Hmm. So you can’t see any differences between a flash drive and cash?
If you withdrew your life savings in cash, that cash couldn’t become corrupted, unless by physical damage. Your life savings in cash would also be large enough that you wouldn’t be likely to lose it, or have the container it sits in easily stolen or accidentally smashed. You also are not very likely to forget or misplace the password to your cash.
Or, you could just use a credit card and have fraud protection.
If I had my life savings on a flash drive I think I could keep track of it pretty well. The nice thing about crypto wallets is you can replicate the secret key indefinitely. So, even if the drive is stolen you still have a password protected backup. If the cash is stolen, well, possession is 9/10s the law ;).
Why does there need to be a digital US dollar? Almost 20% of the US is underbanked, and 6.5% is unbanked. A digital dollar seemingly would be even worse and work to concentrate wealth among the educated/wealthy.
The FDIC's definition of 'underbanked', is pretty broad: "...the household had an account at an insured institution but also obtained financial products or services outside of the banking system.
"Specifically, a household is categorized as underbanked if it had a checking or savings account and used one of the following products or services from an alternative financial services provider in the past 12 months: money orders, check cashing, international remittances, payday loans, refund anticipation loans, rent-to-own services, pawn shop loans, or auto title loans."
I used a money order a few years ago, so that year I was officially underbanked, despite being educated/wealthy (I have a PhD and I'm an accredited investor.)
Many low income people have smartphones actually, and use them in lieu of desktops. Not being connected isn’t the reason they’re unbanked or underbanked, you could argue moving more to digital would include more of them. Plus the US dollar is already digital.
In part they don’t have bank accounts because they’re poor, so they don’t have money to put in them. If they weren’t broke they’d have bank accounts. IMO this is more a function of wealth inequality in the US than of banking.
Think about it, you’ve got $0. Now I give you a fee free bank account. You’ve still got $0. You’re no more included in the financial system.
If they're already connected, why would moving digital include more of them in banking? They're not using physical banking now, I don't see how digital banking would convert them.
I meant having more ways to spend their money directly from their phones would allow them to avoid having to withdraw from physical ATMs, and more digital acceptance options means not having to deposit at ATMs. Those are kind of the last vestiges of the physical banking system. These problems are being solved though. Basically any time you’ve seen a “cash only” sign, it’s a blocker to totally digital banking.
Low income folks get wrecked disproportionately by the high fees associated with physical retail banking (including ATMs). They charge flat fees (like Cryptos incidentally) which function as a regressive tax on the poor. Digital banking, by virtue of not having to deal with real estate and physical assets is more efficient and cheaper.
I can’t overstate this enough, DONT HOLD DOLLARS. Currency is intentionally lossy so you invest it in productive assets. You’re pointing to a feature and yelling bug because you don’t seem to understand how it’s meant to work. Wages kept pace so earn rate remained constant or better and if you invested instead of throwing dollar bills under your mattress you’d have done incredibly well as the S&P has had a historical 7% geometric return.
Finally, all the popular stable coins are literally indexed to the US dollar, so you can’t say USDC/USDT is great then whine about the USD right?
C'mon. We all know why the Fed targets a relatively consistent rate of inflation. It's because deflation suppresses consumer spending. Not what you want in a consumer economy.
This right here, literally how it’s supposed to work. “Money becomes worth less over time, what should I do?” “Invest in productive assets” “OHHHHHHHHH”
There, we just saved you from having to go to an Econ class :P
The thing is, this assumes a shortage of capital for productive enterprises. Historically, that's been normal, but not so much since 2008. Banks have been hoarding cash well in excess of reserve requirements [1], despite ~zero interest for most of that time [2].
So if I have a $2000 how much of that do lose in fees when I buy shares? Sure it makes sense if I am saving $1000 or more a month but it doesn't work when I'm saving $50 to $100 a month for my kids college education, fees eat that up the same way that inflation does, but both make hardly any difference to the person saving $1000 or more a month.
Robinhood charges $0 in fees, so nothing. The trend in ETFs is reducing fees, there’s now zero fee ETFs too. Even if you use a discount brokerage that charges 3-4$ per trade the break even point is quite low, so store it as cash until you’re happy with the fee ratio.
How much do you lose in fees when you buy crypto? 1-2%? Plus insane volatility. If you’re low income that volatility is crippling.
Are you holding cash? The S&P500 is up something like 200% since 2008 so it's hard to understand how anyone's savings could have lost value in the past decade.
What you're talking about is investing+speculating, not saving. By the same logic investing in the S&P500 over the 1999-2009 decade would have been worse than cash. You save money, you invest/speculate to earn a return -- which requires taking on downside risk.
This is hardly worth dignifying with an answer, but I will anyway. Your original premise was that the dollar has lost enormous value since 1913. Strongly implicating the inflation is a measure by which you can measure whether or not a currency is "failed". This is false. A dollar or any unit of currency is an arbitrary symbol of a certain amount of worth.
Inflation does mean that the spending power of a currency decreases. No argument there. But guess what! Wages increase(d) relatively in line with inflation. If a snickers bar used to be $1 when the average salary was $10000; and now it's $2 when the average salary is $20000, then the actual cost of a Snickers bar has not changed, in simplified terms. I see no problem here. It also intuitively makes sense, that as the population of capital producing workers grows, so too does the GDP. These people need currency issued, too, otherwise, the currency would be deflationary. So new currency is issued to prevent deflation (just 1 example of why it's issued) and keep the currency in circulation in line with production.
> 150 caused by hyperinflation.
Like, for example, the Bolivar? or the Mark? That's actual hyperinflation. ~2% inflation YoY doesn't mean hyperinflation. This is Econ 101.
The US government should launch their own stablecoin. A digital US dollar is a national need that shouldn’t be managed by a corporation in my opinion.