Under a mattress, in the freezer: Why so many are hiding cash

A story about some cold hard cash:

Where to stash your cash? Some Americans are sleeping on it—literally.

While banks are still the go-to solution for most consumers, 29 percent say they’re keeping at least some savings in cash bills and coins, according to a new survey of 1,820 adults from American Express. Of those holding cash savings, 53 percent are hiding it in a secret location.

Millennials are even more apt than other generations to go the mattress or freezer route, with 67 percent of those saving cash saying that they hide it outside a bank account.

“We’ve long asked people about how they’ve planned to keep their savings, and for the past few years, we’ve seen an uptick in people saving cash,” said Kimberly Litt, public affairs manager at American Express. This is the first year the company has specifically asked Americans about tucking away cash.

The survey also found that about 1 in 4 consumers anticipates a financial emergency this year, and hiding cash at home could be one way people are preparing. “I’ve also heard of people using it as a budget technique, keeping cash in envelopes set aside,” said Litt.

AmEx didn’t ask where, exactly, that cash is stashed, but a 2012 Marist College survey of 1,080 adults found that the most popular place—with 27 percent of the vote—is the freezer. A little less than 20 percent of Americans hide cash in a sock drawer, while 11 percent put it under the mattress and 10 percent secure it in a cookie jar. Another 9 percent keep their cash somewhere else in the house.

Hmm.  In the days before ATM’s holding cash made more sense since banks were not open 24-7.  However, if people feel a need to store some we don’t recommend keeping too much money in the house as insurance will only pay $200 maximum in case of a claim…theft, fire etc.

There are no Friedmans today, except maybe Friedman himself

Nick Rowe has a very good post which serves to remind us that the ghost of Milton Friedman is still influencing many contemporary economic debates:

I can’t think of any economist living today who has had as much influence on economics and economic policy as Milton Friedman had, and still has. Neither on the right, nor on the left.

If you had a time machine, went back to (say) 1985, picked up Milton Friedman, brought him forward to 2015, and showed him the current debate over macroeconomic policy, he could immediately join right in. Is there anything important that would be really new to him?

We are all Friedman’s children and grandchildren. The way that New Keynesians approach macroeconomics owes more to Friedman than to Keynes: the permanent income hypothesis; the expectations-augmented Phillips Curve; the idea that the central bank is responsible for inflation and should follow a transparent rule. The first two Friedman invented; the third pre-dates Friedman, but he persuaded us it was right. Using the nominal interest rate as the monetary policy instrument is non-Friedmanite, but the new-fangled “Quantitative Easing” is just a silly new name for Friedmanite base-control.

We easily forget how daft the 1970’s really were, and some ideas were much worse than pet rocks. (Marxism was by far the worst, of course, and had a lot of support amongst university intellectuals, though not much in economics departments.) When inflation was too high, and we wanted to bring inflation down, many (most?) macroeconomists advocated direct controls on prices and wages. And governments in Canada, the US, the UK (there must have been more) actually implemented direct controls on prices and wages to bring inflation down. Milton Friedman actually had to argue against price and wage controls and against the prevailing wisdom that inflation was caused by monopoly power, monopoly unions, a grab-bag of sociological factors, and had nothing to do with monetary policy.

Imagine if I argued today: “Inflation is dangerously low. In order to increase inflation, governments should pass a law saying that all firms must raise all prices and wages by a minimum of 2% a year, unless they apply for and get special permission from the Prices and Incomes Board to raise them by less.” What are the chances my policy proposal would be accepted?

Friedman had a mountain to move, and he moved it. And because he already moved it, we simply cannot have a Friedman today.


New Seattle trash law

An interesting New Year’s policy change from the left coast:

Starting Jan. 1, it will be illegal to throw food and food waste in the trash in Seattle, when a new ban takes effect to increase recycling and composting in the city.

Currently, Seattle residents are allowed to throw food and food waste – pizza boxes, dirty napkins, soiled paper towels – in the garbage. Residents are required to have a food and yard waste collection service, but they don’t have to use it for food. (Backyard composters are exempt from that requirement.)

Similarly, multi-family building owners are required to provide a compost collection service for residents, but residents don’t have to use it.

But on Jan. 1, Seattle will ban food and food waste in trash.

Enforcement won’t start until July 1. At that time, any single-family trash container with more than 10 percent recyclables or food waste by volume will face a $1 fine on the next garbage bill.

Multi-family property owners with too much food waste in trash will get up to two warning notices, and then a $50 fine.

Not quite sure how this will be enforced.  Are people really going to be paid to dig through people’s trash and calculate food waste ratios? Are people really going to be fined for not knowing the difference between “organics” and “recyclables”? Are landlords really going to be fined if their tenants fail to follow the new rules?  Living in Ohio is actually looking pretty good.

Countless crows, droppings rankle Ohio residents

Here is an odd story from A.P. reporter Lisa Cornwell:

Thousands of crows roosting at night in a western Ohio city’s downtown have some residents comparing the landscape with the Alfred Hitchcock movie “The Birds” as they work to drive them away.

The crows troubling Springfield aren’t aggressive, as birds in Hitchcock’s 1963 thriller were portrayed. But their overwhelming presence on trees and buildings causes concern over damage and potential health hazards from droppings, said Roger Sherrock, CEO of the Clark County Historical Society.

The society operates the Heritage Center of Clark County, one of the buildings favored by the federally protected crows.

“It can be unnerving to walk outside and see thousands of crows on trees, buildings and everywhere, especially if you’re familiar with Hitchcock’s movie,” Sherrock said.

He estimates as many as 50,000 crows gather downtown after scavenging for food by day in fields surrounding the city of around 60,000, some 80 miles northeast of Cincinnati. State wildlife officials say there has been a roost in the area for decades, but Sherrock says crows began roosting downtown in huge numbers about three years ago


Springfield is, of course, about thirty miles northeast of Dayton as the crow flies.


Law Lets I.R.S. Seize Accounts on Suspicion, No Crime Required

No, we are not making this up.  Here is a New York Times story showing that the I.R.S., although seemingly hapless in retrieving computer files, is really good at extortion:

ARNOLDS PARK, Iowa — For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant. For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000.

The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.

“How can this happen?” Ms. Hinders said in a recent interview. “Who takes your money before they prove that you’ve done anything wrong with it?”

The federal government does.

Using a law designed to catch drug traffickers, racketeers and terrorists by tracking their cash, the government has gone after run-of-the-mill business owners and wage earners without so much as an allegation that they have committed serious crimes. The government can take the money without ever filing a criminal complaint, and the owners are left to prove they are innocent. Many give up.

Clear the Bases

Here is a meaningless fun fact via USA Today:

San Francisco Giants starter Madison Bumgarner came to the plate with the bases loaded in the bottom of the second inning in Monday night’s NLDS Game 3 against the Washington Nationals, so the MLB Network broadcast pointed out an eye-opening fact:

Madison Bumgarner hit more grand slams this season than Derek Jeter did in his entire 20-year career.

The right-handed hitting lefty pitcher hit four home runs in 2014, including grand slams on April 11 and July 13. Jeter hit his lone career grand slam on June 18, 2005 against the Chicago Cubs.

Bumgarner is one of the league’s best hitting pitchers, of course, and Jeter was a contact hitter who usually batted near the top of the Yankees’ batting order. Still, plenty of Jeter’s teams had deep lineups, and it’s surprising to learn that only one of his 260 career homers came with the bases loaded — especially given the Jeter mystique.

It is somewhat surprising since there has not been a player with 200+ homers without at least one grand slam.  So I would have placed higher odds on at least a few more of Jeter’s 260 coming with the bases loaded.  Of course, the Bumgarner grand slam ratio is the real outlier.

What is ‘sustainability’?

A couple of weeks ago the University of Dayton made a very exciting announcement–the largest gift in the history of the school.


The University of Dayton is announcing today a $12.5 million gift from the George and Amanda Hanley Foundation to create the Hanley Sustainability Institute, which will focus on creating innovations in sustainability education across the University. The work of the Institute will build on our already-strong foundation of academic excellence, co-curricular activities, research and campus operations.

But what does the term ‘sustainability’ mean exactly? We’ve never seen a definition that makes logical sense. For instance, the EPA defines sustainability as follows.

Sustainability creates and maintains the conditions under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic and other requirements of present and future generations.

What does this mean? If we drill for oil in Alaska, will that, or will that not, disrupt the ‘productive harmony’ of humans and nature? How do we determine if ‘productive harmony’ prevails or not? For example, is the current Alaska oil pipeline, elevated to allow migrating caribou to pass beneath, an example of productive harmony, or of harmony lost?

Also, how much oil should the present generation use and how much should be preserved for the use of future generations? What’s the proper allocation of oil sharing among generations?

This definition of sustainability raises more questions than it answers.

Will Eschenbach makes a similar point and, as an example, asks whether digging in his garden with an iron spade would be sustainable.

Every kilo of iron ore that is mined to make my shovel is a kilo of iron ore that is forever unavailable to “future generations to meet their own needs”. It’s unavoidable. Which means that we will run out of iron, and thus any use of iron is ultimately unsustainable. My shovel use is depriving my great-grandchildren of shovels.

Oh, sure, I can recycle my shovel. But some of the metal will inevitably be lost in the process. All that does is make the inevitable iron-death move further away in time … but recycling doesn’t magically make iron extraction sustainable.

And if me using a steel shovel to dig in my own garden is not sustainable … then what is sustainable? I mean, where are the “peak iron” zealots when we need them?

Most people would argue that wind turbines and solar panels are sustainable. But manufacturing wind turbines requires mining neodymium, a “rare earth” metal. And solar panels pose a similar issue involving a different metal.

Thin, cheap solar panels need tellurium, which makes up a scant 0.0000001 percent of the earth’s crust, making it three times rarer than gold.

Is mining rare earth metals sustainable?

What is sustainable? If anyone could provide us with a sensible definition of sustainability we would really appreciate it.

More Great Moments in Government

You really can’t make this stuff up:

TRENTON, N.J. – (AP) — The issue has stymied New Jersey politicians for decades. It’s taken more than 50 years of intense lobbying, sweat and tears. It has pitted lawmaker against lawmaker, governor against Legislature, North Jersey against South Jersey.

But a three lawmakers from different corners of the state have hammered out a bipartisan deal that they hope will solve this longtime problem facing New Jersey:

Its lack of a state song.

State Sens. Michael Doherty (R-Warren), Richard Codey (D-Essex) and Jeff Van Drew (D-Cape May) — who have not always been in sync on the state song — came together last Monday to propose a bill (S2438) that would create not one, but five different tunes New Jerseyans could officially call their own.

“I’ve been told from all the players involved that there seems to be a mutual agreement that these are going to move forward, so it’s positive,” Doherty told NJ.com.

Wow, they “came together” to get the job done! These clowns should just resign if they think a state song is important right now. Guess in their world everything is fine, all their relatives have state jobs, they will get a fat pension, and will likely get re-elected without doing much. Thank goodness nonsense issues like road, property taxes, the state budget, and the dysfunctional education system can wait. And anyhow, all five of the options mentioned in the story sound lame.  If they want some free advice….

GOP Caves on Export-Import Bank

Here’s a proposition for you. Want to lend some of your money to an enterprise overseas that is too risky for banks and markets to lend to, at least at the terms on which the enterprise would like to borrow? No? Too late, the Export-Import bank has already done it–with your money!

The Export-Import bank is a New Deal institution that subsidizes loans to foreign entities for big-ticket purchases from major American corporations like Boeing and Caterpillar. The corporation receives a benefit because the Ex-Im Bank’s credit insures that the corporate seller can not only make the sale, but probably also get a better price than they would otherwise. But this gain comes at the expense of the American taxpayer, who is effectively forced to make a loan on terms that banks and other lenders will not accept due to the risk. Thus the Ex-Im bank effectively enables crony capitalism–big corporations win, taxpayers lose.

Of course, the Ex-Im Bank uses faulty accounting to claim that it actually makes money. But a study by the non-partisan Congressional Budget Office estimated that the Bank would lose $2 billion over 10 years, or about $200 million per year. A similar but somewhat higher figure was computed independently by economists at the Manhattan Institute.

This simple approach – which is based on a method outlined in a National Bureau of Economic Research paper by Debbie Lucas of the Massachusetts Institute of Technology – suggests that the Ex-Im bank’s long-term loan guarantee program actually provides guarantees at a loss for taxpayers, not a profit. Moreover, this analysis reveals that the Ex-Im bank’s loan guarantees are made at sufficiently generous terms that borrowers receive subsidies of about 1% of the amount borrowed. That translates into a $200 million cost for taxpayers on the $21 billion in loans that the bank will make in 2012. Because the bank’s smaller loan programs already carry positive subsides under FCRA, the total subsidy level for the entire Ex-Im bank business is even higher than $200 million using fair-value estimates.

No wonder a Senator back in 2008 called the Bank “little more than a fund for corporate welfare.” That was Senator Barack Obama.

And of course, whenever taxpayer money is being handed out, corruption is inevitable.

In June, it was reported that the bank had dismissed three officials and placed a fourth on leave in response to accusations of impropriety. Few details have been disclosed and only one of the employees has been named – Gutierrez, who appeared before a House Oversight and Government Reform subcommittee and refused to answer any questions. Gutierrez lost his position at the Bank after it was revealed that he took money from a Florida company which was angling for Ex-Im funding.

The hearing did yield some further interesting tidbits, all damaging to the Export-Import Bank. Hochberg, the bank’s president, stated that the accusations against Gutierrez and his three colleagues stem from three different incidents. Moreover, the subcommittee’s chairman, Rep. Jim Jordan (R-Ohio) noted that the bank’s own inspector general was looking into at least 40 potential fraud cases.

Even the makeup of the bank’s own advisory committee raises questions. The Daily Caller found that “fully half” of the committee members headed entities “that directly benefitted from Ex-Im financing during their term.” Furthermore, five additional members saw Ex-Im funding reach their organizations before joining the committee. And the questions for the advisory committee start right at the top. It’s probably not a coincidence that the current chair is former Democratic Gov. Christine Gregoire of Washington State – the home of Boeing and, according to one study, recipient of 43.6 percent of Ex-Im funding, far and away the most of any state.

The Export-Import Bank’s charter was set to expire at the end of September, and for the last several months, a number of Congressional Republicans have been making noise about putting an end to the Bank by not renewing the charter. Of course, it’s exceedingly rare that wasteful government programs are eliminated or the size of government scaled back. All the talk this summer about killing the bank, however, heightened expectations that it might actually happen. But in the end, Republicans caved and agreed to extend the charter for nine months.

House Republicans moved Tuesday to extend the authority of the Export-Import Bank this month as part of a government-wide funding bill needed to prevent a shutdown at month’s end.

Republicans unveiled the measure, which would extend the bank’s charter through June 30, 2015, late Tuesday. House Speaker John Boehner, R-Ohio, had telegraphed the move earlier in the day when he told reporters that even a powerful foe of the bank, Financial Services Committee Chairman Jeb Hensarling, R-Texas, believed a temporary extension was in order.

The Export-Import Bank is actually a fairly tiny component of the federal government’s overall massive assault on taxpayers. It is also one of the few wasteful programs that reformers have managed to subject to considerable public scrutiny. But despite the scrutiny and the relatively small size, reform was not achieved. The result is not encouraging. If reformers can’t defeat the Export-Import Bank, what hope for much larger programs like farm subsidies, welfare programs, and entitlements? Things are going to have to get much worse before they get better.

And finally, a word on politics. For what it’s worth, a considerable portion of the GOP’s Congressional caucus has spoken out against the Bank. But among Democrats, the Bank enjoys “widespread support.”

Democrats failed in an attempt to pressure GOP leaders into passing a long-term, five-year extension of the bank.

Among those Democrat supporters is Massachusetts Senator Elizabeth Warren, a noted populist firebrand who pretends to “fight” for the middle class and against greedy corporations.

Sen. Elizabeth Warren (D-MA) may market herself as a progressive populist, but when forced to choose between everyday Americans and billion dollar international corporations, Warren sides with the corporations.

“Senator Warren believes that the Export-Import Bank helps create American jobs and spur economic growth,” Warren spokeswoman Lacey Rose wrote in an e-mail to Bloomnberg News, “She looks forward to reviewing re-authorization legislation if and when it is introduced.”

“Progressive” voters hate big corporations and support politicians like Warren who pretend to ‘fight’ for the ‘little guy.’

Guess Lincoln was right. You really can “fool some of the people all of the time.”


Go Scotland Go !!

Scotland has been tied politically to England for some 300 years, but that might change after a September 18 vote on independence. How the vote will turn out is anyone’s guess, but the possibility that Scotland will break away is quite real. A recent YouGov poll put the pro-independence vote up narrowly, by 51 to 49 percent.

Scotland seems to want to end the union largely because the socialist Scots think that England, particularly London, a hub of world finance, is too capitalist. The Scots apparently want to build the proverbial Socialism in One Country, which of course, has failed everywhere it’s been tried.

In the long run, a break up would probably be good for both countries. English taxpayers pay a lot of welfare subsidies to Scotland, and they would welcome relief from the burden. Scotland needs England a lot more than England needs Scotland. Moreover, removing leftist Scottish voters from national elections might permit the rest of the UK to move in a less socialist direction. John Fund speculates that once Scottish voters are gone, the UK might even be able to extricate itself from the clutches of the European Union.

As for the Scots, if they pursue socialism, they will fail, and as a result, they will learn a valuable lesson. Forced to finally take responsibility for themselves, they’ll have no choice but to put their house in order. No longer will they be able to rely on subsidies from London. Nor will they be able to blame London for their problems. According to John Fund, a similar dynamic ensued back in the 1990s when the Slovaks separated from the Czechs.

I was in the Slovak capital of Bratislava in early 1993 when Czechoslovakia peacefully broke up. The two halves of the country had struggled for three years after the fall of Communism to stay together, but the Slovaks thought the state was too centered on the Czech capital of Prague, and the Czechs resented subsidies and over-representation of Slovaks in key bodies….

Back then, Czechs viewed the Slovaks as more statist and slower to seize economic opportunities than they were. But today, both countries have shown remarkable improvement in the Heritage Foundation’s Index of Economic Freedom; and last year, Slovakia’s economy grew by 2.1 percent…

“We are doing very well,” Miroslav Lajcak, Slovakia’s deputy prime minister, told the BBC last year. “The Czech republic is doing well, and our friendship is better than ever,” he said.

Slovakia’s population of 5.4 million is almost precisely that of Scotland, and its success shows how small countries can do well on their own.

And finally, as if any further confirmation were needed that the UK is a nation off its collective rocker, 16-year-olds will be allowed to vote on the referendum.

Even though 16- and 17-year-olds account for only 2.5 percent of eligible voters, they could make the difference in a close vote. Polls show that they are the most eager for independence.

Because video-game-playing 16-year-olds are known for carefully thinking through difficult questions of national sovereignty and political constitutions.

For hundreds of years, Scotland’s warrior class battled in vain to make their country independent of England. How remarkable that what legendary Scots such as William Wallace, Robert the Bruce, and Bonnie Prince Charlie all failed to achieve through blood and iron might now be accomplished by 16-year-olds with ballots.