Tag Archive | inflation

Is Bitcoin in a Bubble?

No. Next question.

Are Cryptocurrencies generally in a bubble?

No. A bubble is when investors drive a stock’s value beyond its actual value, distorting the market through their cognitive biases, and the inexorable market forces inevitably reveal this to be a sham, which plummets the value of the stock back to its market value. There are a few considerations to be addressed here, because a bubble is the result of “believers” recruiting people to the investment in speculation, and an ultimate correction that causes most people to lose lots of money. The 2007 recession was caused by the bursting of a housing bubble that was brought about by low interest rates as decreed by the Federal Reserve, which gave the illusion of economic strength and created easily-received credit. This was illusory because most people did not have the economic strength to purchase a home on the credit they received, defaulted, and caused banks to lose large amounts of entirely made-up money. Not to get too out there with it, but banks didn’t actually lose any money during the Great Recession, because when people take out loans, banks just invent that money out of thin air (no, really, that’s what they do–they just add the money to their ledgers). Then, when you pay back the loan they gave themselves or another bank in your name, you’ve converted that imaginary money into real money. It’s stupid, counterintuitive, and an obvious ripoff for us. But anyway.

It’s true that crypto believers are attempting to recruit new people to cryptocurrencies, but there are a few things to this that are exceptional and worthy of taking notice. First, this is part of a global battle against globalized tyranny, which we are seeing take place with Brexit, threats of withdrawing from NATO, the Catalonia independence referendum, Kurdistan, and even the Californian possibility of secession. Throughout the world, people are rising up and stating unequivocally that they do not want to be controlled by others. Since the western world is dominated entirely by the USD and by state control of the economy, we in the west have decided to attack the power structure that allows for this tyranny, rather than trying to eliminate the tyranny itself. Bitcoin, Ethereum, Litecoin, and DASH have done more to challenge government authority than 40 years of the Libertarian party. This will only continue going forward.

Because that’s what cryptocurrencies are–they are currencies just like any other, except decentralized and created directly by We the People. Although Spain sent police forces dressed in all-black to beat the hell out of people who advocated independence for Catalonia, we in the United States have… different methods. And we know that we cannot survive a direct fight with our government. We’ve learned this lesson from the Afghans, from Al-Queda, from DAESH, from Iraq, and from countless others. The American military machine has simply become too powerful to fight directly. It’s true that the military machine would probably be unable to ultimately defeat us all, but the resistance would be decimated very early on, and there would be no realistic chance of ever defeating the American military machine, just as DAESH has no realistic chance of ever doing so. This being the case, we must all rely on subterfuge and strategy. It is in this vein that cryptocurrencies were invented (and other reasons).

Rather than throwing away our lives in violent revolution against the state (which would only produce a new state in its place), the anarchist and libertarian communities (because there is a strong overlap between libertarian/anarchist communities and the crypto communities) went one layer deeper: to the currency that funds the monstrous beast. Naturally, the leviathan that inflate our currency to avoid taxing us into oblivion, relying instead upon the hidden tax of inflation, which not even one in ten thousand people is capable of identifying as the reason they are poorer, is not going to take this lying down. This is why other features of cryptocurrencies are so important. They can be held anonymously. The state has made it virtually impossible to buy cryptocurrencies anonymously (though it is possible on the Onion network, but you have to be careful not to throw your money away), but, once you have them, there are several ways to store them securely, safely, privately, and anonymously. The state cannot tax what it cannot find.

In that sense, cryptocurrencies and anonymous wallets like Jaxx (which, if I recall correctly, screwed people over with the BTC/BCC split, and may do so again come the SegWit2x hard fork in November, but I actually do avoid Bitcoin, so I didn’t follow it closely) function as offshore bank accounts for the masses. There’s a digital trail, sure, but even the best hackers and NSA spies will find it nearly impossible to track cryptocurrencies as they move across the digital space. In New Hampshire, to where I am moving (hopefully around January! Yes, that soon! You can help the effort to help me move from bum-fucked Mississippi to the Free State by buying my book from Amazon, for only $2.99 for the eBook or $7.49 for the paperback), you can go an entire day, buying your cigarettes and dinner and whatever else, without ever using a USD. It’s not untraceable, but it’s damned close. Other cryptocurrencies are rising specifically to be completely untraceable.

Just as importantly, the ledger, which contains all BTC transactions, is kept in full on every BTC miner. Just as importantly, just about any noteworthy wallet will have non-American servers. Remember when the government tried to shut down The Pirate Bay? Well… Remember, the one time they actually succeeded for a few months? There were copies of TPB’s full server data all over the place. TPB themselves even have servers in multiple countries, many of which don’t give a shit about piracy or the U.S. government. Cryptocurrencies are like that, except even less centralized–there are miners and servers everywhere. If it became necessary, the entire history of BTC could be rebuilt from a single mining node.

Consider the German hyperinflation of the early 20th century that led directly to Hitler’s rise. Overnight, the German government wiped out everyone’s wealth. Imagine going to bed a millionaire and waking up unable to afford a loaf of bread. While it wasn’t quite that drastic, it was extremely severe, and it has happened with every paper currency that we have a record of. If the government attempted to wipe out everyone’s digital wealth, they would fail, because even a single copy could be used to restore all of it. Let there be no doubt on this note: every single day, we are relying on the goodwill of our government to not wipe out our wealth in USD, and they could do so in minutes. If they did, there would be no way to restore that.

Believers

The only real correlation between the rise of crypto values and “market bubbles” is that crypto believers are recruiting people to convert their money from USD into BTC, ETH, LTC, and others. This is very, very different from convincing people to invest their money in one specific stock or another. It is true that people who convert their money now into crypto currencies are likely to see remarkable gains to its value–BTC has gained 19,000% since Bitcoin China first opened–meaning a $1 conversion at the time BTCC first opened became $19,000 today. That’s true, but it won’t be true forever. People who get in early enough (probably a period of time within the next 2 years) stand to make a lot of money, but the gains will level out as more people convert their wealth into crypto currencies.

By the typical standards, crypto currencies are certainly in a bubble, but the real question is whether it’s an artificial or real bubble, and whether it will burst. The answer is “No.” Cryptos are here to stay. Like so many other things, they represent Pandora’s Box–once opened, they cannot be undone. The abortion issue is another one. AI is yet another. Mind reading technologies are still another. Blockchain and digital currencies are certainly one, as well. There’s no going back now, and it was designed to resist state authority.

The crypto bubble isn’t going to burst because Brexit happened, Kurdistan happened, California secession demands happened, Catalonia happened. All throughout the world, people are resisting centralized control of their lives, and the most powerful control any government wields is its direct control of our lives through the very means we use to secure our lives and sustenance. Cryptos will certainly continue to fluctuate, but their general trend is an indisputable up. This isn’t some new market; it’s a currency. It’s meant to be a store of value for your money. I understand that people don’t like risk and uncertainty, especially, when it comes to their wealth, so even though the USD has steadily stolen wealth from them since its inception, has defaulted at least three times, and has been inflated to the point that we have a twenty trillion dollar debt, it feels less risky to most people to simply continue using the USD.

I’ll be honest with you, though. Your money is a lot safer in ETH and LTC than it is in USD.

And congratulations to Catalonia on their vote, though I suspect its too soon to congratulate them on independence. They haven’t won independence yet. They’ve simply declared war on Spain (well, to be accurate, Spain declared war).

The Inevitable State War on Crypto

I’ve been watching the crypto market for a long time. Naturally, being a tech person and an anarchist, Bitcoin was something that I was deeply interested in, but it wasn’t until last year that I actually started putting any money into it–and even then, only small amounts. More recently, I’m putting in literally every penny that I can afford. It’s pretty clear to me that crypto-currencies are the future, and that fiat currencies are going to be crushed. But before we get into that, let’s discuss this idea first that BTC and other cryptos are “fiat” currencies.

Fiat?

Fiat means “by decree,” basically. A fiat currency is one that some authority figure decrees to be the currency. This is why the USD is a fiat currency–the U.S. government has made it our currency and has, in the way that monopolies do, fought very hard to keep any competition from existing. It’s not being inflationary that makes a currency “fiat.” It’s having a government say, “This is your currency.” If the USD was abolished and the government switched to BTC, then BTC would be a “fiat currency.” In fact, a isn’t the right article to use when discussing fiat currencies; the is usually more accurate. The USD is the fiat currency.

The Past

In the past, kings and nations had to pay for wars using their gold and silver coins. War is expensive, and it has always been expensive. Historically, men who otherwise could have been doing something productive are instead paid to go out and be destructive. This obviously constitutes a net drain on wealth. You not only have people not being productive–and being paid to not be productive–but they’re also being deliberately destructive. Resources, gold, labor, man-hours… all of these things are destroyed during war, and all of them could have been used in a more capitalist sense by investing them and turning them into more wealth and resources.

Taxes were historically high upon barons and lords, who in turn taxed the shit out of their peasants to pay the king’s taxes. The peasants were not usually taxed directly by the king; the king commanded the barons, dukes, and lords to give him money, and they did so. However, the barons, dukes, and lords didn’t really do anything to earn money (neither did the king, of course), and so they had to steal it from the peasants through taxation. The king had to pay his soldiers to fight the wars, had to pay for swords and ships, and all of these other things, because an unpaid soldier is a disloyal soldier.

Soldiers are always the first people to be paid by the ruling power. We see this today in Venezuela where, despite crippling national poverty, soldiers still enforce the government’s bidding because they are still being paid, and offered extra toilet paper for their service. It becomes a matter of survival for the soldiers–everyone else is starving, but they can keep themselves and their families provided-for by continuing to serve the system that has made everyone else poor, but if they refuse to serve, then their families will starve with everyone else.

Because it was a necessity to pay soldiers and because it was impossible for any king to do everything they needed to do while also paying for a war, they instead resorted to inflation. Inflation is when the amount of currency increases while the amount of wealth it represents stays the same or decreases (typically, it decreases). Let’s use a silly example to explain it.

I give you ten M&Ms and I say “These are worth $100.” This means that each M&M is worth $10, yes? Then I say, “I’m going to make you more wealthy. Here’s twenty more M&Ms.” But you find, once you have thirty M&Ms, that they’re still only worth $100. You have more M&Ms, sure, but you still only have $100. Instead of making you richer, you have the same amount of money that you had before. This is inflation. The value of the M&M was inflated. Real life inflation is more dangerous than this, because I don’t actually give you the other twenty M&Ms. In reality, I keep them, and let you keep yours. You still have ten M&Ms, but they’re only worth $33.33 now. I didn’t make you wealthier, did I? I made you poorer.

I robbed you.

Instead of paying with pure gold coins, kings stretched their gold further by taking cheap metals like tin and plating them with gold. It was still “a gold coin,” but it was worth much, much less than a pure gold coin. Instead of having only one thousand gold coins, the king had ten thousand of these gold-plated coins. So if a soldier was paid one coin a week, then he was able to pay ten thousand soldiers that week, instead of only one thousand.

Today the United States Government does this by printing money instead of adding tin to gold coins, but it has exactly the same effect. Earlier today I watched a video of some obnoxious twats who rented dinosaur costumes to go to the White House and “protest” with signs saying that the government should fund national sciences. They may think that now, because the government’s inflation allows them to mask the true cost of this crap. But if the government had to actually steal from us tax us to pay its bills, they wouldn’t be out there asking for their taxes to be increased.

You know, people think our taxes pay for our roads, our education, our bridges, Medicare, Medicaid, and these wars… That’s so untrue. Our taxes leave a huge deficit, to the tune of about $600 billion dollars every year, and that deficit just increases, raising the National Debt ever more. Even with obscene taxation (because we are taxed far more heavily than the colonists would have stood for), the government must inflate the currency to obscene degrees by borrowing it from the private banking cartel that is the Federal Reserve Bank.

The Future

So how do crypto-currencies fit into this? Well, the U.S. government can’t inflate them. They’re decentralized, so they can’t be inflated like that. The U.S. Government can drop money into bank accounts and buy large amounts of crypto, and it’s certainly doing so, but this is pouring value into the cryptos because the USD represents value because it’s easier to exchange and is used in wage payments. If clients paid my invoices in LTC and ETH… That would be fantastic. Anyway, if they did so, then my labor would be pouring value into LTC and ETH, and every new coin would be a representation of the work that I did to earn it. As it is now, it’s a representation of how much USD I spent and, in theory, the USD is a representation of the work I did to earn it.

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The government can’t just tell Crypto Managers, “We want 35 Bitcoins to pay for something,” because there are no “Crypto Managers” they can tell it to. This is the way the Federal Reserve System works, of course–the government tells this cartel of privately owned banks that it wants money (which has Interest attached to it, naturally), and the bank coalition hands it over, because they’re assured to make money in the long-run since the government will steal from us to pay it back. This money is created out of thin air, devaluing all the existent money like the M&Ms above.

If the government wants crypto, it has to buy them. To do that, it must raise money. To do that, it must steal from us. This will work for a while, and the government will buy cryptos, but the continual increase in value that cryptos are seeing will continue to cause people to move away from the USD and into cryptos. Amazon, Wal-Mart, and Target will inevitably start taking the more popular cryptos. We saw exactly the same thing with credit and debit cards, and with personal checks. There are minimal differences, because the debit cards and the personal checks also represented wealth. When people store their wealth, they want it to still be there when they go to retrieve it. A history of it “not being there” is why we have FDIC today, and is what the movie It’s a Wonderful Life is sort of about. Think of each crypto as its own MasterCard or Visa or Discover or American Express. Right now, I’d say BTC is Visa, ETH is MasterCard, LTC is American Express, and DASH is probably Discover.

In the beginning of cards, no one took them, because not enough people had the cards for the companies to justify the expense in setting up their systems to accept them as payment. There are also legal hurdles, but let’s put those aside for the moment. As more people make money in cryptos and find that they are excellent places to store wealth, more people will store their wealth in them, and more people will carry the “cards” and motivate Target et al. to install “card processing machines.” In time (and, due to how accelerated social changes have become, I’d bet it will be within ten years), larger corporate employers will offer employees the option of being paid in crypto currencies.

This is something that cannot be stopped. Pandora’s Box is open, and the only way to pull the plug now is to shut down the entire Internet and never let it come back online. Every BTC miner has a full copy of the blockchain and could restore the network. There is no amount of cracking down that could get and destroy every single part of the crypto networks. They will try, of course. They have no choice. To survive, they must try. We’re getting to that.

There already exist completely anonymous wallets like Jaxx, which allow a person to send and receive crypto without giving up any personal identifying information. This stuff is extremely difficult (although not impossible) to track. I purchase through Coinbase and then send to one of three other wallets. If the state zoomed in on me, they could certainly figure out exactly how much money I have where, but they can’t do this for everyone, and eventually they’ll be overwhelmed solely by numbers–it’s like how torrent sites openly exist today, such as the Pirate Bay. And even if The Pirate Bay one day finally goes down, a hundred will pop up in its place.

The Internet gave us far more power than they ever anticipated, and cryptos are the next stage of that. Once we have cryptos, we can be paid, and we can make purchases, all without ever touching the USD. The USD, which steadily loses value, is a terrible investment. It takes $20 today to buy what $1 bought in 1913. Meanwhile, it takes 0.1 BTC to buy today what it took 1 BTC to buy a year ago. Cryptos have been moving in the opposite direction from the USD; while it becomes less valuable, they become more valuable. Which would you want to be paid in? Which would you rather have–a one hundred dollar bill, or 1.2 Litecoins?

To make matters even worse, they will find that it’s very, very difficult to tax. And it’s impossible to tax in large amounts. Every single person would have to be audited. Massive amounts of wealth will slip right through the IRS’s fingers. “How much crypto do you have?”

“I plead the Fifth.”

They can easily look up your social security number to find your checking and savings accounts, and to find your stocks and shares, and tax you accordingly. But how are they going to find your crypto wallets? What if you store your crypto wallet on an Onion server–on the Tor network? Anonymity within anonymity.

What will happen when Saudi Arabia says, “Sorry, man, but you have to pay us in ETH for our gas”?

It won’t matter by that point, of course. By that point, every American citizen will have started moving away from the USD. Wal-Mart and other corporations will accept it as payment, and they’ll offer to pay people in the same currency. The government’s stranglehold on our wealth will have been broken. So how will it pay $300,000 to teach hookers in the Phillipines how to use condoms? How will it pay $1.6 trillion to fight in foreign countries? The soldiers wouldn’t accept the USD as payment, and neither would the tank and missile manufacturers.

“Taxation” is the only way–inflation will have been ruled out, because they don’t control the currency and can’t inflate it.

And this is why the anonymity matters. They cannot tax what they cannot track. And if they begin kidnapping random people to extort money from them, I don’t believe even the slothen, lackadaisical Americans would put up with that. “We’re going to institute a 0.01 BTC tax to pay for a hammer for NASA to use.”

lol.

Yeah, right.

Once we have to actually be directly taxed to pay for this shit, these government schemes will evaporate. You want to End the Fed? You want to abolish the Department of Education? You want to end Medicaid and welfare? You want to stop the wars? You want to keep the government from paying ludicrous amounts of money to teach hookers how to use condoms?

It’s done with cryptos.

I don’t know if Bitcoin will be one of the holdouts in the end. It has a lot of baggage attached to it. To many people, Bitcoin is used for money laundering and for paying ransoms. It’s going to be very difficult for BTC to get out from under that shadow, even if it’s possible. And I know BTC people are celebrating as it approaches $5,000 per (and I would be, too), and I congratulate them–but their excitement is a little undue. We’re still in the very, very early phases of this. We haven’t even come close to 5% adoption rates. We’re still deep in the Early Adopter phase.

Once we get around 5%, television shows and movies will begin featuring cryptos. Popular mainstream figures and shows like Pewdewpie, Family Guy, Rick & Morty, and South Park will begin mentioning it in regular conversation. They’ll show characters making money with it, making purchases with it… Then, with the Trend Setters like them on board, we’ll reach about 15% adoption. The Trend Setters will bring in the Trend Followers, and that is when Target et al. will start accepting it at the cash registers.

Many people will enter expecting to multiply their wealth by twenty times, hundred times, and so on, but that phase of the cryptos will mostly be over, and a few primary cryptos will be in the lead, and there they will stay until the next paradigm shift. Some new crypto with some new, novel algorithm won’t sway the masses of people. They won’t be impressed by Newcoin’s shiny new algorithms, and will stay with whatever cryptos are in the lead. I think it’s going to be Ethereum, Litecoin, and something else–probably not Bitcoin, because of all its baggage (and its price). Adoption rates will slow down, as these trend followers tell everyone that the “wealth people were making” must have been greatly exaggerated, because they’re only making 1% or 2% gains. The late arrivers will finally get on board, leaving only the iconoclasts, rebels, and conservatives out of the loop, and by then the Gold Rush will officially be over. There will be no more meteoric rises from $40 to $100, or from $600 to $5000.

And there will be losses. I see a lot of people excited about LTC’s climb right now–myself among them, and I really can’t afford for it to plummet–but it did plummet earlier this year, coming in at about $15 per and dropping to less than $2 each around February. Someone who bought 100 LTC while it was $15 each and sold them when it fell to $2 each lost $1300.

I don’t like Bitcoin, to be honest. It has too much baggage, and I’m more than a little envious of the people who bought it at $10 a pop and now have tens of thousands of dollars. What can I say? I’m honest about my motives. I want to see BTC collapse because I’ll feel better about having missed that boat, and I want to see the smugness wiped from Bitcoin Champions’ faces. It’s petty, I know. But the smugness! My god, the smugness. They act like it’s impossible for BTC to rapidly collapse. And it’s not only possible, it’s extremely likely to, around the time the Trend Setters start coming in.

The dumbest thing I heard this week was someone saying that “the number of coins purchased doesn’t matter–its percentage of growth relative to the USD is all that matters.”

That’s Old Paradigm thinking. In fact, the amount of coinage is all that ultimately matters. If the USD collapses, which it ultimately will, and cryptos will be the reason why, it won’t matter one tiny freaking bit that BTC was valued much more highly, according to the USD, than ETH. 0.01 BTC may be worth $100 right now, but if you take that USD away, what do you have? You have 0.01 of a currency. And without the USD, that 0.01 of a currency is a lot less than 1.00 of another currency. Without the USD measuring these currencies relative to one another, the amount of coinage will be all that freaking matters. You could have your wealth vanish in a heartbeat if people decide that a car is worth more than 6 BTC. Without the USD there saying those 6 BTC are worth $30,000, how are you going to get anyone else to accept that your 6 BTC are an even exchange for a car?

This is why the amount of coinage matters. If you get trapped in the Old Paradigm and attempt to apply it to the New Paradigm, in the end I don’t think you’ll have any wealth left at all. Right now, the only thing keeping BTC so valuable is literally the existence of these other currencies. Erase them from the equation, and what do you have? 0.04 BTC. Well, I’ll have quite a lot more than that of ETH and LTC.

And most people intuitively understand this, even if they couldn’t elucidate it. Most people won’t be willing to drop $500 on a tenth of a Bitcoin when they could spend that same amount of money and get five Litecoins. Who would buy a tenth of a BTC instead of five LTC? Not very many people. And their reasoning is solid, even if they don’t realize it, and even if they don’t know why, exactly, they prefer “five of one thing” to “0.1 of another thing,” even if the values are theoretically equal: those values will vanish. Cryptos themselves will make sure that those values vanish, and that the only thing that will be left is “five of this coin” and “0.1 of that coin.”

The Failure to Pair Workers With Work

According to the known liars in the Federal Government, the unemployment rate in the United States is a mere 4.3%. That number is obviously wrong, but it’s really not important. Any degree of unemployment is a bad thing, even if it’s only 1%, because that means one in every one hundred people cannot find a job in order to earn money.

Now, let me point out something that many people seem to have overlooked…

Ridiculous amounts of work are going undone in the United States. Bridges and road signs are covered in graffiti, streets are littered with trash and refuse; storefront windows are smudged with fingerprints and streaks of rain, buildings need to be repainted, countless yards need to be cut, and statues and monuments throughout the nation are covered in bird droppings and graffiti. If you simply begin looking for it, you will see thousands of things, just on your daily commute to work, that need to be done–things that could be done. Things that, you would think, someone would be willing to pay to have done.

And then there’s that number looking at us: 4.3%.

It’s not simply a matter of location, obviously. If only we could make the assertion that our unemployed people are nestled in the valleys of the Smokey Mountains, where there are no bridges to be cleaned of graffiti or monuments to be cleaned. Yet we know that isn’t the case. These unemployed people are scattered throughout the United States unevenly, just as are the tasks that need to be done. This sort of “undone work” exists in the city of Southaven, Mississippi, and, yet, there are unemployed people in the city of Southaven.

The question we have to ask is simple:

If there is work to be done, why isn’t it being done?

The answer is just as simple: the Minimum Wage.

I learned about the Balance of Power when I was a preteen, when I was required to cut the grass each week (in addition to household chores) to earn my $1.50/week allowance. My sister had similar household chores to complete, but didn’t have to cut the grass, and yet she earned exactly the same amount that I made. I pointed out that I had to spend one entire Saturday every two weeks cutting a rather large yard, while my sister didn’t, and I received basically no payment for it, and I argued that I should have been given a raise to my allowance.

“I’ll give you a raise when you start doing a better job of cutting the grass,” my grandmother replied.

I’m sure the problem is obvious. My grandmother could make me cut the grass; I had no real choice in the matter. I couldn’t simply say, “Well, then I’m not cutting the grass anymore.” Yet, she could say, “I’m not paying you anything. You’ll get out there and cut the grass, and that’s that.”

I was at her mercy regarding payment. She didn’t need to pay me, but I needed her to pay me.

The same thing is true in the United States today, especially in regard to Minimum Wage jobs. The individual worker is not needed by the employer, because there are ten others waiting in line if that particular worker proves to be a hassle. Just like my grandmother didn’t need to pay me, so does McDonald’s not need to pay Jim. If Jim demands a higher wage, they can simply fire him and hire from among the 4.3% of people who need that job in order to survive. As it was with my grandmother, the Balance of Power is tilted entirely toward the employer.

If there is one job and ten potential employees, then the workers compete with one another for the job. Think of it like an auction. Each worker offers up the most labor for the lowest cost to the employer, because all of the people bidding for the job need the job.

“I’ll do it for $9/hour plus health insurance,” says the first.

The second laughs. “I’ll do it for $8/hour. Forget the health insurance,” says the second.

The third laughs. “I’ll do it for $6/hour! Forget all the benefits!”

The Minimum Wage then prevents the first and second people–and the fourth, fifth, sixth, seventh, and however many more there are–from proceeding to undercut the third guy. They can come forward and match his offer, but they cannot stack the odds in their favor by lowering the wage for which they will work. This is why Unions despise “scabs” so much. The second person might go away, grumbling, angry that he didn’t get the job, saying, “It’s not fair! He shouldn’t be able to undercut me like that! There ought to be a law!

That “law,” of course, is the Minimum Wage.

The other consideration to this is that the employer may have already decided that the task is not worth more than $7 an hour. By the employer’s calculations, it’s just not worth more than that to hire someone to keep their parking lot clean of litter and trash. So, unknown to him while he cries that the third person shouldn’t be able to undercut him, the second person had overbid anyway.

It’s similar to the television show The Price is Right. Overbidding in the show is an instant loss. If one says $550 for a washing machine that MSRPs for $349, the contestant cannot win that round, no matter what. This is also the case with demanding a wage that is higher than the employer is willing to pay: the worker cannot “win that round.” The worker cannot get that job. It’s instant disqualification. Though the employer, like on the show, has hidden the actual value of the job, the first two people have overbid and have disqualified themselves. This is why everyone cuts their eyes angrily at the person who bids $1–on the show, if everyone else overbids, that person is assured to win the round; that employee who bids the lowest intentionally is assured to get the job, if they are otherwise qualified–and, often, even if they are not.

What happens, though, when everyone is disqualified, because no one is able to bid below a certain amount, and the employer has already calculated to find out that the value of the job is lower than the “certain amount” they aren’t allowed to bid below? Everyone is disqualified. No one gets the job. The job goes undone.

Imagine the foolishness of having on the show The Price is Right the rule that “No one may bid under $100 for an item.” Now imagine the added folly of featuring a toaster that is valued at $40. What happens? Everyone overbids, because everyone must bid over $100. Yes, it’s a rather stupid state of affairs, isn’t it?

Yet the “toasters,” such as they are, exist. There are jobs–tens of thousands of them–that need to be done, but simply aren’t worth $7.25 an hour to the person who would pay to have them done. In our analogy, the toaster is on the show, and the toaster can’t be removed from the show. The circumstances we’ve created are idiotic. We see the toasters on the show, and we know they’re going to have to be bid on, we see the requirement that no one can bid below a certain amount, and we see that this means people are overbidding by default and can’t do anything about it. It’s truly idiotic.

Yet our stakes are so much higher in the real world than round after round of contestant overbidding on the toaster because they can’t bid below a certain amount. In the real world, we end up with unemployment. We end up with people being fired because the employer is unwilling and/or unable to pay someone $9 an hour to do some menial task. We watch a father of three panic over money because he can’t find a job–even McDonald’s continues to hire one teenager after the next, because there are more potential workers than there are jobs available, and the father of three inherently involves more hassle than hiring another pimply seventeen year old nerd.

Yet imagine the opposite! Just as there are, right now, more potential workers than there are jobs available*, so could there be more jobs available than there are potential workers. Look at what this does to the Balance of Power–instead of having a condescending interviewer ask, “What can you do for the company?” we have a grinning worker asking one interviewer after the next, “What do you have to offer me?”

Instead of the workers undercutting each other out of necessity, the employers undercut each other.

“I’ll give you $8.25 an hour,” says the first.

“They offered you $8.25/hour?” asks the second. “Ha. We’ll match that, and we’ll give you stock options.”

“Hm, those are pretty good offers,” says the third. “I tell you what. I’ll give you $10/hour, stock options, and a 3% 401K match.”

That world is possible. It’s a world that exists only when there are more jobs to be done than there are workers to do them. The Minimum Wage ensures that this world does not come to fruition; the Minimum Wage guarantees that workers compete with one another for a job, instead of employers competing with one another for workers. The Minimum Wage is at the heart of this issue. Just look around, at all the stuff that needs to be done–yet isn’t being done. And then look at the millions of Americans who are unemployed, and ask yourself, “Why can’t these unemployed people be hired to do this stuff that isn’t being done?”

The answer, of course, is “Because we made up the rule that contestants couldn’t bid below a certain amount.”

Because, for some weird ass reason, we thought that doing so would make the toaster more valuable.

* Note that, per the title, this isn’t strictly true–the jobs are available, but no one is allowed to hire anyone to do them because of the requirement that bids be a certain amount.