A man could go broke overestimating the intelligence of the federal government but I do see possible sinister motives behind Mr Obama’s plans to raise the minimum wage to $9.00 an hour. I have not watched a State of the Union message for a couple of decades. They became too painful to watch ever since the federal government more obviously revealed itself to be a criminal enterprise. Mr Obama proposed raising the minimum wage during his State of the Union message. I read about it the next day. On the same day I also read articles about our ongoing Currency Wars. I recently saw a BBC interviewer say that the last time the UK devalued the pound their exports only increased 0.1%. Currency Wars were a disaster in the last Depression too.
People today do not realize that the first two years of the Great Depression were with the exception sf Germany and Austria hardly more than a recession until everyone started devaluing their currencies. Specifically, it was when the Bank of England devalued the pound on September 21, 1931 that the real Depression began. Though the earlier bankruptcy of the Credit Anstalt bank on May 11, 1931 in Vienna did freeze credit. If we fit our current Depression to a 1929-39 timeline. we would put ourselves past the early recession period into the 1931 era of bank liquidity squeezes and Currency wars. The Japanese have recently devalued the yen against the euro so they can compete against German car makers and machine tools exporters. We are close to the point where the international reserve currency of our time. the dollar, is devalued. We overcame the stock market crash through Bailouts which by design have substantially increased our total amount of Unpayable Debts. This means that when we enter the next phase of our Depression which is Debt Cancellation things will be far worse for the world than they were in 1933 assuming we do not immediately reform the banking and monetary systems.
A currency war is a governmental plan to devalue it’s currency’s purchasing power so foreigners can bid away a nation’s products from it’s citizens. It also allegedly balances trade deficits by making imported goods and foreign travel more expensive. Devaluation makes travel to your country cheaper thus encouraging tourism. But we are talking about the US here so even a $350 savings on a tour package will not convince men from Brazil, Sweden or Singapore to subject their families to TSA genital groping at our airports. America apart from weapons exports very little except for food though I need to point out that America is a net importer of food. A devaluation of the dollar means that Americans would export more food by raising the price to Americans who will have to learn to eat less in the short run (i.e. until the harvests of 2014 and 2015).
Academic economists tell us that American farmers would produce more food next year when they see higher prices. A problem with this thinking is that devaluing your currency has never worked in the past. Those farmers will see both the price of imports and their operating costs go substantially higher as well. And their domestic customers will have to cut purchases somewhere due to higher prices. This could force Americans to shift from more expensive high quality food to cheaper less nutritious food substitutes like replacing 100% juice with flavored High Fructose Corn Syrup. If the President wanted to help the poor, he could ban Monosodium Glutamate (MSG) which causes consumers to eat more thus raising food budgets while increasing obesity. And the latter does increase health costs which does make America less competitive.
On the day following the President’s announcement that he wanted to raise the minimum wage to $9.00 an hour I saw two comments from analysts who said they expected the dollar to be devalued 40%. I looked at the two numbers and concluded that if the dollar were devalued 40% that a minimum wage worker with a nominal $9.00 an hour wage would be making $7.20 an hour after deflating for inflation. Make no mistake. A 40 % devaluation will have horrendous consequences for everyone who is not a billionaire globalist. Of course those making ten or twenty dollars an hour would soon learn how to live on $6 or $12 an hour. I should point out that this comes after Obama’s healthcare regulations forced employers to cut the hours worked each week to less than 30 to avoid paying for health care coverage written by the insurance companies to benefit them.
There was no minimum wage until 1933 when it was set at 25 cents an hour. It became 40 cents in 1946 though inflation had wiped that nominal pay increase as did the raises of 1963 to $1.25 of 1981 to $3.35. The last raises were to $6.55 and $7.25 in 2008 and 2009 so I do see an element of anticipation on the part of government planners that things will get very bad very soon. Other indicators that the government expects and economic collapse in the near future are the acquisition of 1.6 billion 40 caliber bullets, drones, widespread surveillance equipment, armored ckeckpoint pill boxes and LRAD sound cannons. The latter violates the Constitution by torturing protesters though I think an armed populace would put a stop to that rather quickly.
Minimum wage workers do not get most of their income directly from their employers. They get Food Stamps and some get housing benefits from either the local or federal government. And they also get an Earned Income Tax Credit (EITC) which was originally designed to refund Social Security taxes to low wage workers. The EITC has become a giveaway program that sees recipients get lump sum checks ranging from $2,200 to $5,000. And most get state Medicaid for free or avoid doctors altogether.
Of course a devaluation will wipe out the ability of the federal government to deliver benefits of any kind to any one. Within 30 days of devaluation it will be impossible for 80% of Americans to pay $7 for a gallon of gas, to feed their families and to pay their utility bills after having maxed out their credit cards. I do expect nationwide food riots and race riots. I do not think the government will be able to protect grocery stores from looters so even the wealthy will not have access to food unless they flee the cities. The US military has been practicing martial law techniques in major American cities. I noted last summer that the riot control plans from DHS were to protect the wealthy Jewish suburbs from poor blacks in St Louis and Hartford. They would sacrifice poor and working class whites to angry mobs. I commented at the time that it seemed to me they were trying to get a race war going to give Wall Street an exit strategy.
I should make a few comments about the race between a hike in the minimum wage and an international conference like the 1985 Plaza Accords which did devalue the dollar against the yen and the Deutsche mark. But I would expect an international conference to be called some tine in the near future after another crisis.
I see little chance for the minimum wage to be increased before the dollar crashes. That means the current minimum wage of $7.25 would be cut to a little over $4.00 an hour in real terms while gas prices went up $3 a gallon and the purchasing power of Food Stamps were cut 40%. Sounds like a great recipe for nationwide food riots.
The adult solution is to listen to someone of integrity who has a brain and does not work for the bankers to issue a call for Debt Cancellation. Depressions are caused by an accumulation of Unpayable Debts which are then cancelled over a period of years with much hardship including death by starvation of Americans by the millions. The Babylonians had a formula which told them when it was time for them to cancel Unpayable Debts for the benefit all whether they be rich or poor.
Our choice is clear. Either America cancels its bad debts or we let the bankers cancel American civilization.
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