I’m a huge fan of this podcast, thanks for sharing the insight. Dr Murphy does an excellent job providing an easy to understand narrative of the situation going on. Indeed you guys summed up the mess at the end. Things are getting fishy.
I know you are keeping these discussions as simple as possible, and I think that’s great because it’s going to bring in more listeners. There’s so many spin-off discussions available on banking, clearance, and transactions.
For example, in Australia we have had bank fees for quite a while, and the level varies around a bit, but even during times when home loan mortgage rates were 7% the banks had checking accounts paying like 0.01% interest and charging a regular monthly fee (we don’t call them checking accounts, but you get the idea). They also had tricks like the fee goes up if you keep less money in the account.
This brings me to what you were saying about the inconvenience of closing ALL your accounts and going to 100% cash currency transactions. There’s a lot of reasons why that’s going to be difficult for you if you try (as well as the fact that the police don’t like it). People were willing to take the slap from the banks with their account fees and amongst Australian banks there isn’t a whole lot of competition. Recently Wespac purchased St George so we are down to only a few big banks in this country. Maybe competition has picked up a little bit in recent years with some new banks that have very few branches and mostly operate online.
Anyhow, another example would be those states that chose to legalize marijuana, but then the local businesses in those states were locked out by the Feds and could not open a bank account. They were forced to literally do business in cash and you have situations where the guy paid his tax direct to the government, handing over a backpack full of $100 bills. It’s a bizarre situation … you have to wonder whether some of those marijuana business could organize to “become their own banker”. Suffice to say, what the Feds did was quite inconvenient although the profits in marijuana sales are pretty good (so I’m told) and incentive usually finds a way.
So we have some direct observations that basic transactional banking (i.e. storing money, making payments, keeping accounts) is genuinely useful to people, and because it’s useful it’s also worth something. We have some more evidence in that credit card surcharge gets added by many businesses (e.g. 2% to 3% on VISA, usually a bit more on AMEX) but many customers buying by credit card don’t care, they just pay it because it’s convenient to use the card. This brings us back to bitcoin and what’s the intrinsic value of a bitcoin? Well, transaction systems that can store and transfer money and also keep accounts are valuable. They are useful to people, they serve a purpose.
Bitcoin is competing head-to-head in the exact same space as wire transfers, checking accounts and also cash. You want to move money around, you can use a bank transfer, or stuff cash in an envelope or use bitcoin, they are all alternative ways to do the same thing.
I’m a huge fan of this podcast, thanks for sharing the insight. Dr Murphy does an excellent job providing an easy to understand narrative of the situation going on. Indeed you guys summed up the mess at the end. Things are getting fishy.
Good work Bob.
I know you are keeping these discussions as simple as possible, and I think that’s great because it’s going to bring in more listeners. There’s so many spin-off discussions available on banking, clearance, and transactions.
For example, in Australia we have had bank fees for quite a while, and the level varies around a bit, but even during times when home loan mortgage rates were 7% the banks had checking accounts paying like 0.01% interest and charging a regular monthly fee (we don’t call them checking accounts, but you get the idea). They also had tricks like the fee goes up if you keep less money in the account.
This brings me to what you were saying about the inconvenience of closing ALL your accounts and going to 100% cash currency transactions. There’s a lot of reasons why that’s going to be difficult for you if you try (as well as the fact that the police don’t like it). People were willing to take the slap from the banks with their account fees and amongst Australian banks there isn’t a whole lot of competition. Recently Wespac purchased St George so we are down to only a few big banks in this country. Maybe competition has picked up a little bit in recent years with some new banks that have very few branches and mostly operate online.
Anyhow, another example would be those states that chose to legalize marijuana, but then the local businesses in those states were locked out by the Feds and could not open a bank account. They were forced to literally do business in cash and you have situations where the guy paid his tax direct to the government, handing over a backpack full of $100 bills. It’s a bizarre situation … you have to wonder whether some of those marijuana business could organize to “become their own banker”. Suffice to say, what the Feds did was quite inconvenient although the profits in marijuana sales are pretty good (so I’m told) and incentive usually finds a way.
So we have some direct observations that basic transactional banking (i.e. storing money, making payments, keeping accounts) is genuinely useful to people, and because it’s useful it’s also worth something. We have some more evidence in that credit card surcharge gets added by many businesses (e.g. 2% to 3% on VISA, usually a bit more on AMEX) but many customers buying by credit card don’t care, they just pay it because it’s convenient to use the card. This brings us back to bitcoin and what’s the intrinsic value of a bitcoin? Well, transaction systems that can store and transfer money and also keep accounts are valuable. They are useful to people, they serve a purpose.
Bitcoin is competing head-to-head in the exact same space as wire transfers, checking accounts and also cash. You want to move money around, you can use a bank transfer, or stuff cash in an envelope or use bitcoin, they are all alternative ways to do the same thing.