Silver vs Fiat: The Fall of Minimum Wage in Real Terms | Mike Maloney

Summary

This video script argues that the US minimum wage has effectively fallen by over 70% in the past 61 years, using the example of silver quarters' value compared to the Federal Reserve notes. It suggests that inflation, a tool of wealth transfer, has disproportionately benefited the top 10%, while the rest suffer from reduced purchasing power. The speaker critiques the concept of minimum wage, its impact on unemployment, and the Federal Reserve's role in inflation, advocating for a return to 'real money' to address economic inequality.

Takeaways

• 💼 The speaker argues that the minimum wage has effectively fallen by more than 70% over the last 61 years, using a comparison to the value of silver quarters in 1963.
• 💡 Luke Groman's tweet is highlighted as a source of inspiration, suggesting his unique perspective on economic issues is valuable.
• 🏦 The speaker criticizes the US CPI (Consumer Price Index) calculations, claiming they undervalue the true inflation rate and its impact on purchasing power.
• 📉 The labor share of corporate profits is said to be at multi-decade lows, indicating a shift in wealth distribution favoring the top 10%.
• 🌐 The speaker suggests that the Federal Reserve's policies are responsible for wealth inequality and economic dysfunction, advocating for its dissolution.
• 💰 The concept of 'fiat currency' is contrasted with 'real money' (silver), emphasizing the devaluation of the former over time.
• 📊 The speaker uses a mathematical analogy to demonstrate the decline in the purchasing power of the dollar, particularly against silver.
• 🚀 The current federal minimum wage is compared to the historical value of silver quarters, showing a significant decrease in real terms.
• 🍔 The speaker discusses the economic implications of artificially high minimum wages, such as increased unemployment and reduced job availability.
• 🏛️ The speaker criticizes government interventions like minimum wage laws and fees on services, arguing they disrupt economic equilibrium and lead to unintended consequences.
• 🌟 The speaker concludes by advocating for a return to 'money' (as opposed to currency) to address issues like unemployment and wealth inequality, suggesting a clearer economic perspective.

Q & A

What is the main argument presented in the video script regarding the minimum wage?

The main argument is that the minimum wage has effectively fallen by more than 70% over the last 61 years when compared to its purchasing power in terms of silver, and that this decline in purchasing power is not visible to most people.

What does the script suggest about the distribution of wealth in the United States?

The script suggests that wealth has been increasingly concentrated in the hands of the top 10%, partly due to the decline in the purchasing power of the minimum wage.

What is the 'CP Lie' mentioned in the script, and why was this term coined?

The 'CP Lie' refers to the Consumer Price Index (CPI), which the speaker accuses of underreporting inflation and thus hiding the true extent of the decline in the purchasing power of the minimum wage. The term was coined by the speaker in his first book to highlight this perceived deception.

How does the script connect the minimum wage to the concept of 'real money' and 'fiat currency'?

The script contrasts 'real money', represented by silver dollars in the past, with 'fiat currency', the Federal Reserve notes of today. It argues that the value of the minimum wage in terms of 'real money' has significantly decreased when compared to its value in 'fiat currency'.

What is the speaker's view on the current state of labor share and political dysfunction in the United States?

The speaker believes that the labor share of corporate profits is near multi-decade lows and that political dysfunction is at multigenerational highs, both of which are driven significantly by high income inequality.

What is the speaker's opinion on the current federal minimum wage and its effects?

The speaker criticizes the federal minimum wage, suggesting that it is too low and that attempts to raise it artificially can lead to unemployment and economic dysfunction.

How does the script use the example of silver quarters to illustrate the decline in the minimum wage's purchasing power?

The script uses the example of silver quarters, which were worth $1.25 each in 1963, to show that the equivalent value in today's currency would be $25, but the purchasing power of that amount has significantly diminished, as it would only equate to $10.81 in terms of 1963 dollars.

What is the speaker's stance on raising the minimum wage to an artificially high level?

The speaker is against raising the minimum wage to an artificially high level, such as $10,000 per hour, arguing that it would lead to economic imbalances and make goods and services unaffordably expensive.

What evidence does the script provide to support the claim that raising the minimum wage can lead to job losses?

The script cites examples such as California fast food workers losing jobs after the minimum wage was raised to $20 per hour, and a 45% decrease in Uber Eats deliveries in Seattle after a $4.99 fee was mandated to support drivers.

What is the speaker's view on the Federal Reserve and its role in economic inequality?

The speaker is highly critical of the Federal Reserve, accusing it of either being incompetent for not understanding the wealth transfer effects of its policies, or immoral for knowingly causing such effects. The speaker calls for the dissolution of the Federal Reserve.

How does the script explain the concept of inflation as a form of theft?

The script likens inflation to a form of theft where a 'slice' is taken from the total currency supply, reducing the value of everyone's money without them noticing, thus transferring wealth from the many to the few.

Outlines

00:00

💼 The Decline of Minimum Wage Value

The speaker begins by discussing the concept of inflation and its impact on the value of currency. They argue that the minimum wage has significantly decreased in real value over the past 61 years, using a tweet by Luke Groman as a reference. The speaker points out that in 1963, the minimum wage was equivalent to five silver quarters, which had a real value of $25. According to the speaker, the U.S. CPI calculations indicate that this amount is now only worth $10.81. They further explain that the difference in value has been absorbed by the top 10% of the population, highlighting issues such as labor share and corporate profits. The speaker emphasizes the importance of understanding the difference between money and currency, and how inflation stealthily reduces the purchasing power of currency.

05:02

💸 Current Minimum Wage and Economic Consequences

In this paragraph, the speaker discusses the current federal minimum wage of $7.25 per hour and compares it to the historical value of the minimum wage in terms of silver quarters. They calculate that the current minimum wage is equivalent to 1.45 silver quarters, indicating a 71% decrease in value since 1963. The speaker criticizes the idea of artificially raising the minimum wage, arguing that it leads to economic imbalances and unemployment. They provide examples such as the impact of a $20 minimum wage in California and a $4.99 fee on Uber Eats in Seattle, which resulted in job losses. The speaker suggests that the Federal Reserve's policies contribute to wealth inequality and calls for a return to a system based on real money, rather than fiat currency.

10:04

🏦 Inflation and the Invisible Theft of Currency

The speaker concludes by emphasizing the invisible nature of inflation and its impact on wealth distribution. They describe how the Federal Reserve targets a certain rate of inflation, which they equate to a form of theft from the public. The speaker argues that the current inflation rate is manipulated to appear lower than it actually is, thereby understating the extent of the theft. They advocate for a shift from fiat currency to real money to eliminate the 'fog' of misunderstanding that currency creates. The speaker suggests that eliminating minimum wage and returning to a money-based system could help address issues like unemployment and wealth inequality. The paragraph ends with a call to action for viewers to understand the difference between money and currency and to think critically about the economic policies that affect their lives.

Keywords

💡Inflation

Inflation refers to the rate at which the general level of prices for goods and services is rising, and subsequently, the purchasing power of currency is falling. In the video, the concept of inflation is used to illustrate the hidden 'theft' of value from currency holders over time, as the same amount of money buys less due to price increases. The script mentions how inflation has eroded the value of the minimum wage over the past 61 years.

💡Minimum Wage

The minimum wage is the lowest wage permitted by law or by a special agreement. The video discusses how the real value of the minimum wage has significantly decreased over time when compared to its purchasing power in the past, specifically referencing the difference in value from 1963 to the present.

💡Purchasing Power

Purchasing power is the value of income that can be used to purchase goods and services. The script uses the term to describe the decline in the real value of money over time, particularly highlighting how much less a minimum wage earner can buy today compared to 1963.

💡Fiat Currency

Fiat currency is a type of currency that a government has declared to be legal tender, but it is not backed by a physical commodity like gold or silver. The video contrasts fiat currency with 'real money' or silver dollars, emphasizing the devaluation of fiat currency over time due to inflation.

💡Wealth Inequality

Wealth inequality refers to the unequal distribution of assets among different social classes or individuals within a society. The script suggests that wealth inequality has been exacerbated by economic policies, with the top 10% benefiting at the expense of others, as illustrated by the decline in the minimum wage's value.

💡CPI (Consumer Price Index)

The Consumer Price Index is a measure that examines the weighted average of prices of a basket of consumer goods and services, often used to track inflation. The video criticizes CPI calculations for underrepresenting the true extent of inflation and its impact on the value of money.

💡Silver Quarters

Silver quarters refer to the US 25-cent coins minted before 1971 that contained silver. The script uses the historical value of silver quarters to demonstrate the decline in the minimum wage's purchasing power, comparing their value in 1963 to their equivalent in today's currency.

💡Labor Share

Labor share is the percentage of a country's GDP that is paid to workers for their labor. The video mentions that the labor share of corporate profits is near multi-decade lows, suggesting a shift in income distribution away from workers and towards capital owners.

💡Political Dysfunction

Political dysfunction refers to the inability of a political system to function effectively, often due to disagreement or conflict. The script connects political dysfunction with high income inequality, suggesting that economic disparities contribute to political instability.

💡Economics

Economics is the social science that studies the production, distribution, and consumption of goods and services. The video discusses the economic principles of supply and demand, and how setting a minimum wage can affect employment levels and the cost of goods and services.

💡Federal Reserve

The Federal Reserve is the central banking system of the United States, responsible for monetary policy. The script criticizes the Federal Reserve for its role in inflation and suggests that its policies contribute to wealth inequality and economic distortions.

Highlights

The video argues that the minimum wage has effectively fallen by over 70% in the last 61 years.

Luke Groman's tweet is used to illustrate the decline in the real value of the minimum wage.

In 1963, the minimum wage was equivalent to five silver quarters, which today would be worth $25.

According to CPI calculations, $125 from 1963 is only worth $10.81 today.

The difference in value has been transferred to the top 10% of earners.

Labor share of corporate profits is at multi-decade lows, and political dysfunction is at multigenerational highs.

The speaker introduces the term 'CP Lie' to describe the discrepancy between CPI calculations and real-world value.

Silver is used as a measure to expose the lie of inflation and currency devaluation.

The current Federal Reserve notes are considered 'fake' compared to the 'real money' of silver dollars.

The dollar has fallen to 1/12th of its value in terms of purchasing power against silver.

The current federal minimum wage is $7.25 per hour, which is a significant decrease in real value compared to 1963.

The video suggests that raising the minimum wage can lead to unemployment and economic inefficiency.

Examples of California and Seattle are given where high minimum wages have led to job losses.

The Federal Reserve is criticized for its role in wealth transfer and inflation targeting.

The video argues for the dissolution of the Federal Reserve and a return to 'real money' to fix unemployment and wealth inequality.

The difference between currency and money is emphasized as a key to understanding economic issues.

The video concludes by stating that understanding the difference between currency and money can clear the fog and provide clarity on economic matters.

Transcripts

you take a little slice out of the

middle through

inflation you give everybody else what

is left but it's all distributed sliced

up into uh these units of currency and

nobody can see the value that you have

stolen from everybody

[Music]

else in this video I'm going to attempt

to prove to you that the minimum wage

has actually Fallen by More than 70%

over the last 61 years yes the minimum

wage has gone down by More than 70% over

the past 61 years and for that I'm going

to use this brilliant tweet by Luke

growman Luke groman has a great mind and

I love how he looks at things a

different way it's really worth paying

attention to him he's a great guy this

ceases to be an intellectual exercise

once you realize hey you minimum wage

was five silver quarters

a25 in

1963 those silver quarters are worth $25

now us CPI calculations say that that

$125 is only worth

$10.81

now uh the diff the $14 and 19 C

difference has gone to the US top 10%

labor share share of corporate profits

is near multi-decade lows uh us

political dysfunction is at

multigenerational highs driven in no

small part by the highest income

inequality in nearly 100 years now this

is absolutely true but I want to try and

dig a Little Deeper Than This uh so

let's let's take this apart here uh

first of all us minimum wage was five

silver qu ERS of real money silver which

was

1.25 silver dollars

125% of a silver dollar in 1963 five

silver quarters each quarter being 25%

one quarter of a silver dollar so that

was you know you've got four of those

equal a dollar right that's a dollar but

it was a dollar of money those five

silver quarters of money are now worth

$25 of national fiia currency Federal

Reserve notes so the five silver

quarters of money five silver a buck 25

of money is now worth

$25 of national fiat currency fiat

currency Federal Reserve notes the fake

stuff the US CP lie a term that I coined

in my first book uh the the the guide to

investing in gold and silver back in

2008 I made that term up the cply

calculations say that

$125 is only worth $10 81 now and I that

probably should be phrased that

$125 of

1963 money dollars is now only worth

$10.81 of 2024 National Fiat Federal

Reserve notes uh now this is the lie

though and silver is exposing that lie

it to to buy a buck 25 of the of silver

from

1963 now costs

$25 so um uh and I do want to point out

here 25 divided five is five right

except that's five silver quarters a

quarter of a dollar this isn't

$5 so the in in $25 there are actually

100 quarters right so you've got 100

divided by five that means it's that uh

silver that the dollar has fallen in in

purchasing power against silver uh

$25 buys five silver quarters um if you

take this divided by that you end up

with 20 if you take 100 divided by five

you end up with 20 uh so the dollar has

fallen to 12th of its value that is

95% uh fall in purchasing power of

national fiat currency Federal Reserve

notes they are not money this is

currency difference between money and

currency is very very clear here uh uh

so the difference has gone to the top

10% now I do want to point out

five silver quarters was minimum wage

what's minimum wage today minimum wage

this is the US Department of Labor

minimum wage is

$725 per hour now that's Federal uh

minimum wage it's not uh you know

California and Seattle and and people

that are just like dreaming uh that that

where bureaucrats are trying to dictate

what they think is fair

and try to disregard economics and when

you disregard economics you always get

punished well not those bureaucrats

they're doing well they get these uh you

know six figure paychecks uh it it's

punishing the people that they're

dictating this minimum wage thinking

that they are uh defending it so when

they try and dictate the $20 minimum

wage so let's take these five silver

quarters of minimum wage and and now uh

it costs $25 for those five silver

quarters 25 divided 5 is $5 each right

so you take this minimum wage of

$725 per hour and if we take um the

7.25 uh divided by um the

$5 quarter each quarter now costs $5 you

end up with

1.45

quarters so let's go to a percentage

calculator minimum wage used to be five

silver quarters now it is 1.45 quarters

and that is a fall of

71% minimum wage has literally Fallen by

71% since

1963 it's a different way of looking at

things now now let's look you know I

wish that we could create a minimum wage

that would work I think everybody should

get paid uh 50 bucks no 100 bucks an

hour no a th000 bucks an hour I think

it's better 10,000 bucks an hour that's

what we should pay people because that

would be great wouldn't it if all of us

including somebody working at McDonald's

flipping hamburgers could get paid

10,000 bucks an hour well wait a minute

wouldn't that mean that a hamburger

would cost about 50 million bucks when

you for somebody that goes to McDonald's

I haven't eaten there in I don't know

it's been decades uh but uh there

there's sort of a choice um

economics it's supply and demand and

when you raise the price you reduce

demand and so you raise the the price of

a job of of pay you're going to reduce

the demand of how many people want to

create the how how many people want to

pay somebody how many people can afford

to pay somebody and so here is the proof

uh or here's some of the things we're on

the brink of an unemployment Fiasco

unless the federal fed steps in fast

actually what they didn't need to do is

step out fast not step in the FED needs

to go away actually millions of

Americans could lose their job so this

is somebody not looking at the

fundamentals that that wrote this

article that doesn't really understand

the real economics behind it uh when you

raise minimum wage so California raised

it up to 20 bucks an hour 10,000

California fast food workers mfed thanks

to $20 minimum wage and so uh you raise

it up and all these people lose their

job you need further proof Seattle

mandates a

$4.99 fee on Uber Eats so let's just

call that five bucks to help drivers

deliveries crash by

45% okay every time uh if you're an Uber

driver whether you're accepting a ride

or an Uber Eats delivery every time you

accept a delivery that's another job

you've just been hired well there's

45% Less jobs available because of some

bureaucrat deciding this is fair I'm

going to help drivers I'm going to help

them by eliminating 45% % of the

potential job openings that they've got

so uh you know J Powell now these

people in chapter four of the great gold

and silver Rush of the 21st century I

talked about the wealth transfer that

these people are causing and I said that

there are a bunch of very smart PhD

economists and if they do not understand

the wealth transfer that they are

causing then they are incompetent and do

not belong in their jobs if they do

understand the wealth transfer that they

are causing then they are immoral and

they belong in jail and there is no

middle ground here they either

understand it or they don't understand

it so it's one or the other they're

incompetent Federal Reserve needs to be

dissolved and they need to lose their

jobs or they are immoral and they belong

in jail because now Federal JP palal

signals growth growing confidence that

the US inflation is moving towards the

2% Target in other words they have

targeted 2% as of the amount of theft

the amount that they are going to steal

from you each year they are going to

take 2% of your income due to inflation

uh now they accidentally created so much

currency during the pandemic that for a

while it was a stated you know according

to the their measures of inflation the

CPI the CP Li uh it was like up to 9%

that they were stealing from you every

single year taking 9% of your savings

your pay uh taking 9% of your purchasing

power each year uh but it was actually

far more than that if you look at the

price of real goods and services they

pick and choose how they measure and

then they adjust it they always adjust

it to make it look better so that their

uh their theft does not look as

egregious but they are now tar you know

they've been targeting 2% theft instead

of 9% or 16% or 20% or whatever the

theft really was so that's how much

they're going to steal from you in the

future and you want to see how this

works because the the average person

never sees this it is invisible the way

that they do it so I want to show you

the best explanation I've seen of this

you take the current currency Supply

this is the whole thing you take a Big

Slice out of the middle inflation you

take the rest of the currency Supply and

you cut it up into little currency units

called dollars and nobody can see the

robbery that has just been committed the

theft uh let me show you this once again

here you take a little slice out of the

middle through

inflation you give everybody else what

is left but it's all distributed sliced

up into uh these units of currency and

nobody can see the value that you have

stolen from everybody else the way to

fix this uh you can fix unemployment by

getting rid of minimum wage you can fix

uh the wealth inequality the income

inequality uh by getting rid of uh

currency and going back to money uh the

difference with with minimum wage the

difference between a million dollars of

income per year and uh

$20,000 worth of income if you if you

you're you know you make a deal with

somebody to work for $20,000 a year

that's your income the difference

between a million and 20,000 is less

it's it's less uh there's less

inequality than a million and zero which

is happen which is what happens when you

dictate a minimum wage a lot of people

have zero income because they don't have

a wage this is just a different way of

looking at things and hopefully when you

know the difference between currency and

money you can then uh analyze things

like this and see through the fog

whenever you use currency there is a fog

that you cannot see through when you

think of things in terms of money it

lifts the fog and you can see clearly I

want to thank you for watching we'll see

you next time