A great technology solves a problem that we didn’t know we had. It makes us aware of deprivations we didn’t know existed until we discover the new thing. Once discovered, we can’t go back.People in the 1950s, for example, never missed the smart phone. They were pleased to have a phone at all. But today, […]
In early July 1944, delegates from 44 countries gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire. A three-week summit took place, at which a new system was agreed to regulate the international monetary and financial order after the Second World War.The U.S. was already the world’s commercial powerhouse, having eclipsed the British […]
When you type a website address into a browser, you might have noticed that the letters “http” appear at the front. “HTTP” stands for Hypertext Transfer Protocol. In typing a Web address, you are actually sending an HTTP command to transmit that website to you. Hypertext Transfer Protocol is the means by which information is […]
In 2012, money mandarins running the European Union chose stagnation over restructuring. Here’s a consequence of that choice: expectations for a self-sustaining economic recovery keep getting crushed.Two years ago, European Central Bank (ECB) chief Mario Draghi promised to do “whatever it takes” to hold the eurozone together. He bluffed nervous investors into believing in a […]
Here’s a fun fact: Although we all hate the U.S. dollar, as it continues to hemorrhage wealth, its foothold as the world’s reserve currency isn’t going to disappear overnight.A Russian gas deal with China won’t change that — as we’ll highlight below.But before we get to the nitty-gritty, let’s dive into a story that’s right […]
Franklin Delano Roosevelt famously used the term “forgotten man” in a 1932 speech to describe those at the bottom of the economic pyramid who, he felt, government should aid.But the originator of the phrase “forgotten man” had a whole different meaning in mind. He aimed to expose the seeming good intentions of government to reveal […]
“As the nation’s central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding […]
The Keynesian disaster recovery plan has been to lower rates, force people to take more risk in search of yield, and entice others to borrow and spend and, magically, more jobs will be created. If people won’t buy stocks, central banks will.Back in 2011, Ben Bernanke, when asked if QE2 was driving up stock prices, […]
According to the Bureau of Labor Statistics, consumer prices are rising at a 2.1% annual rate. This suggests to us that the current stock market boom will die with a bang, rather than a whimper.Fed economists say they don’t think inflation rates are rising. They think the most recent reading is a fluke. But why […]
Real progress happens through real people, ideas, and innovations. Not by legislation argued and debated in Congress. Right now, one of the most influential technologies is changing the way people do business. And reinventing the future in the process.
As the world gets more digital, people forget about the benefits of transacting in cash. And government officials know that.
The experts will tell you the recession is over, but they’re only torturing the data to hide the truth. The economy never recovered from the downturn it experienced. But the downturn happened in 2000, not 2008. The country’s been in the middle of a 14 year recession and hardly anyone knows the truth.
Every time Bitcoin crashes, it winds up at a price greater than it’s previous high. Yet the experts still call it a currency fad that will fade away. But a little over a year since it really took up, the digital currency is still going strong, and is once again seeing its price rise. But is there another reason why people are buying Bitcoins.
All paper currency has a shelf life. It could be 5 years or 500 years, but at some point, the value of any paper currency eventually reaches zero. That's why, for centuries, people have turned to one shiny metal to safeguard their personal store of wealth. And, as Jim Rickards explains, you still have that option. Read on...
Edward Snowden’s one year visa in Russia expires at the end of next month. With only a few weeks left before he finds himself without a safe country to live in, he sat down to give an exclusive interview. Here are the most important things he wants you to remember from his recent sacrifice.
It’s a destructive cycle that comes around everytime your politicians ask you to take to the polls. The government’s meddling creates unexpected problems that eventually overshadow the planners’ original intentions. But that only leads the way for even more interventions.
Politicians love inflation. It’s a way to pay for the government’s debts without upsetting the public by raising taxes, or their special interests by cutting government. So they’ll flood the economy with easy money and eat away at your savings. But that’s only part of the story...
Obama recently claimed this was the “Decade of the Brain”. But it not the first time the government made that promise. The last time they did it, they wasted millions of your tax dollars. Now they’re back for round two. But this time, their failure could mean more than squandered money. It could mean making Alzheimer’s even worse for those who suffer from it.
“So we have, indeed, had a disappointingly slow recovery, and our consistent expectations for a pickup in growth have been dashed over a number of years… And the labor market is behaving in some perplexing ways and showing patterns that are novel.”–Federal Reserve Chairperson Janet Yellen in a speech to the Economic Club of New […]
Politicians who love Big Government love talking about the minimum wage. It’s one of the few policy where they don’t have to ask their constituents to pony up the extra tax dollars to pay the higher costs. Instead, they pass the buck to business owners. They can’t print money, nor can they can force you to pay more. So they cut back hours and fire the very workers politicians tried to help. But that’s how things go when you mess with the economy.
Economists aren’t physicists. But they sure do like to act like they are sometimes. When scientists reach a consensus about something, it usually means they’re breaking new ground on a theory based on hard facts and proven evidence. When economists agree on something, it shows the limitations of a field that tries to model how humans are supposed to behave. And that’s where the danger lies. Especially when it comes to things like U.S. Treasurys.
Ask a D.C. insider what’s the best way to solve the debt crisis. Nine times out of ten, they’ll recommend taking on more debt. That’s how things operate in the Potomac swamp. Up is down, right is left, digging yourself into more debt is the best way to get out of it. But it wasn’t always like this. In fact, there used to be common sense when it came to the economy. So where did it all go wrong?
Just because you’re retired doesn’t mean you have to stop working. Especially now that you have all the time in the world to do what you really want. Entrepreneurs don’t only come out of Silicon Valley. They come from all walks of life, from all different ages. If you’re retired and want to stay active while you relax, then find out the steps you need to take in order to start, manage, and grow your next small business.
Austrian economics does more than tell you what happens when the government disturbs market forces. In the hands of knowledgeable investors and entrepreneurs, it can tell you exactly what to expect from the market. Market behavior depends on how people behave. And how people behave is central to the Austrian perspective.
The U.S. dollar has been the world's reserve currency for almost a century, and already there are signs it may be in decline. But that doesn't mean it's not still valuable. On the contrary... As Chris Mayer explains, there are many reasons the U.S. dollar will remain relevant on the world stage for years to come. Read on...
The government will do whatever it takes to make sure it has enough of your money to fund itself. On the surface you might think that means enduring a grueling audit. But the IRS and the government is more than willing to ignore your privacy in the cold relentless pursuit of the money they think they deserve. As they get bigger and bigger every year, the smaller and smaller your paycheck becomes as they leach off it.
World War II might have dragged the country out of the Great Depression, but it did so at a great price. Central planning took center stage, and politicans and bureaucrats suddenly knew what was best for America, the economy, and your life. On top of that, they replaced the free market with a new economic system… Creditism.
Change is inevitable. Conditions are never frozen in time. As the clock and calendar move forward, people and organizations must adapt to different circumstances. Human thought and creativity is constantly exploring ways to make our lives better. The fruits of technology change our expectations and our demands.
The market is spectacular at adapting to people’s wants and desires. The government, and entities protected by government, not so much. Government attempts to stop time and progress.
Even in a business like banking, heavily protected and subsidized by government and regulation, competition and consumer tastes force changes to a business that, while hated by many, is patronized by the majority of Americans.
Bankers are not known for innovation. For example, In the wake of the 2008 financial crisis, ex-Fed Chair Paul Volcker famously quipped, “the most important financial innovation that I have seen the past 20 years is the automatic teller machine (ATM). That really helps people and prevents visits to the bank and is a real convenience.”
As ATMs evolved, open 24 hours a day, 365 days a year (the situation in Cyprus notwithstanding), these machines became the only bank many people ever need to visit. No employees required. Additionally, in October 1994 online banking was born in the U.S. and over time more and more customers began to do their banking using clicks instead of visiting sticks-and-bricks. Now customers can do their banking on their mobile phones.
Over the years banks have provided customers plenty of alternatives to showing up at a branch and interacting with live bankers. PNC Bank estimates the bank saves $3.88 per transaction if a living, breathing teller isn’t involved in a simple transaction. You help banks prosper when you deposit a check by snapping a picture of it with your mobile phone.
However, during banking’s go-go years bankers still raced to expand their physical branch networks. The number of bank branches doubled during the past thirty years. After the building boom, there were just shy of 100,000 bank branches in the U.S. by June 2009. Bank failures and consolidations had trimmed that number down to 93,000 as of last year.
However, transactions done online now account for 53 percent of all banking transactions. Only 14 percent are completed during in-branch visits. This shift in consumer preference now make a third of all bank branches unprofitable.
In a white paper entitled “The Bank Wears Prada” AlixPartners points out that as fewer customers visit bank branches, the real estate itself become less productive and “often cannot cover the operational cost and related credit structure.”
A bank’s average sales are only half that of a large retail chain on a square meter basis, according AlixPartners. “The return on the branch property assets is now often significantly lower than that which could be realized by the best available user, an argument that, taken to its logical extreme, suggests that the premises should be re-let or partially sublet.”
The market is saying that there are too many bank branches, and for that reason, AlixPartners expects the number to drop further to 80,000 over the coming decade.
Similar to banking, technology has had its way with the postal service. Phones, cell phones, faxes, emails, texts, pdfs, not to mention FedEx and UPS has driven the USPS first class mail volume down 28 percent over the past decade. This despite the postal service having a monopoly on the delivery of first class mail that for many deliveries is underpriced.
The U.S. Postal Service operates 31,272 retail locations and 417 processing centers while on the verge of losing, assuming U.S. Postal Service (USPS) CFO and EVP Joseph Corbett is right, $14 billion a year for each of the next five years.
One would assume that the first thing to go at the USPS is more than a few of their redundant or unprofitable locations. In fact 3,700 locations were targeted for closure under the Retail Access Optimization Initiative (RAOI). Thanks to the nationwide protest against post office closings, the RAOI never was implemented. Then a moratorium on closings went into effect from December 2011 to May 2012.
As hard as it is to believe, abcnews.com reports, “One in four post offices bring in, on average, a mere $52 in revenue per day and serves about four people. A full quarter of the 31,000 post offices operated by USPS operate at a loss” and 13,000 offices have less than one hour of work to be done on the average day.”
Economics and customer service do not hold sway in the short term future of the post office, just politics. So, rather than close locations, one of the plans to save money and keep the USPS going is to decrease service by cutting out Saturday delivery.
However, union members have aggressively organized and gather at rallies mindlessly chanting things like “six day is the only way” and protesting any job cutbacks. These protest speeches don’t talk about “customer service” but instead “jobs.” If the unions have their way Saturday delivery will live on just as the formerly targeted 3,700 branch sites remain open.
Protecting jobs is the name of the game. The postal monopoly creates inefficiencies and reinforces them with its focus on job preservation. Because of the government’s backstop and political pressure it operates under, the USPS has an incentive not to take advantage of faster, more efficient technologies to transport mail. Go to a rural post office and it is as if time has stopped: No technology allowed. But career postal workers still have jobs.
AlixPartners explains, “The bank of the future must be able to develop its offerings beyond credit and finance….banks can use digital innovation as a key to their transformation from mere money brokers to entertainment and shopping solution providers.”
The AFL-CIO brass will not be organizing rallies to save bank teller jobs or keep bank branches open. Bankers must innovate or die. The USPS should do the same.