dollars would be more like $700,000 in actual return. If the investor died and the money went for relatives to fight over, there would be state and federal inheritance taxes to deal with although the rich have been fairly successful in avoiding these taxes. For some reason the religion of capitalism does not see anything wrong with people inheriting millions that they did not raise a finger to earn.
Then there's inflation to try to reckon into the mix. The land I paid $2,000 an acre for in 1979 would cost me $4,000 an acre today, I imagine. Probably more if I were cunning enough. That means the $700,000 will buy only half of what it bought in 1979. That's why rich people fear inflation. They know what it does to their wealth. Poor people love inflation because it gives them the illusion that they have more cash in their pockets.
So the million paper dollars is more like $350,000 over 40 years or about $8,700 a year. Since I actually sold or used about $400 worth of wood a year, that would have meant a paper money yearly income, had I invested the money in stocks, to about $8,300. Big deal. I save that much money just by living modestly.
Did you ever wonder why both the Bible and the Koran are, or were initially at least, dead set against interest on money? In the Middle Ages both Christian and Muslim considered all interest on money as usury. As immoral. God said so. The Popes finally realized how much money could be made with money interest, so suddenly God didn't say so anymore. On paper, Islam still opposes money interest. Why?
I can explain why, and there is a whole shelf full of books in any large library that I can reference, but most Americans simply won't believe me. Any truth or theory that opposes the ideas from which a person draws his or her historical identity will be met with denial. Denial of obvious truth, like denying historic evidence that proves one's religious or political beliefs are mistaken, is a basic part of the human mentality. Humans will deny facts before they will deny self.
So Americans are for the most part not going to admit the fallacies of a money system that allows them to become millionaires on paper without so much as lifting a finger in work. They cannot believe, although they are looking an example right in the face today, that storing up paper money wealth leads to economic problems. They seem even unable to grasp the truth that if everyone stored up money and became millionaires, then being a millionaire would be meaningless. Being a millionaire is only meaningful if there are a lot of poor people around.
What is wrong about allowing money to "grow" as if it were a real thing? Answer: Real things grow, mature and die. Pretend money grows and grows every second of every hour of every day and night. Pretend money therefore tends to overwhelm the growth rate of real resources. Although the capitalist won't admit it, money interest is the reason why banking is in such terrible straits today and will only get worse if it continues to be propped up with more pretend money. Before the debacle is over, we will see that the Bible and the Koran condemned money interest because it is so tempting that it is almost impossible for human greed not to overdo it.
I had to buy my woods for "more than it is worth" because competing buyers were willing to pay "more than it was worth" too, with the intention of turning it into something that would make it worth more in the race to keep up with money interest growth. In this case, the woods would have become a corn field. That would have meant 10 fewer acres kept as a never-ending source of fuel if managed correctly; 10 fewer acres producing housing materials and habitat for wildlife necessary to a sustainable environment; 10 fewer acres producing wood for furniture, paper, plywood, barns, chicken coops, violins, leaf mulch, permanently fertile soil, fence posts, and pallets.
And it has already been demonstrated that replacing woodland with more annually cultivated crops, so aptly referred to as money crops, is destructive to the environment and not even necessary to raise our meat, milk and eggs. These annual, subsidized crops are now being used to produce subsidized fuels, encouraging not only environmentally-destructive farming, but destructive travel and leisure time activities while driving up the price of food.
Maybe I can sum up what I am trying to say with a question: How long will a million paper dollars, burned in a home furnace or stove, keep the house warm?