FRIDAY, April 28, 2017

Millionaire's Tale

It was all good while it lasted



TUCSON (A-P) — I was born in 1950, but don't remember the silver spoon. I went to Berkeley when I was seventeen; I was mathematically gifted, even had Ted Kaczynski as a teacher. It was a summer of love and I turned on, tuned in, and dropped out. And my dad died just after I turned eighteen.

He had seen it coming, a terminal illness thing, and figured I couldn't/wouldn't run the business and sold it. Mom had gone to a better place and I was the only heir. On his deathbed he told me to live only off the interest. He had put all his money in a mutual fund. So I promised to do what he said since I never cared about the money thing. Five percent of five million is $250,000/year so I figured that would be enough. I did the right thing, I married my pregnant girlfriend. We did okay, I spent the extra on friends; I had a lot of them; it was so cool. Had another kid; I had heard about the population bomb, two was enough, but my old lady turned into a gold digger sort who wanted to spend the five million, but I said interest only.

She no comprende, so I had to make her move along. I got the kids as she really just wanted to have a good time with the money. I had to tighten the belt to pay the alimony and the lawyer dude. Lost a lot of friends. Didn't take long, however, to find my true love who also wanted kids, so we had one and the next one turned out to be twins but one didn't make it. It happens. We had a nice place, but too hot in the summer, so we got another higher up in the mountains. I was twenty five when I was forced to start spending just one percent of the principle. But I don't believe in ghosts and I never told anyone I had to live within limits.

Fortunately interest rates went up almost as much as expenses, so it was all good, nothing to worry about. I didn't trust anyone over thirty and didn't expect to live that long, but shit happens. Expenses to keep up two places and four kids was covered. By 1982 interest rates had shot up to 14% and we had over $600,000 rolling in in 'unearned' income and we weren't even touch'n the principle. We were gett'n by just fine. By 1990 some kids were in college, the rest soon to be, and I had to dip into the principle, but there was still four and a half million left.

So the new millennium comes and the interest rate is back down to five percent. I'm a real family guy and the kids took after me. I never wanted to waste my life grubbing for money and neither did they. I understood, and they expected to be taken care of. I took care of them and the grand kids, all 12 of them. I had told them about the overpopulation thing, and some stopped at two, but three turned out to be the average. I had to sell one of our places, and talk a lot about how they had to get by living on $50,000/year. It was tough and we set the example. It was what we had to do. I could still do math and we were down to four million in principle and interest was only four percent, so split five ways we each had to make do with $50,000/year, but most places were paid for.

It was 2010 and interest rates were down to three percent. The unearned income wasn't enough so principle was down to three and a half million. The grand kids wanted more to spend at the mall. I was starting to foresee a problem. We had been spending down the principle at just two percent a year on average, but the rate of spending down the principle was growing, it was up to five percent a year.

So here we are now, 2017, and just to keep everybody barely happy I'm having to spend seven percent per year of the principle which is down to a bit over two million. Everybody thinks there is plenty left. I've been cracking the economy whip, talking efficiency, and we're each getting by on $42,000/year, but I had a talk with the kids and grand kids about fiscal reality. Over two million seems like a lot but the way things are going—mutual funds are paying even less, all the principle is going to be gone in 2030. They just looked at me, eyes glazed over. I said, 'so you think its awful you might have to live on $40,000/year. Well you can, and it will be better than nothing, but in 13 years, maybe give or take a few, it will be nothing'.

I made them watch Professor Bartlett's video, Arithmetic, Population, and Energy: Sustainability 101, so they would understand the exponential function. I showed them that the percentage of principle we have had to spend, that was only 1% in the late 1970s, had become 2% in 1990, 3% in 2000, and 5% by 2010. So what? Well, the rate of increase is exponential and at 5% the principle will be reduced by half in just 14 years. We were now spending 7% and in 2020 we'll have to spend 8% of the principle. I had to yell louder. They had had enough of the numbers shit and just wanted to check Facebook and Twitter for messages. I had to keep on, so I talked faster. By 2025 we'll have to spend 15%, and by 2028 it will be 30% of principle. I tried to be clear. In 2029 it will be 40% and in 2030 it will be 70% and there will only be $70,000 left. And then what?

I pointed vigorously at the figures, but none of them had liked math and it soon became clear they didn't believe me. One said the mutual fund interest rate would surely go up, another said we should invest in Musk's Solar City and that would change everything. Apparently I was just going senile, just crazy old, to be pitied and tolerated as much as possible, so they said thanks, they'll think about it, and they stressed that they had things to do now, so talk to you later.

Okay, so for the next 13 years we'll all get by and I'll be 80 if I live that long. I'm thinking I won't. Still I didn't think I'd live past 30, but shit can happen, and what do I know?

The facts are that humans have a limited grasp of reality... since the dawn of agriculture, humanity's material and cognitive relationship with the rest of the natural world has become increasingly dysfunctional. The accumulating scientific evidence shows that humanity is now on a collision course with biophysical reality... the global community has failed utterly to take the necessary evasive action. — William Rees 2015

We have all by our actions or lack of them — in particular over the last almost half-century — agreed to deny reality' — J.R. Saul 1995

Technology exists now to produce in virtually inexhaustible quantities just about all the products made by nature.... We have in our hands now — actually, in our libraries — the technology to feed, clothe, and supply energy to an ever-growing population for the next 7 billion years. —Julian Simon 1995

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