Toilet Paper Money (Are You Sitting Down?)
All efforts at avoiding puns aside, are you prepared, Dear Reader, for the day when the dollar gets wiped out? Consider if you will the humble roll of toilet paper. Or for those of you living east of the Potomac, of bathroom tissue.
SIDEBAR: You may be asking yourself why an ostensibly reputable financial publication such as our would be discussing toilet paper. However, a moment’s contemplation of the dollar, and the similarity springs immediately to mind! Try as we might, it’s hard to wipe that smile off of our face (again, sorry, and tasteless references to all further cleverly hidden puns will be assiduously avoided).
Toilet paper doesn’t ask much of society, other than the modicum of respect that Rodney Dangefield found so elusive. Truth be told, toilet paper is more valuable than rubies. Try going one day without either and the point is made, and hopefully not a sharp one.
Not Just For Bird Cages
Our grandparents were well familiar with the Sears catalog which kept them company both in the hearth and the outhouse. We hear that the world’s more remote areas are serviced these days by the New York Times, although perhaps the editorial pages of the Boston Globe would be more suitable.
When Gordon was a lad, his father (an Army captain in World War II), told of his artillery division receiving a memo during the thick of action in the Battle of the Bulge, ordering that soldiers thenceforth would be folders and not bunchers since the latter were depleting available inventories too quickly.
One can certainly sympathize with the increased need for toilet paper in the face of hostile fire. But didn’t Eisenhower have more pressing concerns? Perhaps he too was running low. Then again, that could just be a bunch of rumors.
Digressing for a moment, one imagines mighty flotillas of Army transport ships crossing the Atlantic, their holds groaning with toilet paper, all fodder for lurking German U-Boats that perhaps sought more to capture their prey than to perforate it since a used copy of Mein Kampf only holds so many pages.
We’re really on a roll here, so let’s move on to more financial considerations. Shop at your local grocery store for a roll of toilet paper these days and you will pay $.50, which is to say one-half of a dollar. But look at the top of a dollar bill and it announces itself to be a Federal Reserve Note. What gives?
As you doubtless learned in public school, a dollar is actually a unit of measure — specifically, of weight. The 1792 Coinage Act defined a dollar as a weight of 371.25 ounces of .90 fine silver. Today’s $1 bill must weigh marginally less than the $10 bill due to the weight of the ink required to print the extra zero. If it called itself a ‘One Banana Note”, would you take a bite?
SIDEBAR: The reader will note that the Federal Reserve Note (FRN) isn’t federal; that there are no reserves, and that it fails the legal definition of a note. Other than that, there’s nothing to worry about.
‘In Bernanke We Trust’
The FRN is the mass-produced product of a private, for-profit corporation that is no more federal than Federal Express. But lest we be concerned, the back of the note calms us by asserting the Fed’s piety in these matters in stating: ‘In God We Trust’. Reassured that all is well, and undeterred by the unreality of the situation, we go about our business (sorry) and move on.
Store a roll of toilet paper in the cabinet, retrieve it 20 years from now, and it will do its duty (sorry, we’ve now lost all control) just as admirably as it will today. Store a FRN in the same cabinet and 20 years from now it may not purchase a single sheet of toilet paper, let alone an entire roll. The uncertainty of the situation is enough to produce the urge to go out and purchase 20 year’s worth of toilet paper right now. So let’s imagine that we do that.
The well-fibered American family of 5 will consume about a roll of toilet paper each day, which comes to 365 rolls per year at a current annual cost of $186.25. Over the next 20 years they will consume 7,300 rolls at a current cost of $3,650, the key word being current. For, again, no one knows what the FRN will buy next year, let alone 20 years from now when outhouses may be stocked with boxes of the stuff.
Let’s analyze this situation from a worst-case-scenario perspective. Say that hyperinflation causes the cost of everything purchased with FRN’s to rise twenty-fold over the next 20 years, causing a roll of toilet paper to cost $10 in 2032, at which time a year’s consumption would set you back $3,650.
That’s not as crazy as it might sound, considering that a roll cost a nickel back in 1960. Had you bought a shipload (heh) of toilet paper back then, you could sell it on Ebay today for a vast profit!
The Bare Essentials
So here, Dear Reader, is the question. Which would make more sense, to stock up $3,650 today so that 20 years in the future you are already prepared to purchase that year’s requirement of 365 rolls? Or purchase those same 365 rolls today at 1/20th of their potential future cost, store them in the basement, and use them up when the time comes?
Do you see the equivalence? An hour of your labor, assuming that you earn $15 an hour, is equivalent to being paid 30 rolls of toilet paper at today’s prices. Let’s say that, instead, you saved up those $15 and socked them away for retirement 20 years hence.
Unfortunately, just as you are ready to cross the retirement finish line 20 years in the future (when the mandatory retirement age is 85), the FRN is retired and replaced by a new green federal coupon (perhaps bearing the likeness of President Chelsea Clinton?), with so many zeroes added as to be invisible without a powerful microscope, and your $15 will buy a single sheet of toilet paper (single ply only, and unscented).
With your future currency so debased as to be what some today would disparagingly call ‘toilet paper money’ (not us, Dear Reader, for we love the Fed without which there would be no Forex!), a roll of toilet paper purchased today could one day be more valuable as a unit of barter than a dollar bill which, given its size, wouldn’t begin to compete in terms of ‘bottom line’ utility with a page from that old Sears Catalog.
This, then, is the essence of preparedness. Do you store up today’s labor in the form of federal spending coupons that even a squirrel wouldn’t be dumb enough to touch? (squirrels don’t save coupons with pictures of nuts on them, they save the real thing).
Or do you stock up on those items today that you will need in the future at today’s vastly cheaper prices, not knowing what a FRN will buy down the road? Seen in this light, the dollar truly is a hot potato, the difference being that you can always eat a potato, even when the FRN won’t buy a single potato chip.
We would suggest, Dear Reader, that if you have not yet taken measures to prepare for the severe future inflation of the FRN (and one hopes not hyperinflation) that is most certainly inevitable, you could be left sitting without a pot to ‘you-know-what’ in.
Not Just Currency Guys
As a dedicated reader of our fine publications, you already know that Prism Solutions purveys a powerful platform for the persistent production of profit, our specialty being the automated manufacture of money out of thin air (all resemblances to the Fed being purely coincidental).
But what you may not know, Dear Reader, is that we also offer private net worth preservation and wealth enhancement consultancy services that go far beyond your garden variety financial planning.
From bedrock asset protection (you’ll never see a hearse towing a U-Haul), to hedging the failure of paper money, to situational preparedness, to the engineering of wealth as a mathematical process, we take financial planning to an entirely new level.
If those other guys are the ‘Arthur Murray School of Financial Planning,’ we are the ‘Erwin Rommel School of Financial Planning’ where, if there aren’t teeth, hair and eyeballs all over the counting room floor, you’re doing it all wrong.
Here at Prism Solutions we refer to ourselves as ‘financial unplanners’ since financial planning the way we do it involves locking the client into a private hotel conference room for an entire weekend.
The first step involves cult deprogramming during which the client’s mind is flushed (there we go again) of irrelevant and worse, dangerous, notions of how one goes about becoming debt free, truly wealthy, and prepared for the worst.
Then we remove the top of their head and pour in the kind of bare-knuckled wealth management information that will never be mentioned by AARP or discussed at the next Rotary power luncheon.
In closing, if you’re not getting everything you need from Smith Blarney; if you don’t feel entirely prepared for when the ball drops and the economy tanks, you might want to get in touch. Because when the financial effluvium hits the rotary airfoil, you could be sitting pretty.