Confirmed - The US Dollar is one of the Worst Sh*tcoins of Them All

in #steemleo5 years ago

The US Dollar is one of the Worst Sh*tcoins of Them All

What is a stable shitcoin?
A stable shitcoin is a stablecoin backed by one or more shitcoins. Use only shitcoins to back your stablecoin with so that you only have losses and no gains.

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A point I made about minimum wage is that it only deals with actual dollar amounts. It does not matter if one makes $10 an hour or $100 an hour. What matters is what someone can purchase with what they have earned in an hour. The dollar has weakened considerably over the years.

Comparison to Silver

To see this point, one need only look at the minimum wage in 1964, the last year that 90% silver coins were used as legal tender. At that time, federal minimum wage was $1.15 an hour, as opposed to $7.25 an hour, as of October 2018. As of writing this additional component of the article, silver has been hovering around $14.50 a troy oz, which is fairly low for silver. But even then, taking into account that 90% silver has approximately 0.715 troy oz per $1 value, that $1.15 an hour minimum wage equates to $11.92 an hour, which is 64% above current federal minimum wage.

What this point means is that had minimum wage been frozen in 1964, and had silver not been removed as legal tender so that 90% silver was still used, people making minimum wage would be making 64% more, in terms of purchasing power. So the issue is not minimum wage. It is the value of the dollar.

Housing Prices

Okay, but maybe that’s just silver. We don’t go around consuming that much silver, so does it really matter? Well, first off, we do consume a fair amount of silver in industrial production, but let’s consider another example: housing.

Affordable housing is important. We need to have a place to live. It’s one of the three basic needs after all. Many suggestions have been put forward to help solve the housing problem. Some people think that more government is needed. Fast Company suggestions that taxing empty apartments could ease the housing crisis.

According to FRED Economic Data, the median sale price of houses sold in the US, in 1964 was $18,925. FRED’s data only goes up to 2017, but in 2017, the median price was $322,425. That’s a 17 fold difference. So clearly median household prices have gone up more than silver, but the size of houses continues to grow. Even still, at $1.15 an hour in 1964, it would have taken ~16,500 hours of labor at minimum wage, or about 11,800 troy oz of silver, to buy a house. Today it would take 44,500 hours of labor at minimum wage, but only 22,240 troy oz of silver. It’s actually less, because silver has gone up to over $15.50, closer towards its longer term purchasing power. But that’s fine.

If I really wanted to showcase specifics, I could try to calculate the median per square foot price of a house, and I would be much closer. In fact, the American Enterprise Institute has an interesting article looking at the increase in the average size of a house, and decrease in average household size. Based on official inflation data, it seems that per square foot, housing prices have remained essentially constant since 1973.

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Uneven Inflation

The point is that it’s fairly clear that the dollar has lost over 90% of its actual purchasing power, since 1964. But what makes this loss in purchasing power worse is that it is uneven. If every dollar generated the roughly 5 cents per year in inflationary expansion, and it went everyone’s pockets, then inflation wouldn’t matter too much. But obviously that’s not how money works, at least not how the USD works.

New currency is added to the monetary base through the federal reserve system, and is injected into the banking and financial industry first. It then filters out into the broader economy. But what this means is that, for a time, the financial industry gets most of the new currency generated, and gets to play with it and decide how it is distributed. This imbalance allows for a transfer of actual purchasing power, from the masses, to the financial industry.

Sacrificing the Masses for Debt
The reason I decided to rush to write this article is so that I could write a better response to Pascal Bedard, who suggested that the United States doesn’t actually have a government debt problem. On the surface, I agree. Because the payments aren’t too far above inflation, it’s not that expensive to handle the debt right now. And that’s one reason why the government needs a fairly steady inflation rate: to keep its debt cheap. In fact, with an interest rate hovering around 3% for ten year notes, and a real inflation rate hovering around 5%, the government isn’t actually having to spend much at all. But we’re the ones who are paying for it, through the decrease in purchasing power.

Final Notes
So I think I’ve made my point, or at least I hope I’ve convinced people to look into the matter further. The monopolization of currency production, by the United States government, has benefited itself, and those connected to it. We see a continued drain of purchasing power, from the masses, to the elites, and the dollar is a major vehicle.

So what can we do? The greatest threat to government control of currency production is cryptoassets. Not only can cryptoassets solve the problem of uneven inflation, it is going to be essentially impossible for government to place a stranglehold on such a decentralized and distributed system.

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