Sunday, June 17, 2007

If We All Just Made More Money

It looks like I found someone who is more paranoid than I am:

The actual truth is that raising the minimum wage is the most shameful "achievement" of any Congress in the last forty years. The reason that I make this highly-inflammatory and rudely derogatory statement is threefold:

1) Congress's own continual, irresponsible expansion of government, by deficit-spending the excess money and credit (monetary inflation) created by the Federal Reserve, is what produced the inflation in prices that "necessitated" the increase in the minimum wage,

2) it is the culmination of 94 years of gathering the most profound, incontrovertible actual proof that the Federal Reserve cannot be trusted to maintain the value of the fiat dollar because the dollar's buying power has gone down, and down, and down the whole freaking time since the Fed was established in 1913, and the dollar now has a lousy 3% of its original purchasing power left, and yet not one damned Congress has done one damned thing to require the Fed to do anything different in the whole 94 years, and

3) because I enjoy being contemptuous and sarcastically rude to people who are being trusted to know better and act better, but don't.

A quick way to tell if someone has a grasp on economic issues is to ask them for their stance on minimum wage. If they say they want it to be higher they likely don't understand free markets--or simply despise them, which is at least more honest. Raising the minimum wage might be a good PR move since most Americans, having been educated in government run schools, lack the insight to realize the futility of such a gesture, but futile it is.

In ten years we'll again be forced to endure some liberal pontificating about how if only we raise the minimum wage, poor people will be able to afford things. What these simpletons fail to appreciate is the extent that modifying one aspect of a system changes the system as a whole. Like Heisenberg and his atom, we can't measure speed without losing position and vice versa, except that when it comes to vaguely free markets we can determine how the model will react based on some simple rules as well as historical precedent. Hence raising the minimum wage invariably causes inflation; it does absolutely nothing to reduce poverty, either in extent or in number of cases.

Like the nonsensical War on Terror, the War on Poverty will always fail to achieve its object. And, again similarly, this seems to make little sense until you realize that these Wars aren't about defeating anything. Perpetual war is good for the State, and the best way to ensure a never-ending fight is to make one's object vaguely defined, and victory unachievable.

That the dollar has lost 97% of its value in just over ninety years sounds discouraging, and to a large extent it is. However, it took France less than five years to destroy their currency during their ill-fated Revolution. Early Americans were similarly mis-fortunate: one seldom deals in Continentals any more. I can't claim surprise that the American dollar is rapidly reaching the level of worthlessness, though I am a bit amazed it has taken so long.

The lesson, as always: giving power to the government is tremendously foolhardy. And, as the Mogambo Guru points out, it might not be a bad idea to invest in gold and other precious metals.

1 comment:

Doom said...

Though I really agree with you regarding raising the minimum wage as a means of combating poverty in that it cannot work. I am not sure about the deflation of the dollar as a Feds based problem. I guess I would have to see a system that does work. Sure, I realize the Swiss maintain, for the most part, their coin of the realm's value, but at what price? They refused to deny Nazis, Communists, dictators of various flavors worldwide, or show any morality whatsoever. Perhaps taking gold teeth and smelting them? As well, should we have lost WWII, what exactly would neutrality have gained them?

No other nation I have seen manages it's money half so well than ourselves, other than Switzerland. And, I realize, though the dream here is equality, it isn't a guarantee. The rich will and do affect the economy to their favor, and should that fail they will find a way to capitalize on the new paradigm or become middle class or poor.

Are you saying the government should guarantee fiscal equality? Are you saying we should decentralize the Fed? What are you offering to replace it? These aren't doubts, merely questions.

Beside that, one thing I have noted with inflation is that it isn't truly a problem unless it happens very quickly. If I am paid a quarter an hour and a house costs thirty seven thousand two hundred fifty dollars, then nearly a century later, I make $15 an hour and a house costs a hundred twent five thousand dollars, I am ahead of my great great great great grandparents. And, to be honest, we are. The other trick I have noticed is that as coin is split down, it becomes much more of a flexible spending tool.

Oh, hey, I was wondering if you wouldn't consider dropping the verification. If you start getting weird hits, you could always set up so that you approve the posts first or reinstitute the sign in. Just more thoughts from the grumpy side.