Since the dawn of humanity, mankind has been striving for a better life. It’s what makes us human.
If your father plowed a field, you built a dam to flood it so you can increase the harvest. Your son will build a water wheel on that damn to mill the wheat.
We call this “economic growth.” Despite the rhetoric of some, untamed nature isn’t friendly to human beings. It wants to kill and eat us. Even rabbits and deer will eat your carcass, given the opportunity.
So, humans naturally want to better our situation vis-à-vis nature through capital accumulation. Capital may be material or intellectual, but slowly over the eons of history, and much more rapidly recently, it has made life more comfortable.
Saving the surplus of what we produce is what allows us to build a better future. Money is what human societies inevitably invent to have a universally accepted store of value. Saving money is a necessary part of all material progress.
Even primitive tribes such as the Mundari tribe of Africa use cattle as money. They would like to acquire more cattle, but they have reached the limit of what they can sustain given their environment and their cultural capital. Humanity as a whole has not reached a limit. We are accumulating more capital every day. Global poverty fell from 94.4% in 1820 to 9.2% today
Not only does humanity have more wealth than ever before, but we are creating it at a faster pace than ever before. Not only that, but the pace of change is accelerating too, and so is the pace of the pace of change, so there are at least three derivatives in the progress of acquiring capital.
It’s not a great mystery why this is. The more people there are, the more we can specialize, the more we can collaborate, the more minds there are to invent new ideas and capitalize on them. Human beings are more than the sum of our minds, but a synergy, and perhaps one day, a singularity of progress.
This is why ever since the times of Babylon
people have saved and lent their money. In a growing economy, a fixed quantity of sound money (like gold or Bitcoin) will keep increasing in value. This is because the same supply of money is needed by an ever-larger economy. We can further increase the value of our savings by lending it out. By lending our money, we forfeit current pleasure to use the stored energy of our labor to accelerate the success of others. That is how savings have always worked.
Until the Federal Reserve Bank of the United States set interest rates near 0 in 2008
. Saving doesn’t pay anymore, because the government is creating vast new money to support the welfare state - I mean mostly the welfare of powerful elites. Not only does our money lose value every year due to inflation, but it’s also impossible to benefit from economic growth by lending it out in a savings account.
Governments are making life more and more difficult for savers. Not only are our savings progressively less valuable and less profitable, but governments confiscate them with capital gains taxes.
If you buy a house for $100K and sell it for $200K, you owe taxes on $100K. But how much of that gain is due to the government making the dollar worth less? No matter how you try to shelter your savings from inflation, the politicians want a cut.
Democrats are now proposing to tax “unrealized capital gains,” which means you will owe taxes even if you didn’t sell your assets. While these proposals are currently limited to “billionaires,” the income tax was originally only for the top 3%. The inevitable bankruptcy of the welfare state means the political class will be increasingly more desperate to sustain their spending spree with even more brazen wealth confiscations.