Can the U.S. Go ‘Cashless?’

Cash is dirty, inconvenient, and so last century. Some 70% of Americans under age 50 think its days are numbered. But we still need those greenbacks, if as an alternative to banks. More than 4% of households are “unbanked,” and three times as many are “underbanked,” meaning bank services mostly don’t work for them, so rely on services like check cashers or payday lenders. And that's before you get to the racial disparities in who banks approve for credit. Reviving banking services at the post office might be one way to help the unbanked and keep from handing yet more power to the finance sector. Chapters: 00:00:48 Announcements 00:02:30 Retcon: Semiquincentennia 00:03:35 Terms & Conditions: ChexSystems, Unbanked 00:05:46 Big Pilcrow: What’s keeping the U. S. from going cashless? 00:38:28 Executive Orders: Regulate youth sports schedules; Airline baggage fees by weight. 00:40:56 Spiritual Sponsors: Artemis splashdown; Friends with season tickets. Donate to Optimist Economy: https://optimisteconomy.com Video clips available at the Optimist Economy YouTube channel⁠⁠ https://www.youtube.com/@optimist_economy. We’re also on Instagram at ⁠⁠@optimist_economy https://www.instagram.com/optimist_economy or TikTok at ⁠⁠@optimist_economy https://www.tiktok.com/@optimist_economy. You can also search for us on Facebook and chat with other Optimists on Substack. https://substack.com/chat/4604257?utm_source=pub-nav-bar Consume leisure while donning Optimist merch: https://merch.ambientinks.com/collections/optimisteconomy Have a questions for our next Q&A? Send it to [email protected] mailto:[email protected]

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

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• 0:31Speaker 02

  I haven't slept all the way through the night in almost a year, and it's like really starting to show.

• 0:35Robin Rauzi?

  It's adding up.

• 0:36Speaker 02

  It's adding, it's adding up. Hello, and welcome to Optimist Economy. I'm economist Catherine Ann Edwards.

• 0:48Robin Rauzi?

  I'm editor Robyn Rousey.

• 0:50Speaker 02

  On this show, we believe the US economy can be better, and we talk about how to get there, one problem and solution at a time.

• 1:01Robin Rauzi?

  Today on Optimist Economy, we're going to talk about who uses cash anymore and why, and what does that actually tell us?

• 1:09Speaker 02

  I'm wondering how long I can wait until I say cash is king, or something like that.

• 1:13Robin Rauzi?

  Just kidding, baby. Just get it out, just get it out.

• 1:15Speaker 02

  Yeah, okay. Whew, it's gone. Announcements.

• 1:19Robin Rauzi?

  First of all, I saw this review on Apple Podcasts that says, "I've become a better dinner party slash cocktail party guest since listening to this podcast," which I think is a great endorsement. Also, maybe you go to different parties than I do, I don't know.

• 1:35Speaker 02

  Or, maybe nobody else thinks that but her, right? Like, she's a great guest, but maybe else is like, oh, God, this is taking a turn, that damn show again.

• 1:46Robin Rauzi?

  Exactly. So, thank you for that review, and also in a comment on Spotify, somebody shared a YouTube video where a tattoo artist was shown pictures of people's tattoos, and she was supposed to try to match the person to the tattoo without knowing who had what. And one of the people had a tattoo of the Herfindall-Hirschman index equation on her foot, and it turned out that she was the granddaughter of either Herfindall or Hirschman. She didn't say which, though the YouTube commenters put their money on Hirschman. Anyway, that's a deep cut.

• 2:27Speaker 02

  Talk about the corners of the internet coming together.

• 2:30Robin Rauzi?

  Exactly.

• 2:33Speaker 02

  See, optimists, it's a small world after all.

• 2:37Robin Rauzi?

  But there were multiple people commenting, like, who would get the HHI tattooed on their foot?

• 2:46Speaker 02

  I mean, we've talked about getting Pilcrow tattoos.

• 2:48Robin Rauzi?

  Exactly. I was like, this is clearly.

• 2:51Speaker 02

  We've never clarified, they would be matching Pilcrow tattoos, right?

• 2:59Robin Rauzi?

  Okay. Okay. Redcon, we got an email from Catherine in Delaware, who noticed that I could not say the word for the 250th anniversary of the Declaration of Independence. Apparently, I said semi-quantennial, but it's actually semi-quincentennial, which is why I'm still going to just call it the 250th anniversary.

• 3:18Speaker 02

  Semi-quincentennial.

• 3:20Robin Rauzi?

  Semi-quincentennial.

• 3:21Speaker 02

  It's such a bummer it's happening right now, right?

• 3:24Robin Rauzi?

  I know.

• 3:25Speaker 02

  I mean, the Fourth of July is my favorite holiday, like, bar none. And it's not even that it's my favorite. I think it is the best holiday.

• 3:35Robin Rauzi?

  Really? More than Thanksgiving? Thanksgiving is my favorite holiday.

• 3:38Speaker 02

  Thanksgiving's your favorite holiday?

• 3:40Robin Rauzi?

  There's a lot of food.

• 3:41Speaker 02

  Oh, okay. Well, there's a lot of food at my July 4th parties. Lot of food.

• 3:47Robin Rauzi?

  Keep that in mind.

• 3:48Speaker 02

  Yeah. No, it's truly like, like, slaughter the fatted calf. Our country is a year older.

• 3:57Speaker 02

  It's like birthday party, but no present. It's summertime. You get to burn stuff because fireworks. It's awesome.

• 4:05Robin Rauzi?

  Okay, terms and conditions. Catherine, did you look up anything this week?

• 4:12Speaker 02

  No.

• 4:13Robin Rauzi?

  You're not really holding down the first half of this show.

• 4:15Speaker 02

  I, you know, it's funny, we were off recording last week and I'm now I'm just like, I don't know. One week out of the group, I'm like, who am I? Who are you? What is economy?

• 4:25Robin Rauzi?

  What optimist. Um, I just, I looked up this thing that I, I read about called Cheques Systems. So Cheques Systems is like a credit bureau, credit reporting specifically for bank accounts. And so it's a central database to verify all sorts of personal information related to your banking history. And I think this is where you can also get sort of blacklisted from opening a bank account. And I didn't realize that that was separate from Equifax and TRW and the other credit reporting agencies.

• 4:57Speaker 02

  Yes. I mean, I think one term and condition for the show this week would be unbanked.

• 5:03Robin Rauzi?

  Mm hmm.

• 5:03Speaker 02

  People who don't have a bank account. But practically speaking, it means that it's high use of alternative financial services and alternative financial products. So alternative financial products, alternative financial services, you know, you don't deposit cash in a bank, you don't withdraw from a bank, you go to a check cashier, you go to a pawn broker, you go to a payday lender. These are not banks, but they perform financial services. And the only people who go to them are people who are somehow frosted out of the banking system and unbanked and use of really not great financial products tend to be synonymous, even though technically they're two different things.

• 5:44Robin Rauzi?

  Mm hmm. Did you say frosted out of the banking system?

• 5:48Speaker 02

  Frosted out?

• 5:49Robin Rauzi?

  Frosted out?

• 5:49Speaker 02

  Yeah. It's a technical term. You got iced out by the banking system, frosted out. I don't know the words I say sometimes, believe it or not.

• 5:58Robin Rauzi?

  I think frozen out is-

• 5:59Speaker 02

  Frozen out.

• 6:04Speaker 02

  That makes more sense.

• 6:06Robin Rauzi?

  We'll be back in just a second for the big pill crow discussion on cash and the unbanked.

• 6:16Robin Rauzi?

  Are we ready to pilcrow?

• 6:17Speaker 02

  Oh, ready to pilcrow is such a good motto.

• 6:23Robin Rauzi?

  Noun to verb.

• 6:24Speaker 02

  Noun to verb. I am ready to pilcrow.

• 6:27Robin Rauzi?

  Okay, so I was interested in this topic about our future cashless society because a listener of the show wrote in to ask what the ramifications of a cashless society would be. So I looked up where we are in cash usage and I was sort of shocked frankly to find out that while cash usage had dropped during the pandemic, which is what everybody sort of thinks of, but then it in fact stabilized and that about 80% of people still carry cash and then in fact cash hoarding, like people keeping a lot of cash around the house went, has gone up since the pandemic. Maybe it's just people feel like they need more cash around the house. But still, you know, polls show that people really do think that

• 7:11Robin Rauzi?

  we're headed toward a cashless society. Gallup did a poll on this in 2016 and again in 2022. 70% of people under 50 think it's likely that we will be a cashless society in their lifetime. But this would be, this would be a problem. It would be a problem for a lot of people.

• 7:28Speaker 02

  Oh yeah, because outwardly it sounds, I mean, it sounds great, right? Like cash is filthy. We have to pay money to print it.

• 7:35Robin Rauzi?

  I drop cash a lot. It's always, I pull a phone out of my pocket, whatever cash was in there goes flying.

• 7:41Speaker 02

  Yeah, well, now there's truly no feeling like putting on a clean pair of pants and realizing you left money folded in your pocket and it's been through the washer, the dryer, and it's now crisp and dry and you find it and it's like money, found money is free money, even if it was your money the whole time, right? Like that's a joy that I think I'd love other people to experience, even if it's like a dollar. It's just like, ah, money. But it's also like it's easier to pay. You don't, you know, you don't have to count out your cash, rifle through your cash, carry cash. It feels safer. Businesses say that it's safer for them. I mean, it seems like such a like win, win, win, win, win. Like what, what could possibly be wrong about not having cash when it is?

• 8:25Speaker 02

  So convenient in so many ways. It makes transactions simpler.

• 8:28Robin Rauzi?

  Yeah. Do you use a lot of cash? I'm just curious. I more or less did stop carrying cash during the pandemic.

• 8:36Speaker 02

  You know, my, my cash usage has gone up because I moved back to Houston and my mom lives 10 minutes away and she uses cash. So I'll end up with these arrangements of like, I'll order pizza and she's like, oh, well, let me give you money for the pizza. And then she gives me cash and I'm like, what am I gonna do?

• 8:54Robin Rauzi?

  So you're, you're a teenager just getting like allowance money from your mom still.

• 9:00Speaker 02

  Okay, no, she's paying me back at a cut rate.

• 9:05Robin Rauzi?

  That's hilarious. I actually only get cash out of an ATM at the airport, I think. It's like when I travel, I feel like I should have cash and then I often come back with all of it still in a, still, still in my bag. But I have also converted almost entirely to Apple Wallet payments and apparently I'm part of the problem. I just, no cash, no problem. I am.

• 9:32Speaker 02

  But I mean, I, I find this to be really an interesting question. When you said you want to talk about cash, I was like, oh, let's talk about cash. Cause we're not going to talk about cash, actually. We're gonna talk about.

• 9:42Robin Rauzi?

  Banks.

• 9:43Speaker 02

  Banking, uh, financial products and financial services. Cause I don't think there is any harm in the world. If you decide I'm never going to use cash again. I think the problem is people for whom that doesn't work and why it doesn't work. And this is one of these really interesting cases in which you embracing something has no bearing on whether or not it's a good policy overall. Not having cash would hurt a lot of people in the economy, not you. But that's like, your worlds can coexist on some level. Where you never have to use cash again, and that doesn't mean that they have to stop using it. It's a very, I think it's kind of like the, you could coexist,

• 10:26Speaker 02

  which is why a lot of states have had bans on cashless.

• 10:30Robin Rauzi?

  What is it? Nine? I looked it up. Nine states and the District of Columbia have statewide cashless business bans.

• 10:38Speaker 02

  Yeah, where businesses are not allowed to go cashless.

• 10:41Robin Rauzi?

  I was just at Dodger Stadium Friday, cashless. They sent us an email in advance of the game saying, we do not accept cash. I was like, baseball? Baseball doesn't accept cash? And actually, you know, who knows if anything's ever going to move forward in Congress ever again? But the Payment Choice Act of 2025, which has 21 bipartisan cosponsors, you know, would insist that businesses that have a retail, like a brick and mortar retail location, take cash for purchases up to $500. And there are some weird exceptions, like you can have a machine that lets them put cash on a card that they can pay with.

• 11:19Speaker 02

  Oh, like an arcade?

• 11:20Robin Rauzi?

  Exactly. Like, it's like a one-time gift card machine. Like, I don't understand how it's supposed to work. But it's interesting because I think you see both sides of this. One side is the concern for people who are unbanked. But then also, I think there's a real concern around privacy, that there are people who legitimately don't want their every purchase tracked by financial institutions and credit institutions.

• 11:46Speaker 02

  Or the government.

• 11:47Robin Rauzi?

  Or the government.

• 11:48Speaker 02

  So I think that the one aspect of it, I think, is just purely like it is a, do you have the right in our economy to choose how you pay for things? And what is the mechanism for turning one of those options off? And it's not so much an endorsement that cash is better, but that choice and agency amongst consumers is better. And this lends itself to a lot of bipartisan support. Of like, do not let the banking lobby convince you that we shouldn't be allowed to use cash anymore. That makes me feel like it has such a long tail because, man, if you don't like banks and you don't like the government, should you be forced to go through a financial institution to be a participant in our economy?

• 12:28Robin Rauzi?

  Yeah. I mean, no.

• 12:30Speaker 02

  No, I mean, yeah, exactly.

• 12:32Robin Rauzi?

  I'm agreeing, but no.

• 12:33Speaker 02

  I'm like, I never want to use cash again, but do not, do not tell someone that they have to go through a bank. It's a fundamental question of how we allow people to participate in the economy. And then that fundamental question is met with a lot of evidence is that the people who would then gatekeep participation in our economy, they're not good. Their track record would be...

• 12:53Robin Rauzi?

  Not good.

• 12:54Speaker 02

  Not good. I mean, I want to say mixed, but I'm not gonna. Because it is, it is a bad track record. Financial services that go to especially low-income people are bad.

• 13:08Robin Rauzi?

  You're saying big banks, not necessarily the alternative financial services that you were talking about earlier?

• 13:16Speaker 02

  Well, it's cascading issues. You need to be able to convert your currency into some type of payment system. How do you do that? Well, you know, most of us go to a bank. But what if the bank says we won't take you?

• 13:32Robin Rauzi?

  Mm-hmm.

• 13:33Speaker 02

  According to the Survey of Household Economics and Decision Making, which is put out by the Federal Reserve, 6% of adults are unbanked.

• 13:45Robin Rauzi?

  And that number's been pretty steady.

• 13:47Speaker 02

  It's been steady, according to them, since probably over the last 10 years. It's been relatively steady. And it's a pretty high correlation of being on the blacklist from banking institutions that these are people who have, you know, had too many overdrafts, unstable credits, didn't pay off accounts that had balances owed because of things like overdraft, and they're kicked out of the banking system for a period of time.

• 14:11Robin Rauzi?

  Right.

• 14:12Speaker 02

  The cousin of unbanked is called underbanked.

• 14:16Robin Rauzi?

  Right.

• 14:16Speaker 02

  A separate survey is put out by the FDIC, which is a survey of the unbanked and the underbanked. And they measure in terms of households. And it's 4.2% of households, which makes sense. Underbanked is 14.2%. So, underbanked, meaning you have a bank account but use alternative financial products and services, is roughly three times the unbanked.

• 14:40Robin Rauzi?

  Wow. And it's, I mean, it's not surprising, but your family income is under $25,000 a year. The rate of being unbanked, completely unbanked, is 22%. And if your household makes basically under $50,000 a year, the unbanked rate is actually still at 8%.

• 14:59Speaker 02

  That's problem one. They don't hit everybody. Problem two is that, how does it say this? How does one? So, they're racist. Banks are racist. They're regulated to not be racist, but they 100% are. And they, it's, I don't think it's, um...

• 15:17Robin Rauzi?

  But how do we know that they're racist? I mean, especially in this day and age where, I mean, you can open a bank account and never talk to a human, never step foot in a bank.

• 15:28Speaker 02

  Mm-hmm.

• 15:30Speaker 02

  One way that we see it is the difference in outcomes in terms of what kind of credit you're offered, your credit approval rate, your credit denial rate, your total access to credit of black and white people who have very similar incomes. The Federal Reserve has a survey, the SHED, the Survey of Household Economics and Decision Making, and the SHED measures things like, have you ever applied for a credit increase and were denied? And if you look within income bands, you're still looking at black households that are pulling down north of $100,000 and their rejection rate or their denial rate will be much higher than white households.

• 16:10Speaker 02

  So these are like high-income people being rejected from credit applications or, say, like making an account, your total credit availability larger. And it's disparate between race, even amongst high-income households. So amongst low-income households, it's going to be worse. But one of the...

• 16:26Robin Rauzi?

  That's also true with Latino households, right?

• 16:28Speaker 02

  Yes, although the biggest knock in the financial sector is being a black person. So here's a case study that's illustrative. It's 2020, and Congress has passed the Paycheck Protection Program, which is intended to open up credit, basically a spigot, the fire hydrant that's pouring water into the street. They are trying to open up credit to small businesses to keep them from going under as the economy comes to a screeching halt. And the Paycheck Protection Program works through existing lending institutions. You do not go to the government for money. You go to a bank, and the bank opens up a small loan for you, backed through the Paycheck Protection Program. It went to big banks, it went to small banks, and so on.

• 17:12Speaker 02

  So a research and advocacy group called the National Community Reinvestment Coalition, they did a paired test of the PPP loans. So a paired test means you have two people, one black, one white, one in a protected class, one not in a protected class, one gay, one straight. It was developed by HUD. It was called the Slam Door Test, where you would send people out into neighborhoods to respond to like four lease signs and see what was the slam door rate of the white person being given access to the apartment versus the black person having the door slander their face.

• 17:45Speaker 02

  This model slam door test has basically just become much more sophisticated over time, but the fundamental question that they're testing is the same. When two people come to you looking for a service, do you treat them differently based on their race, or their skin color, or their sexual preference, or their gender, or pregnancy status, or what have you? And we conduct these types of tests all the time. So, the National Community Reinvestment Coalition had a set of people, at the start of the pandemic, call banks, and they-

• 18:15Robin Rauzi?

  These were supposed to be small business owners?

• 18:16Speaker 02

  Yeah, they're given a script of, you know, here's the size of your business, here is how much money you need, here's how many people you have on staff. They're basically given a script to follow, to say, tell this to the bank. And they had them, they had half men, half women, half black, half whites. And as they point out in their report, most Americans are able to identify, based on someone's voice, whether they're black or white. So you have black sounding people calling a bank, and then you have white sounding people calling a bank. And it is, this is just, you pick up the phone and ask a bank, the government is basically giving you money to give to me, what should I ask for? And they were given wildly different advice. And they're, remember, they're given the

• 18:58Speaker 02

  prompt of the exact same business, with the exact same numbers and statistics, and then a black man calls, and they give him worse advice, even though they're not, the money's not even coming from them. The National Community Reinvestment Coalition has done this type of testing, leading up to the pandemic, so they were like, ready to go. Like, they spun this research up really quickly, and then they sent it out the door. And yeah, I mean, if you were a small business owner with a black voice in 2020, banks were more likely to offer you less loans, smaller loans, tell you to do things like take out a home equity line of credit, instead of getting a business loan. I mean, they just got worse advice.

• 19:35Robin Rauzi?

  Oh, my god.

• 19:36Speaker 02

  Yeah.

• 19:38Robin Rauzi?

  Criminal advice, actually, it seems like. Criminally bad advice in some cases.

• 19:42Speaker 02

  Criminally bad advice in some cases. This is a problem that is exists up and down the financial institutions. So there's some, some of the badness of financial services comes from bad products. Like, we don't need to explain to listeners why payday loans are predatory. Like, there are bad products, but then there is bad treatment of people within good products. And so this is like a compounding problem. You don't serve everyone.

• 20:04Robin Rauzi?

  You push them towards bad products.

• 20:07Speaker 02

  You push them towards bad products. Those bad products can be exploitative. And then you have, even within good products, you still have disparate outcomes for people based on non-financial features like their skin, their race.

• 20:21Robin Rauzi?

  Their accents, yeah.

• 20:22Speaker 02

  Yeah, their accents. You know, we want to move into a cashless society, like, who does that give power to?

• 20:27Robin Rauzi?

  Wells Fargo?

• 20:28Speaker 02

  Yeah.

• 20:29Robin Rauzi?

  Bank of America?

• 20:30Speaker 02

  Yeah.

• 20:34Robin Rauzi?

  I mean, I, I think in, in defense of big banks, words I never thought I'd say aloud, you know, should they be forced to do business with customers who don't have, you know, regular money to keep in an account? Or have a history of bouncing checks? Or, I mean, I think that if any of us owned a bank, we might be like, well, I don't think that I trust this person because they have a bad history of using credit.

• 21:01Speaker 02

  No, I, actually, I don't think banks should have to serve everybody, not a for-profit, private bank, because they've proven themselves to be pretty, what is the word I'm looking for? Mean, might be, might be the right word? Opportunistic.

• 21:21Robin Rauzi?

  Hmm, mhm.

• 21:22Speaker 02

  Why do you need to be charged a $35 fee for going 50 cents into the red in your bank account?

• 21:29Robin Rauzi?

  Right, right.

• 21:31Speaker 02

  I mean, it's, it's, it's not necessarily that we should require them to serve those people, because they've kind of shown That they will make money off of people's decision making, you know, good and bad. And I had a friend who worked for a bank regulator during the Biden administration's like, let's get rid of junk fees. And the banks really took issue for their fees being called junk. Because they were like, look, we're not charging you $15 to buy an online ticket. Like, they owe us money. We should be allowed to charge them for that. It's not a junk fee because it's actually associated with a particular action that has a cost. Now, does it cost $35?

• 22:08Robin Rauzi?

  No, yeah, yeah.

• 22:10Speaker 02

  I don't know, but that's, I mean, that's how they-

• 22:11Robin Rauzi?

  And then you charge them over and over and over and over, too.

• 22:14Speaker 02

  Should I tell my, should I tell my banking story? I, I have, there are like banks that I, like, I will walk by and-

• 22:22Robin Rauzi?

  Like, you won't even withdraw money from their ATM?

• 22:24Speaker 02

  I won't, oh my god, like, I would, like, I, like, one day, if they go bust, like, I will piss on their grave. Like, I hate, there are certain banks that I hate so much. I mean, it's, what's wild, right? So, when I was in, I was spending a summer in DC at a paid internship. And I deposited my paycheck on the Friday, or Thursday or Friday of a holiday weekend. It was July 4th, obviously the best day of the year, best weekend of the year. And I'm, this is my first July 4th in DC. Like, we're gonna see fireworks. There's all kinds of fun stuff going on. It's like, America, the weekend. I deposit my paycheck, and then the weekend starts. And I think, you know, the, the paycheck's like, I mean, it's not a lot.

• 23:09Speaker 02

  It's not nothing. I'm proud of myself, but I think I deposited something like 500 bucks. And when I check my balance at the start of the next week, when the holiday is over, I owe the bank $700, $600, some, some wild, I mean, like, I, I was like, wait, is that negative? That's not, no, wait, how, because at first I was like, wait, I only put in like 500. I should have like-

• 23:30Robin Rauzi?

  This is 700.

• 23:31Speaker 02

  Like, how did that swing? And what had happened was is that they reordered transactions. So I made a deposit.

• 23:38Robin Rauzi?

  Right.

• 23:38Speaker 02

  And so in my timeline, the human timeline that a person goes through, I deposit the money into the bank, got my little receipts. And then, over the next three days, purchased things. We went to museums, like we, you know, like, whatever. I bought small stuff. $2 here, $3 here, $10 here, a movie ticket, whatever. Um, when they actually processed all the transactions, they reordered it so that all of the transactions I had made before the weekend came first and each incurred a $35 overdraft. And then the paycheck was the last thing that was deposited.

• 24:14Robin Rauzi?

  Oh, my God.

• 24:14Speaker 02

  So even though I deposited the paycheck, spent a lot of money over three days and then came back on a Tuesday, they reordered the transactions so as to force me to go into overdraft.

• 24:25Robin Rauzi?

  It's not like you went into overdraft and they charged you $35 once. They charged you for $35 for the movie tickets, $35 for the beer and fries, $35 for the parking.

• 24:36Speaker 02

  I mean, hundreds of dollars. Because, I mean, this is over a holiday weekend. I mean, I easily made 20 different transactions over a three-day holiday weekend. So I

• 24:45Robin Rauzi?

  Oh, my God.

• 24:46Speaker 02

  I went back to the bank and I was like, what on earth? Did y'all lose the little piece of paper that said, I have money? Like, what is happening? And they're like, no, that's not us. Our branch can't do anything. So I had to call the, like, 1-800 number. This was like a day off of work. Probably an hour for the phone call and seven hours just to pace furious anger. And they were, they were like, you know what? We're gonna give you our special one-time exception and clear all of these and reorder the transactions. And I was like, reorder? I was so mad. They got off the phone and I went down to the bank. And I was like, give me every dollar in that account? I was unbanked, um, for the rest of the summer. And I operated entirely off of cash because I, I was so like,

• 25:31Speaker 02

  I hate banks. I hate the way they treat people. That's not my only horrible bank story. That was in 2005, I had a similar problem. I moved abroad after I graduated college. So I closed all the bank accounts that I, like my primary checking account before I moved. I moved to Russia and then I moved to Prague. Well, like, I don't know, it was like nine months later, my dad calls me and he says, "You have a third-party collection for like over a thousand dollars." Turns out that the account that I had closed, like two days later, a charge hit, you know, because they reorder and pause transactions. A charge came in after I closed it. And then I left the country.

• 26:14Speaker 02

  And then they charged me the overdraft, then they charged me interest on the overdraft, and then they compounded the interest on the overdraft. And then months go by, months go by. Because why would you know? You closed the account and moved out of the country. No, because I'm gone. I'm out of the country. I closed the account. I told my dad, like, "Oh yeah, throw that away. I don't bank there anymore. They're just trying to like sell me something." My parents have to go to the bank on my behalf to settle the debt. And my dad has been banking at this place for decades. Yeah. And it's a small, like, local bank. And he was like, "What the [bleep] is wrong with you? What's wrong with you?" And they were like, "Well, we're willing to settle for the initial overdraft.

• 26:57Speaker 02

  You just have to pay that and we'll waive everything else and take the debt out of collection." Guess how much the overdraft was? Oh, no. Thirty-five dollars? How much? Uh-uh. It was a dollar ninety-five. What? Yeah. And it was me buying a Dr. Pepper. That hadn't cleared when you closed the account. That hadn't cleared. My Dr. Pepper hadn't cleared and it was like a thousand-dollar Dr. Pepper. Oh, my God. I'm still mad, honestly. All these years, like, it's been 20 years. I'm like red and mad and, ugh.

• 27:30Robin Rauzi?

  I've been there. I mean, I think I told you about the time that I was trying to get a deposit on my apartment and I had my first paycheck and I deposited and they said, oh, well, this is a new account. We're going to hold on to this for 10 business days. And I think I found this out because something had already bounced and I went into the bank and they said, you know, this is a new account. We can't, we don't just trust you. And I was like, this was a paycheck. If I walked up to this window and asked you to cash it, you would give me dollar bills. And if I walked around the room and got back in the line and handed you a big pile of dollar bills, you would put those into my account and you wouldn't

• 28:10Robin Rauzi?

  hold it for 10 days, right? And these were like, well, yeah. And I said, yeah, you can close that account right now and just give me all the cash in dollar bills. Thank you very much. And I never went back to that bank.

• 28:23Speaker 02

  Yeah. Oh, I think everybody has these types of experiences of it was like, like, maybe I didn't understand the game like that we were playing. Like, I thought I was just giving you money and you were holding on to it. And then I was going out and spending in society. But actually, I'm like some kind of mark and you figured out a way to make money off of me.

• 28:45Robin Rauzi?

  Yeah.

• 28:45Speaker 02

  By holding my money. It's not just interest rates. Like, banking should be boring. You hold at 1%. You lend at another percent. But like, the fee apparatus, the restructuring of transaction apparatus, they make money off of you.

• 29:02Robin Rauzi?

  Did you read that report from the Cleveland Fed where they did the focus group of people who were, half of them were had banks and half of them were unbanked or underbanked, as you say?

• 29:11Speaker 02

  Uh-uh.

• 29:11Robin Rauzi?

  The hatred that some people had for banks, they didn't trust them, they didn't trust their privacy, they were poorly treated by them. For a lot of people, banks represent safety and security. And for people who have been mistreated by banks, it is.

• 29:28Robin Rauzi?

  180 degrees, the opposite. And that's where also where I really read about the privacy concerns that people have about banks, that they just don't, they don't want the banks and the government up in their, in their business about what they're spending their money on.

• 29:41Speaker 02

  Oh, yeah. If a bank has an AI chatbot, do you think it's really good at like keeping people's private transactions to itself? I doubt it.

• 29:49Robin Rauzi?

  Yeah.

• 29:49Speaker 02

  I doubt it. I mean, I have a friend who thinks that the overdraft fees were such an effective long game of basically moving all of US consumers onto credit cards. I mean, there's lots of things, right? Like, we have more credit card options, but it's the, you know, why would you incur debt for literally every transaction you have unless you were worried, unless it was easier to manage? So you've kind of almost like locked people into preferring to use credit cards, which are more lucrative to you because you could charge them like $100, $200 for each account.

• 30:22Robin Rauzi?

  Yeah. And I mean, and of course, they make more money on credit card transactions because they charge the business anywhere from 3% to 4% just to process that transaction.

• 30:32Speaker 02

  I mean, I imagine a lot of listeners would be in a position like myself where like, I don't like banks, but this is the world we live in and I'm rich enough to keep myself mostly protected from the type of practices that can leave you a lot, you know, stung by the banking industry.

• 30:48Robin Rauzi?

  I mean, the other thing that I find galling is to be charged to have a bank account. And I maybe I shouldn't find that galling, I just, but I do. And the average fees for banks that charge for checking accounts, the monthly fees are now on average over $12 a month to have a bank account, which just seems like a lot. And then there, of course, there are banks that have no fees or have no fees with minimum deposits, but a lot of those are online only banks, which, you know, the people who need zero fee banks are not probably the ones who are also doing only online banking.

• 31:25Speaker 02

  Right. So those fees aren't nothing, but they can be prohibitive to someone who's trying to open an account or at least, you know, a turnoff. Like, I'm supposed to open up a bank account, so I could put my $100 somewhere safe, but they're going to charge me $12 to hold my $100.

• 31:40Robin Rauzi?

  Right.

• 31:41Speaker 02

  You know, $144 a year isn't much if you're putting $100,000 into an account, but if you're putting, you know, $500 into an account.

• 31:49Robin Rauzi?

  $200, yeah.

• 31:50Speaker 02

  That is a very high fee. Oh, I have a term and condition.

• 31:55Robin Rauzi?

  Okay.

• 31:55Speaker 02

  After the fact.

• 31:57Robin Rauzi?

  Ex post facto term and condition.

• 31:59Speaker 02

  Ex post facto term and condition is usury.

• 32:01Robin Rauzi?

  Oh, uh huh.

• 32:03Speaker 02

  Usury is the charging of incredibly high interest rates. And the reason why we don't get charged incredibly high interest rates is most state governments have usury regulations. And this is what has been used to try and eradicate payday lenders is to say that it's a usury charge and they're effective interest rates. So, I mean, our question here about, you know, will we go cashless? The problem with it is that you are very much at the mercy of financial institutions. And even those institutions that are good still have a lot of bad things that they do. And it's one of these like, well, I would feel differently about the world in which financial institutions have a lot of power if the Consumer Financial Protection Bureau

• 32:48Speaker 02

  also had a lot of power.

• 32:51Speaker 02

  I think like the optimist solution here is because there are so, there's so much skepticism on both sides of the aisle about the power given to financial institutions and a cashless society. That means that there is an opportunity for good policy. And the opportunity for good policy, I mean, you asked me, should private enterprises have to have a bank account for everyone? And I think the answer is no, but your government should. We can offer financial services publicly and we actually did for like 50 years through the postal system. The US postal savings system was a banking system set up through the post office where you could use the post office to make small deposits.

• 33:37Speaker 02

  It was set up after the panic of 1907 or in response to the panic of 1907. The original strength of postal banking was that the FDIC didn't exist yet. And if you put money into a postal bank account, it was backed by the federal government, whereas other banks were not. So this was a way to have small savers protected. After the Great Depression, when FDIC starts to insure deposits even at private banking institutions in kind of exchange for heavily regulating them, the nature of postal banking changes and who actually uses it. And it becomes like a small dollar depository.

• 34:16Speaker 02

  So after that, it, you know, It gets a little murky. There's some evidence that it was used as like wealthy people figured out that they could get a low interest rate from it. And so they were using it kind of like for their own purposes of like, okay, wealthy people gonna wealth, gonna like figure out how to make money.

• 34:32Robin Rauzi?

  Rich people gonna rich.

• 34:33Speaker 02

  Rich people gonna rich.

• 34:34Robin Rauzi?

  So were they were giving out loans?

• 34:37Speaker 02

  No, I don't think so. They were really just short term saving. A lot of countries, probably the three that would strike the most comparisons for us Western industrialized listeners here in the United States is that France, Germany, and Japan all have postal banking. And it's a, it is not like a cure all, but it is a way that people who either don't want to use banks or don't have access to banks can hold small dollar deposits, can cash checks. They don't have credit cards attached. They don't have, you know, anything else attached. And there, there is a, a real push that has waxed and waned over the past 25 years that

• 35:17Speaker 02

  we need to bring back postal banking. The postal workers' union is very much in favor for it, favor of it.

• 35:24Robin Rauzi?

  Yeah. I think this was last proposed in 2022. We'll see if, yeah, that ever gets revived again. But there is a feeling that it could, in fact, shore up the postal service financially.

• 35:36Speaker 02

  Yes, by expanding their services.

• 35:38Robin Rauzi?

  By expanding their services, yeah.

• 35:40Speaker 02

  I mean, I'm trying to imagine, like, I am not boxed out of financial services. So if they had a postal banking system, would I need it or use it? And of course, I'm thinking, like, it would probably be a great place to park some money for kids. Of like a way to teach them about bank accounts and to have a, an institution that I feel safe and I don't have to worry that if I create a bank account, but don't touch it because I'm intending it for children over long term, that I'll actually lose it all to fees.

• 36:04Robin Rauzi?

  Yeah.

• 36:06Speaker 02

  I just don't like banks. I don't, I don't like them. I don't, it's not that I don't see their purpose. It's not that I think they're all bad or they only do bad things. I think they do amazing things. But I think, I mean, they absolutely go after fees and exploitation when they have to. It's like I fly in an airplane. It's not because I love airlines. It's because I would like to get across the country. I don't fly because I love airlines. I don't put my money in a bank account because I love banks. They do not want the alternative.

• 36:35Robin Rauzi?

  Mm hmm.

• 36:36Speaker 02

  We've talked about before the child savings accounts and the retirement accounts that everyone's have access to.

• 36:42Robin Rauzi?

  The Trump accounts and the Trump accounts.

• 36:44Speaker 02

  The Trump accounts and the Trump accounts in 2026, the Trump accounts and the Trump accounts, but you know, also called child savings accounts and also called the auto IRA or the Thrift Savings Plan. The whole point of those accounts is that not everyone is served by a private sector, private provided for profit good. So you need to come up with an alternative. The alternative is a public provision.

• 37:05Robin Rauzi?

  Right. We need something that is a public provision.

• 37:09Speaker 02

  Yes. I think there's part of me that is just like, we should always have cash around because if nothing else, it serves as a check on banks of how much power they can really have because we have a way of interacting with an economy that doesn't involve them. And there's something nice about that. I know that that's not necessarily like the best policy solution. The best policy solution is we will have alternative banking services that come in public areas and have better access to low income communities and so that we don't have to be quite so held over a barrel by the banking system. That's the better option forward. But the, that is like the ultimate $20 bill you find when you take your pants out of the dryer. The ultimate 20 is to continue to have cash. But I'm not married to this one.

• 37:50Speaker 02

  I think if there were a good enough slate of financial services and products in which the interaction that most low income people have is not like pure exploitation and usury, I think I would be okay with getting rid of cash.

• 38:05Robin Rauzi?

  Yeah, yeah.

• 38:08Speaker 02

  Well, for those of you who would like to contribute to Optimus Economy, we do not take cash. We do take check, but obviously our preferred method is to have a burlap sack full of gold coins with a dollar sign on the side of the sack. And that is, that is the currency that we prefer here on the show.

• 38:24Robin Rauzi?

  You can't, you can't mail us like a $10 bill in an envelope like my grandmother did at Christmas time? You can't do that to us?

• 38:32Speaker 02

  I think you can mail us a $10, you can mail us cash.

• 38:36Robin Rauzi?

  Optimus, you can mail us cash. We'll figure it out.

• 38:38Speaker 02

  Yeah. You know what? If you gave us cash, I would, I would, I would figure it out. Optimus Economy is not cashless.

• 38:45Robin Rauzi?

  Okay. Good. I'm glad we're on the, on the record there.

• 38:50Robin Rauzi?

  Okay. We'll be back in a second for executive orders and spiritual sponsors.

• 38:58Robin Rauzi?

  Are you ready, Catherine?

• 39:00Speaker 02

  I'm ready.

• 39:01Robin Rauzi?

  Okay. So, executive orders. What do you got, Catherine?

• 39:06Speaker 02

  My executive order for the week is that youth sports need to be regulated so that their schedules ain't so crazy.

• 39:14Robin Rauzi?

  Okay.

• 39:15Speaker 02

  Because their schedules are crazy. And I think we need to have some, like, pretty clear limitations on, like, we can call it a health and safety measure, but, like, you can only practice and play games so many times per week, per sport.

• 39:27Robin Rauzi?

  Hmm, mhm, mhm. Uh, yeah. Friends who had multiple kids in multiple sports, I don't know how they did it. I don't know how they did it, yeah.

• 39:37Speaker 02

  It's a lot, uh, for just the logistics of getting kids from place to place, but then, I've talked to a lot of older parents who said that it really does end up that even if your kid loves sports, they can really only play one because the competition, uh, for time gets so intense. I also think that travel sports, and this is another health and safety ban, you cannot have travel sports until, like, age 14, 15, something like that.

• 40:05Robin Rauzi?

  Yeah, yeah, till you're old enough to go, maybe, on your own and your parents don't have to go on every trip with you?

• 40:10Speaker 02

  Uh-huh.

• 40:11Robin Rauzi?

  Yeah.

• 40:12Speaker 02

  And this would, of course, help parents feel more sane, but at the same time, would be a lot less classism in the, uh, youth sports world because it is incredibly expensive to do all of those things, and it's wild if you have more than one kid who wants to play more than one sport. I mean, you're down thousands of dollars, uh, and it makes sports, being competitive at sports, a privilege of the elite. So, it's not just because I don't want to drive places or do things on weekends, it's also for America.

• 40:41Robin Rauzi?

  All right, for America.

• 40:43Speaker 02

  Youth sports need to be 50 to 70% less intense.

• 40:46Robin Rauzi?

  I endorse this. Um, speaking of junk fees, yeah, I think that airline luggage fees should be done by weight, not by item. Like, if I have two 10-pound bags, why should that cost me twice as much as one person who comes in with a 20-pound bag? They have a scale. You drop this stuff off, they weigh it right there. This is, uh, this is, to me, a common sense reform that the American people will embrace.

• 41:14Speaker 02

  In addition to having a bathroom of a decent size, I would like to be charged in a sensical way for what I am doing, 100%.

• 41:22Robin Rauzi?

  Yeah.

• 41:23Speaker 02

  Yeah.

• 41:25Robin Rauzi?

  Okay.

• 41:26Speaker 02

  Spiritual sponsors, things that get us through our week.

• 41:29Robin Rauzi?

  Yeah.

• 41:31Speaker 02

  My spiritual sponsor is a little bit of a throwback now, but watching the Artemis crew splash down in, in the water with my kids around me, uh, the like yelps of joy that they like, when they saw the splash, I mean, it was just like pure joy and excitement. And I'm like, well, we're just hanging out on a Friday night, watching the frontier of human achievement. Mom is sobbing. Like, of course, mom of time just absolutely sobbing.

• 42:01Robin Rauzi?

  It's like the Olympics of space.

• 42:03Speaker 02

  Yeah, it's just the Olympics, absolutely space Olympics. Human achievement really moves me. And I mean, I'm sitting there sobbing and my kids turned around and one of them said, but they're, wait, is everything okay? And I was like, yeah, everything's great. Mom's just really moved. Um, so the Artemis crew touching down and then the like real lovely hangover of like the hour it took for them to get the front porch out and the amount of front porch talk. How quickly my five-year-old and three-year-old were like, where's the front porch? Should have deployed by now. They just, they like, they got it.

• 42:38Robin Rauzi?

  Is it actually called a front porch?

• 42:39Speaker 02

  It was called the front porch. And then I came home and my six-year-old was coloring and he was making a front porch for a capsule. This is like the bane of people who have cats or children, cardboard boxes never really go away.

• 42:53Robin Rauzi?

  They don't.

• 42:54Speaker 02

  Yeah. I now have cardboard front porches.

• 42:56Robin Rauzi?

  Oh, good, good, good, good. Uh, my spiritual sponsor this week, this is kind of a throwback to our friends with trucks, friends with pools, friends with season tickets, friends with season tickets to the Dodgers.

• 43:08Speaker 02

  Oh, the Dodgers. Oh, no.

• 43:10Robin Rauzi?

  Even the Dodgers.

• 43:12Speaker 02

  Even the Dodgers.

• 43:13Robin Rauzi?

  Even the cashless Dodgers. Yeah, I went to the game on Friday. It was, it was, it's just really fun. Dodger Stadium is really, it's just a great place to see a baseball game. Uh, it was beautiful. And, you know, friends with season tickets.

• 43:26Speaker 02

  That's awesome. Friends with season tickets. We, thank you.

• 43:30Robin Rauzi?

  Yes. Thank you.

• 43:38Speaker 02

  Optimist Economy is a nonprofit, but that doesn't make the show free to produce. It does mean we can take contributions from your donor-advised fund if you have one. And we'll also just take cash in an envelope, send it our way.

• 43:51Robin Rauzi?

  If you're on Substack at either our free or paid levels, you can join the Optimist Economy chat and talk with your fellow optimists. And if you have the means to contribute at whatever level is comfortable for you, we'll take your gift at optimist economy dot com.

• 44:05Speaker 02

  The Optimist Economy podcast is edited by Sophie LeBlanc. Our video production for social media is by Andy Robinson. Video clips from the show for you to share are available on TikTok, Instagram, YouTube, LinkedIn, and you can buy a t-shirt, a hat, or tote bag on our website, optimist economy dot com.

• 44:22Robin Rauzi?

  And we're also on Facebook.

• 44:24Speaker 02

  Oh, and we're on Facebook now.

• 44:25Robin Rauzi?

  Oh, my God.

• 44:26Speaker 02

  Oh, optimists, at some point, I'll tell you the story of why Facebook doesn't think I'm a person.

• 44:34Robin Rauzi?

  Because the banks told them, no.