There’s a graphic making the rounds on Facebook (of course!) that reads,
“In 1964, minimum wage was 5 silver quarters per hour. Today (2/27/2013), those quarters are worth $26.21 in melt value. We don’t need to fix the minimum wage, we need to fix the money.”
I don’t understand much of what my friend is talking about with regard to inflation resulting because our currency has lost much of its value because it’s been debased and doesn’t meet Constitutional standards for weights and measures.
I’m struggling to figure out what this has to do with minimum wage. This debasement doesn’t seem to be hurting CEOs much.
It’s the standard Ron Paul/fiat money/fringe libertarian argument. The idea is that since our currency isn’t backed by a huge pile of precious metal it requires “fixing.”
So basically it’s ignorance of how our modern economy works. Nothing unusual there: just look at how many people see no difference between our national debt and their credit card debt, thus cries to “balance the budget” when we should be “borrowing” hand over fist given current rates. When investors are willing to essentially pay the USA to park their money safely we should take advantage. Instead we’ve got grandstanding and sequestration. :rolleyes:
Every week I’m telling a ‘friend’ on Facebook to stop reposting spam and like-fishing garbage. It’s like everyone forgot all the stupid stuff that happened on email and are just replicating it on Facebook.
The 1964 quarters are worth so much today because there is a shortage of precious metals - there are a lot more people chasing a lot less money.
So their suggestion that currnecy be based on scarce metals would result in a different kind of hell. Instead of inflation, we’d have deflation - given current rates, minimum wage would be between 25 and 50 cents. ($5 to $10).
Think about it - your wages go down as the value of your currency goes up. You borrow $100,000 for your house, but then your wages go down each year. Unless the bank will offer negative interest (meaning, too they will charge depositors a fee to park their money) you will never pay off that house. Really what would happen? Nobody would extend credit, nobody would buy anything, and so on.
Tying money to a specific item like gold or silver is a really dumb idea in the modern world.
The idea is that working for an hour deserves to be paid 5 coins worth of silver. Today, working for an hour earns you about.. 5 coins worth of silver.
($25 worth.. $25 an hour..)
So the youtube video has no point, they actually demonstrate that the economy is rock steady , with an hours toil being worth about ‘5 silver coins of silver’.
Now as to why he calls it ‘constitional’, thats antidisestablishmentarinismistic … its just using big words to sound smart.
Also, time travel appears to be involved. It looks like they want to get cheap silver in 1961, bring it to 2013 where it’s worth more, and pay minimum-wage earners with it. As opposed to killing Hitler, for example. It’s nice that they’re sufficiently concerned about minimum-wage folks to use time travel to fix it, I guess.
I’ve never really understood the idea behind “peg the dollar to gold so it has worth.” Sure, in the beginning to get things rolling you might do that to convince everyone to use the new money and prime the currency pump, but after that, the peg is just in the way.
After all, who determines how much gold is worth? And we’re back to where we started with the extra baggage of trying to manage some sort of pegging system.
In addition to everything else mentioned, the guvvamint originally set the exchange rate of gold to silver at 15:1, then later deflated it to 16:1. As of this morning the value of gold to silver on the open market is approximately 58:1. If the monetarists really want to be paid in silver quarters, they either have to accept the market price, in which case a quarter-dollar would contain approximately .035 ounce of silver (and a $20 gold piece would have .013 ounce of gold). If they wanted to go back to the good old days of the 16:1 exchange rate, their precious silver quarters would either contain .000003 ounces of silver, or they’d have to accept a “fiat” inflation of the price of silver, deflation of the price of gold, or both.
What’s even worse is that in 1964 I used to be paid with 10 Superman comic books each hour, and ten of those cost $30 nowadays. We need to get back on the Superman standard, pronto!
The idea is that pegged money is harder to inflate. If you promise to give someone an ounce of gold for every hundred dollars they give you. Then it becomes pointless to print hundred dollars bills to give to those people.
The value of gold is determined by the market price. The problem is not how to manage the pegging system. Governments all around the world have succesfully used pegging to other currencies to fight inflation. The problem is that you can change the peg as easily as you can inflate a fiat currency. So the purpose of the peg can be easily defeated and you still get the massive uncertainty that pegging to gold would cause.
There’s no such thing. Nothing in the Constitution sets standards in such a way.
Nor has the currency been debased. That has a particular meaning which is not applicable to our modern coinage. A quarter is worth 25¢ and will buy anything that is priced 25¢, so by definition it is not debased.
It’s true that at one time money was pegged to a certain quantity of a precious metal. That gave people the false impression that the metal had an intrinsic value. This was false because new supplies of that metal were constantly being found and altering the metal’s worth. In very old times, a lack of the precious metal could be hidden by substituting a cheaper metal when the coin was made. When people found this out, the coin was worth less, and this is what a debased currency was.
America and virtually every other country in the world went off the gold standard in the 1930s. Even before that, we had stopped making everyday coins and bills that had any real relation to a fixed amount of stored metal. American money was worth what its face value was, and everybody in America accepted it that way. In such a system, the concept of debased currency can’t exist.
Since that time, the notion that coins and bills have to be backed by or pegged to a precious metal has been driven out of all economic thinking except for a tiny and shunned minority. They are a very loud minority, considering their numbers, but their influence can be measured by one simple fact: no country of any economic or political system has gone back onto a precious metal-backed currency.
The buying power of a dollar - or a Euro or a yen or a yuan or anything else - does vary from day to day, even microsecond to microsecond in trading circles, but that’s a different issue, even if some confuse the two. The minimum wage is totally about the current buying power of a dollar. Fixing the money - putting the money onto a system where it has to be fixed to a certain amount of silver - is the worst possible answer.
The idea is that silver and/or gold values are remaining more or less the same over time–the reason that their values seem to be so much more now is because the value of the currency that they’re quoted in is going down over time.
Trying to run an economy on a precious metal standard is just a dumb idea. There simply isn’t enough precious metal to support a modern economy. Something like a gold standard can work when you have a small economy and there’s enough god to go around. But if your economy grows you eventually reach a limit - you only have so much gold and you can’t make more of it. At this point you either have to stop your economic growth or go off the gold standard.
First, similar argument was already made on the floor of Senate only with slightly different method but basically same idea (productivity increase vs. money value) has been posited by Senator Elizabeth Warren. Someone smartly figured that if they link the questions related to the value of minimum wage now vs. 1950’s to Ron Paul then they won by default; i.e. he is “insane” so the whole concept MUST BE insane. Plus, so much about “informed” Doper.
Secondly, and to address your “ignorance of how our modern economy works”, it shows only your ignorance. In other words, if you had any awareness of the topic of economy and how it works you’d realize nobody really knows how economy works; in order to make any sense some assumptions have to be made and then you can talkl about a specific viewpoint but not entire theory. It’s all bunch of theories based on models whose probability and possibility is in the realm of mathematics and random events so let’s not kid ourselves that there’s someone who knows.
However, what we do know is the effects of various policies and initiatives on economy and its results and we can at least show some intellectual honesty and confirm that we at least understand symptoms if not causes.
There are already a number of threads dealing with money and there’s one where we ended with the following – please prepare it sounds very Ron-Paul-ish: “debt is money”. There’s no magic about how is debt created. If I can create $100 dollars out of thin air and make you hooked up on $99 of those as your debt who actually has the money – you or me?
It would help, in future, instead of bouncing off media-fed slogans and sound-bites, try for a change and disprove the mechanics of money creation and debt.