You know what I was told this year in my 9-5 job?

My performance was analyzed by an AI. The AI said I didn’t do well.

A large portion of my wage is performance-based, yet the AI spat on my performance. I can only guess it looked at some mediocre stat, like the number of logins or volume of meetings attended. I hate meetings so it’s no wonder the AI disagreed with my compensation.

Being paid on deliverables is how many people earn a living. The calculation can easily be manipulated. Bad economic times can cause an unexpected adjustment, wrapped up in the phrase “You’re lucky to even keep your job, pal.” Software analytics measuring performance can be misinterpreted. Secret backend processes can be used to cancel what you enter into a CRM.

When it comes to my fixed salary, it hasn’t been adjusted for inflation in years. My overall remuneration is trending downwards (put away the violins, I’m doing fine). This is where the problem starts.

The financial system is broken, not the rate of pay.

When I see people arguing online about minimum wage, it pains me. The dollar figure of your wage is smoke and mirrors. If your job gives you a pay increase and then simultaneously gives everybody else free money, then you didn’t get an increase at all.

It’s not the amount you’re paid. It’s your purchasing power that counts.

Tech CEO, rocket scientist, and investor Michael Saylor explains the real problem with minimum wage perfectly:

Bonds only hold value if their after-tax yield exceeds the rate of monetary expansion. Few overcome this hurdle.

Wait, what? I know, what he’s saying makes no sense unless you’re a banker. Thankfully, I’ve spent a lifetime in banks. Let me decipher his point.

An asset only holds value if its after-tax return exceeds the rate of new money being created out of thin air by governments.

Governments are printing money out of thin air at a record rate. This means if you have an investment property with a tenant paying you rent, the profit you make after paying the loan, taxes, and expenses must be greater than all the new money being created by governments that are diluting your profits.

Think of it as a game of Monopoly. If everybody in the board game gets handed extra money, then more people in the game are going to be buying Monopoly real estate and placing plastic houses on the board. So, everything in the game rises in proportion to the free money that is handed out.

The problem isn’t the rate of your wage. The problem is most people can’t keep up with inflation and money being created out of thin air. Why?

  1. Lack of transparency.
  2. Centralization.

There’s more to it…

Financial education plays a part too.

For example, service workers have the money to go into a pension fund. That money ends up on Wall Street. You know the running joke in the finance industry right now? The money sitting in pension funds has been gambled recklessly. Bankers are laughing that there won’t be enough money left to pay everybody’s pension in a few years.

See the problem?

You can be paid the most awesome salary in the world. But the finance industry can take it all away and gamble it. They do this through a complex product known as derivatives. Derivatives allow you to bet on the price of an asset without actually owning it. It’s extremely clever and scary in the same sentence.

So the government can force a minimum wage, but when it ends up being deposited at a financial institution, then the long-term benefit can be better or worse or … completely distorted.

Asset prices have become distorted. It’s hard to know what anything is worth, and what will happen when an asset correction occurs. This makes the money you earn from your job hard to quantify.

What does your money actually buy you?

That’s the question you should become obsessed with. Not the amount of dollars the Monopoly money game puts in your account. The amount of dollars is just an information system. What does that information tell you though about your future prosperity?

A wage increase can be wiped out by inflation.

Tomorrow everybody could be given 10% more money from their job. It could be legislated and enforced. We could have parades in the streets celebrating the huge win. We could say “inequality is dead.”

It’s a mirage. The moment the minimum wage is increased, prices will rise accordingly, and the government will create more money out of thin air (stimulus) to compensate.

The New York Times reports:

“Consumers are set to unleash trillions of dollars in excess savings this spring and throughout the rest of the year.

Estimates suggest that in the aggregate, U.S. families saved $1.6 trillion more this year than they normally would have. This large amount of ‘dry powder’ was goosed by a combination of less spending in general and households that held on to the money from direct government checks.”

To expect normal inflation is a fantasy. So, if you get a wage increase and prices rise, then you are back to square one. You’re not more prosperous at all. Meanwhile, the rich folks will continue buying assets to protect themselves using their financial education.

The legacy financial system takes more away from you than those who don’t lift your wage.

I sell digital products. My main product is sold via a third-party platform. They charge me 6% to collect money. PayPal charges me another 4% to withdraw money. There are other fees on top.

Then the money hits my bank account. I pay more fees. Then if the money stays in a bank account too long, its purchasing power steals more money away from me.

See the real problem?

The financial system is stupidly expensive to use. Wages can go up but if the middlemen and gatekeepers aren’t disrupted, then your purchasing power and freedom don’t increase.

This is what is completely missed:

Increasing a fictitious number in a bank’s financial ledger isn’t going to make your life better. Raising the minimum wage isn’t going to help you work less or spend more time with your family.

You’re definitely not getting richer by having your wage go up as a result of new laws or the gentle kindness of a corporation seeking to make their corporate image better for LinkedIn. One solution is to increase your financial education.

The real solution, though, is decentralization. A decentralized internet, with decentralized companies, with various decentralized forms of money, with decentralized apps/social media, with fewer middlemen, fewer gatekeepers, and code that enforces trust.

Decentralization can help fix the minimum wage problem and the decrease in our collective purchasing power. Your ability to transparently see your value is what is missing. Decentralization brings back trust and transparency.

Decentralization is the answer to inequality, not centralized pay rises.

This article is for informational purposes only, it should not be considered Financial or Legal Advice. Consult a financial professional before making any major financial decisions.