Wednesday, June 4, 2014

Death of the Six Dollar Burger

In 2001, the California-based fast-food chain, Carl's Jr introduced their Six Dollar Burger.  This products spearheaded a marketing campaign whose idea was to make a direct comparison of their fast-food burgers to some of the premium, top-of-the-line burger offerings of major restaurant chains like Chili's or Red Robin. In fact they even mentioned the burgers at some of these restaurants in their ad campaigns.  The ads poked fun at those fancier sit-down restaurants with people having trouble getting the waitress' attention, having drinks spilled on them, and having to leave tips, etc.

They proudly proclaimed that now, you can get a comparable burger for less money and no need to leave a tip.  You can get a "Six-Dollar Burger" for under $4.  At that time, a Big Mac from McDonald's sold for $2.54.

This served as a great marketing campaign however, as predicted by many people, it wouldn't be able to last because inflation would render this campaign (if not the product itself) obsolete.  It's like how the Five and Dime Stores became Dime Stores, then Dollar Stores and will soon become Five-Dollar Stores.

Today, those $6 burgers at Chili's typically sell for about $9-10 for a basic hamburger and up to $13 for a more premium cheeseburger, while the Big Mac sells for about $4.50.

Recently, the price of many of Carl's Jr. Six Dollar burger options were priced at $6 or above.  The idea of a burger costing $6 isn't seen by the public as premium fare anymore, it more-likely tends to conjure up images of the happy-hour burger special at the local dive bar.

Still the Six Dollar Burger campaign got a longer run than I thought it would.  In my opinion, it should have ended years ago.  The name given to the Hardee's version, which was always known as the Thickburger, has replaced the Six Dollar Burger.  (Though it is a gradual phase-out with the current brand being the "Six Dollar Thickburger").

The problem with the campaign was never with the burger, it was always a very good burger.  The increase in price was not due to improvements in its quality, added value, or anything of that sort, it was strictly due to the devaluing of the U.S. dollar through inflation.

In 2010, a Six Dollar Burger with fries would very likely cost you more than $6, while the fries at those fancier sit-down restaurants they poked fun at would likely be included with the hamburger at no extra charge.

In order to illustrate the difference between price and value, let's look at this in terms of Bitcoin.  Let's pretend that in June of 2010, Carl's Jr re-branded their Six Dollar Burger as the 75 Bitcoin Burger - that's $6 in Bitcoin at that time.  Today, they would have had to rename it to the 0.009 Bitcoin Burger.  That's a 99.988% drop in price, simply because we're using a different currency.

Some will argue that this comparison isn't fair because the price of Bitcoin is going up.  However, the value of the burger remains constant in either case.  The loss in purchasing power that is experienced by using dollars is a function of the devaluing of the currency, not an increase in the value of the product being purchased.  Conversely, the price drop in the burger against Bitcoin is due to the increasing purchasing power of Bitcoin.  It also illustrates the decreasing value of the dollar against Bitcoin.  As of this writing, there are 645 dollars to 1 Bitcoin.

As Bitcoin continues to go up against not only the U.S. Dollar, but every other Central Bank currency on earth, more and more people are starting to take notice and get out of losing currencies and into a winning one.  The main reasons people haven't done so yet are: (a) because they do not know how to begin and (b) not enough people accept Bitcoin as a form of payment.

To get started, the first thing you'll need is a wallet.  You can get a free one from Coinbase, which I like because it's hosted online so you can access it from anywhere on any internet device.  They also make it easy to buy Bitcoins using any other currency.  Coinbase is also the preferred payment processor for some of the largest merchants that accept Bitcoin such as Overstock.com and Dish Network.
Click to get your free Bitcoin wallet.
Every day, more and more businesses are accepting Bitcoin as a form of Payment.  As more people begin using Bitcoin and asking businesses if they accept it, pressure to accept the currency increases.  Businesses that want to succeed will cater to that demand or suffer.  The price of the dollar will continue to fall, there is no saving the dollar, it is dead.

Currently the United States has military bases in 153 countries on earth (out of a total of 189-196 countries total depending on the source).  The U.S. soldiers are deployed to basically fight to keep the U.S. Petro-Dollar alive and relevant, but we are running out of countries to invade.  China and Russia have both made moves to get away from the U.S. Dollar.  Russian lawmakers are even working on instituting a ban on the American currency.  These actions, even if unsuccessful, will only devalue the dollar further.

Basic economics teaches us that inflation is caused by too many dollars chasing too few goods.  Currently, the Federal Reserve, whose sole mission is to control inflation (they like to keep it around 3% annually), has been printing cash like mad.  They call it "Quantitative Easing", and it basically means they fire up the printing presses and print money full-throttle.  They've done this three times in recent years and all that cash has been stashed in reserves, where it will do its damage at a later date when it is loaned out.  On top of this, there is a massive push for minimum wage increases.  As more companies move dollars from production to their payroll, we will find people with more dollars while less products make it to market (inflation).

Hyperinflation happens when the value of the money falls so quickly that people are pushed to spend their money now, since it will have less buying power tomorrow.  This further increases inflation creating a vicious cycle of destruction since we once again have more dollars chasing fewer products.

Hyperinflation of the U.S. Dollar is no longer just a possibility, it is an inevitability.