What is a decent minimum wage?

[CPA2]

I think that we are only one step away from a cashless society. I will attempt to give a history of money. We have come a long way, baby!

100% Commodity Money

The process of creating money started innocently enough. Jewelers deal with gold every day. Way back when, jewelers would store people’s gold. Jewelers would issue receipts or deposit slips for that gold. People would trade those receipts as if they were gold. Every receipt was backed by 100% gold.

Then lending and banking begins. Depositors wanted interest on their deposits of gold. Others wanted to borrow gold. The jeweler could print some private money and have the borrower sign an IOU.

Fractional Commodity Reserve Money

These new private banks discover something. Not everyone wants to withdraw gold at the same time. The new banker can issue more paper money than gold. This is fractional backing with gold as reserves and the rest with IOU’s.

Then begins the process of changing what a reserve is, and what functions as a reserve. Some jewelers and/or banks get greedy and lend out too much paper money. There is a run on banks, banks fail and people loose their gold. The government steps in and prohibits private bank money. Only the government prints money. The government replaces gold reserves with government money. However, government currency is still redeemable in gold. Reserves still function as “backing” but now government currency is also a reserve along with gold itself. Next, over time, there is a practice of suspending gold payments in the process of changing what is a reserve. In effect, redeemable currency is replaced with non-redeemable government money. Reserves are then no longer “backing,” and government currency serves as backing. Reserves (government money) no longer has intrinsic value. They are not intended to give confidence in the sense that gold reserves did.

Fractional Fiat Reserve

Government money and deposits at the central bank act as replacements for gold. The Federal Reserve Act of 1913 creates the structure (cookie jar) of the Fed. By 1931 (off the gold standard) The Federal Reserve Act allows the system to convert completely to fiat reserves. In 1913 the Fed requires the banks to place part of their reserves (fiat money) at the Fed. Then the Fed deposits become reserves. The last step is that the Fed can create reserves out of nothing.

Fiat Money

Welcome to fiat money. A Federal Reserve Note is an IOU nothing. If you were to turn in a Federal Reserve Note, you would get another Federal Reserve Note. What we have is a cookie jar with no gold in the cookie jar! Demand determines the price of our money. If demand were to evaporate, so would our money. FINI.

Cashless Money

I gave a talk to my sociology class about the cashless society in 1967. I predicted that someday the technology would exist to eliminate cash. The selling point will be convenience. Isn’t a credit card used for a cashless transaction?

A universal cashless society is not desirable. How do I know? I think that the Bible says so. The Bible says that no one will be able to buy or sell without the mark of the Beast. How is that possible without technology and a cashless society?

 

[CPA2]

In The End, A Whole New
Monetary System Will Be Needed
by Larry Edelson

New currencies. New rules of the game. New institutions. A new monetary system.

Gold Has Now Closed Above $1,162 An Ounce — Your Signal That Its Next Phase Higher to Well Above $2,000 Has Begun.
I’ve warned you about this before. But if you still don’t believe me, I suggest you take your cues from gold, which is much more than just an inflation barometer. Much, much more. It’s the ultimate currency — real money.

That’s why last Thursday, as virtually all global markets were in meltdown mode — ONLY ONE market stood head and shoulders above all others, and exploded higher: None other than real money itself, GOLD!

And despite any pullbacks that may occur in gold in the weeks ahead — gold has now given me all the signals I’ve been expecting … and is now preparing to blast off to much higher prices.

Put simply, I believe the price of gold is officially now on its way toward $1,500 … then $1,750 … and then $2,000 an ounce, and probably much higher.

But mark my words: Gold’s next rocket ride higher is not just a bull market for savvy investors to take advantage of.

No, it’s much more than that — because the next phase up in gold will signal the final demise of the existing fiat paper monetary system, and the eventual birth of a new monetary system where the dollar is no longer the world’s reserve currency.

The problem: Between now and then, it will be holy hell for investors who do not understand what’s happening and do not appropriately protect their wealth.

Some Of The Things I Think You Need
To Seriously Consider Going Forward …

1. The value of your current dollars. You’ve already seen how the euro has collapsed, shedding as much as 8% of its value in barely a month. So when this great sovereign debt crisis hits the U.S. dollar — you have to ask yourself a very simple question: What will your cash be worth if left in your typical savings account?

80 cents on the dollar? 70 cents? 50 cents?

I can’t predict what the exact future value of the dollar will be. At least not to the penny. But I can tell you this: The U.S. dollar, despite its recent strength, is in even worse shape than the euro and faces a historic devaluation.

That’s why I also agree with what famed investor Warren Buffett recently said about cash held in U.S. dollars …

“Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.”

And this is not new. It’s been that way for cash for a very long time.

For instance …

$5,000 in cash squirreled away in 1913, when the Federal Reserve was created, is now worth only 4.5 cents. That’s right, 4.5 cents.

Put another way, it would take $110,582.14 of today’s money to buy what $5,000 would have bought in 1913.

Want more recent examples? Consider the following …

It now takes $6,167.83 to buy what $5,000 bought just ten years ago

$27,319.59 to buy what $5,000 bought in 1970

$44,075.92 to buy what $5,000 bought in 1950

Even a McDonald’s hamburger — which cost a mere 57 cents in 1959 — now costs $4.29, an increase of 653%, or just over 13% per year.

Looking into the future, and at the rate the I expect the dollar to lose value going forward — a little over six years from now a Big Mac could cost twice that, or $8.58, if not more.

 

[TenBobNote]

Government money and deposits at the central bank act as replacements for gold. The Federal Reserve Act of 1913 creates the structure (cookie jar) of the Fed. By 1931 (off the gold standard) The Federal Reserve Act allows the system to convert completely to fiat reserves. In 1913 the Fed requires the banks to place part of their reserves (fiat money) at the Fed. Then the Fed deposits become reserves. The last step is that the Fed can create reserves out of nothing.

1971- Bretton Woods was when we went off the gold standard.

Milton Friedman argued against using gold as money.

Gold is too scarce for everyone in the world to own gold.

An article refuting that myth.
lewrockwell.com/north/north213.html

 

[TenBobNote]

CPA, I was just gonna ask if you ever listened to the critique of Friedman I posted a bit ago, I went back to the post and it looks like I had forgotten to post the link, ha, so anyway, here it is if you are interested.

mises.org/media/3933 ( It gets a little more humorous towards the middle end)

 

[CPA2]

Here is a perspective of how bad the economy is doing: April federal deficit was over $80 Billion. The BIGGEST April budget deficit in the history of this country. Normally April runs a surplus because April is the month where everyone pays their taxes. It did not happen this year. Income taxes in April were down over 20%. Last year the April budget deficit was just over $20 Billion. April, a year ago, the S&P had just hit 666 the month before and people were freaking out about a collapse. This year, with the so called “recovery,” the deficit is four times larger!

Find a job now, however you can, and take it. If I had to take a bet with anyone, I would bet that there will be no companies hiring in Jan 2011.

 

[Texas_Roofer]

…The market rate he takes in, or better yet the adjusted average for those in his field, position, etc, would be more than enough info.

So if he makes 100k that has to be the “*value he contributes”? *And if his pay is raised to $250k then he contributes $250k?? What if sales drop, and profits drop would that matter?

If his opportunity cost truly was zero - which is clearly a ridiculous premise - then he would do quite well on $0.01/hr. It also would not collide with Church teaching, for to have a nil opportunity cost he would have to live in a world where $0.01 has a fantastic buying power.

His working for a $0.01 does mean that $0.01 has “fantastic buying power” and would be opposed to the written catechism

If gold is unique in being a nearly universally accepted medium of exchange (which it is), then it has intrinsic value as money…

And that makes it exactly equal to the US dollar which is “universally accepted medium of exchange (which it is), then it has intrinsic value as money” .

Transporting electricity has no intrinsic value. It only matters because it makes human life easier. Same goes for a ready form of currency.

 

[TenBobNote]

And that makes it exactly equal to the US dollar which is “universally accepted medium of exchange (which it is), then it has intrinsic value as money” .

Something interesting has just happened within the last couple of weeks. For most of the history of the dollar (post 1971) gold has acted like a commodity and has risen and fallen with the rest of them. Just within the last couple of weeks with the crises in Greece, gold has acted as a currency, rising when other commodities fall. This is a big deal because it means people are losing faith in the dollar.

So you can not say that it is equal to the U.S. dollar because gold is stable. There is no real assurance the dollar will last.It may be close to equal right now, but it will not be if our government keeps up its same monetary policies.

 

[Texas_Roofer]

.
For instance …

$5,000 in cash squirreled away in 1913, when the Federal Reserve was created, is now worth only 4.5 cents. That’s right, 4.5 cents.

You can sell it to me, I’ll give you a shinny dime for it and all others at those rates. Btw in that 5,000 if used today had the 1913 purchasing power of $227. The difference $4,773 was lost to inflation data.bls.gov/cgi-bin/cpicalc.pl

 

[Texas_Roofer]

Something interesting has just happened within the last couple of weeks. For most of the history of the dollar (post 1971) gold has acted like a commodity and has risen and fallen with the rest of them. Just within the last couple of weeks with the crises in Greece, gold has acted as a currency, rising when other commodities fall. This is a big deal because it means people are losing faith in the dollar.

So you can not say that it is equal to the U.S. dollar because gold is stable. There is no real assurance the dollar will last.It may be close to equal right now, but it will not be if our government keeps up its same monetary policies.

gold is not stable, look at the charts gold just reversed a 20+ year decline, so unless the dollar deflated for 20 years gold was not stable and actually lost value.

(look here)
kitco.com/scripts/hist_charts/yearly_graphs.plx
goldprice.org/30-year-gold-price-history.html

 

[CPA2]

gold is not stable, look at the charts gold just reversed a 20+ year decline, so unless the dollar deflated for 20 years gold was not stable and actually lost value.

(look here)
kitco.com/scripts/hist_charts/yearly_graphs.plx
goldprice.org/30-year-gold-price-history.html

Gold was in a bear market for 25 years because of President Regan and Fed Chairman Volker. However, gold did not become wotrthless. The dollar, on the other hand, will become worthless.

Gold is my measuring stick, not the dollar. My chart would be the inverse of yours.

The feverish pitch for gold — and the worries over the declining value of the U.S. Dollar — are rising again. That’s not surprising.

First, it’s pretty much official: The U.S. is losing its status as the world’s economic caretaker. That was made clear by the recent G-20 meeting in Pittsburgh.

It is now no longer the G-3 … the G-7 … or even the G-8 countries that are the world’s bastion of economic decision makers. It is now the G-20, giving many of the emerging and developing countries, especially China and India, a far stronger voice in world economic policy than ever before.

That’s great for those countries, and I am happy for them. But there’s no question that it also shows the diminishing economic power of the United States — and the increasing power of our foreign creditors.

So not surprisingly, the value of the U.S. dollar continues to sink, barely lifting its head off the mat. Which is obviously why the price of real money — gold — is now, despite short-term gyrations, preparing to at least double in value.

And it’s why there’s such a feverish pitch around the world to gobble up that real money.

 

[stinkcat_14]

$5,000 in cash squirreled away in 1913, when the Federal Reserve was created, is now worth only 4.5 cents. That’s right, 4.5 cents.

Put another way, it would take $110,582.14 of today’s money to buy what $5,000 would have bought in 1913.

This is one of the silliest statements that I have ever seen. Certainly, if you put $5000 into a safety deposit box in 1913, you would have lost purchasing power. No doubt about that. But if you had $5,000 back then and wanted to store it for 96 years, nobody would have been foolish enough to keep $5,000 in currency. If you invested the cash in a portfolio of stocks paying 8%, at the end of those 96 years you would have over $8,000,000. So there would be no harm due to inflation if people are smart enough to anticipate it and invest appropriately.

 

[stinkcat_14]

Gold was in a bear market for 25 years because of President Regan and Fed Chairman Volker.

I see, fiat money can increase in value.

 

[CPA2]

You can sell it to me, I’ll give you a shinny dime for it and all others at those rates. Btw in that 5,000 if used today had the 1913 purchasing power of $227. The difference $4,773 was lost to inflation data.bls.gov/cgi-bin/cpicalc.pl

You can keep your shinny dime made out of pot metal. I want a real dime, one made from coin silver (90% pure silver).

 

[CPA2]

I see, fiat money can increase in value.

All currencies are fiat money. One fiat currency can increase in value relative to other fiat currencies. No fiat currency has intrinsic value. All fiat currencies are pure fiction and will become worthless.

 

[stinkcat_14]

One fiat currency can increase in value relative to other fiat currencies.

Also fiat money can increase in value relative to gold. When the price of gold falls there will be a lot of people who will be happy they had fiat money instead of gold.

 

[CPA2]

This is one of the silliest statements that I have ever seen. Certainly, if you put $5000 into a safety deposit box in 1913, you would have lost purchasing power. No doubt about that. But if you had $5,000 back then and wanted to store it for 96 years, nobody would have been foolish enough to keep $5,000 in currency. If you invested the cash in a portfolio of stocks paying 8%, at the end of those 96 years you would have over $8,000,000. So there would be no harm due to inflation if people are smart enough to anticipate it and invest appropriately.

Deduct inflation from your 8% return, if you can find a reliable CPI index. Now pay taxes on your nominal return of 8%. Will you have any return on your investment?

 

[CPA2]

Also fiat money can increase in value relative to gold. When the price of gold falls there will be a lot of people who will be happy they had fiat money instead of gold.

Economists with doctorates make terrible investors. They are too busy working with their economic models to know what is going on in the real world.

Good luck with your fiat money!

 

[CPA2]

Something interesting has just happened within the last couple of weeks. For most of the history of the dollar (post 1971) gold has acted like a commodity and has risen and fallen with the rest of them. Just within the last couple of weeks with the crises in Greece, gold has acted as a currency, rising when other commodities fall. This is a big deal because it means people are losing faith in the dollar.

So you can not say that it is equal to the U.S. dollar because gold is stable. There is no real assurance the dollar will last.It may be close to equal right now, but it will not be if our government keeps up its same monetary policies.

You understand the gist of the problem! The dollar will lose its status as the reserve currency of the world. The new reserve currency will be a basket of currencies, including gold.

 

[CPA2]

Economists with doctorates make terrible investors. They are too busy working with their economic models to know what is going on in the real world.

Good luck with your fiat money!

Almost everything that investors deem safe today will soon become some of the riskiest investments around.

Your savings, if purely in cash and the U.S. dollar, could lose its purchasing power like grains of sand on the edge of a beach being washed out to sea.

Investments in supposedly “safe” instruments like long-term bonds could be absolutely crushed. Ditto for municipal bonds.

 

[TenBobNote]

gold is not stable, look at the charts gold just reversed a 20+ year decline, so unless the dollar deflated for 20 years gold was not stable and actually lost value.

(look here)
kitco.com/scripts/hist_charts/yearly_graphs.plx
goldprice.org/30-year-gold-price-history.html

What was 20+ years ago? The answer: Bretton Woods. In 1971 when we went off the gold standard gold was no longer used as currency, it was actually made illegal to use as currency.

In order for your argument, that gold is not stable, to be valid, you must refute me in a setting where government interference did not restrict the use of gold as money.

My argument. Gold is stable when used as a currency strictly when government does not intervene.