This problem not only affects the U.S. but has spread to other countries, like Turkey. The New York Times reports that in Istanbul, the Turkish lira — which is equivalent to .44 of the U.S. dollar — has lost over 14 percent of its value over the last two months. Merchants in Istanbul who are buying merchandise from the U.S. are trying to balance their purchasing price with their selling price and are finding it difficult to keep their businesses viable with their increased prices.
The Federal Reserve needs to put out a systematic way of handling the economy where we work towards decreasing inflation, not increasing wages. This would devalue the U.S. dollar in that more consumers will have more dollars and more merchants will be competing for those dollars by raising their prices. In this way, consumers lose purchasing power (e.g. a loaf of bread will cost $5 and gas will climb to $8/gallon). Ultimately, this will lead to a depletion of the middle class leaving us with only the extremes of rich and poor. Mybudget360.com further supports this “dismantling of the middle-class” idea, the average household that made an income of $52,029 in 2008 saw a 3.6 percent drop in their income in 2009.
Middle-class Americans or those just above the poverty line make up to $35,000 whereas the top five percent of the wealthy class are making just around or above $313,000 according to CBS news. “Cruel Tax” certainly does not have as a significant impact on the top five percent as it would for a family barely scraping by working on minimum wage. Why it is that Americans cannot live comfortably only making minimum wage? Because the value of our monetary system has dropped, and if it continues this way even if those in the “middle-class” make 20 percent more in 20 years, they would still have trouble making ends meet. The changes need to be with the value of the U.S. dollar, not with increasing minimum wage.