37
votes
There used to be a people’s bank at the US Post Office
Link information
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- Title
- A People's Bank at the Post Office - JSTOR Daily
- Authors
- Matthew Wills
- Published
- Apr 16 2024
- Word count
- 768 words
And it might again, someday. People have been advocating for bringing back postal banking for a long, long time. Here’s an example of arguments for how it might help impoverished communities
With the push to cashless it makes even more sense.
I completely understand why businesses want to go that way. Don't have to worry about counting drawers, incorrect amounts, bank drops, or even theft if there's no cash on hand. But it's also a huge impediment to the same people the paper talks about.
For reference, the initial deposit limit is ~$16K today, and the expansion became ~$52K.
The data last collected by the Federal Reserve in 2019 places the US average household savings at $41,600, with a median at $5,300. This implies that the vast majority of Americans could be serviced by the Postal Savings System’s initial configurations (adjusted for inflation). It’s also likely those numbers are more optimistic than more recent studies suggest.
The 2% interest rate is also something unheard of today as most savings accounts offer 0.5% at best, putting high yield savings accounts aside (which most poor Americans wouldn’t use anyways). People probably shouldn’t use a savings account as an investment vehicle, but it’s hard to argue against the security of a government-backed bank.
I’m a big fan of the US Postal Service and I despise the constant attempts to make it unprofitable as a way to justify the privatization of it. It provides better services than its private counterparts (e.g. true last-mile delivery, PO Boxes, Informed Delivery), and has a crazy cheap cost (the recent stamp increase to 73¢ is still far cheaper than every alternative), especially given its connection to the global Express Mail Service Cooperative (servicing 180 countries).
The idea that Republicans bandy about, that we should disband one of the fundamental services baked into the US Constitution (due to Ben Franklin, nonetheless), is abhorrent to me. It’s arguable that the USPS’s ubiquity and government backing is what powered the US’s prominence as information needed to travel at an increasing pace on the run up to the Information Age we currently live in.
This banking “side-gig” also seems to have supported Americans during a period that had the most economic strife as well. I’m all for bringing it back, and the cursory research I did to write this comment has only solidified my opinion that the USPS is a net-benefit to society, and can do even more if we just don’t let private interests get in the way.
So I will ask something that Google has not given me a good answer (probably because of SEO spam) but are there any legitimate orgs or movements one could join to try and bring back postal banking?
I learned about this years ago and thought it was such a brilliant idea and I never understood why it was never reimplemented.
I believe it was part of what Bernie Sanders campaigned for and possibly Elizabeth Warren.
I don't know about organizations but I want there to be something
Stablecoins are the new postal banking imo, 24/7 banking with near instant global settlement
How about fraud protection?
FDIC?
Accepted at all retailers and utility providers?
Qualified for direct deposit of paychecks?
Banking provides a lot more benefits besides not having to carry cash around.
this is a policy level decision; the purpose of cryptocurrency is simply to provide mechanisms for attestation and auditability. aside from that, all of these are just one problem (not to minimise that problem): adoption. the banking system is successful today not because of any particular technical merits, but simply because it's already successful
I don't understand the first two, why do I need fraud protection or FDIC if I self-custody?
This where dollars and dollar-based credit systems win in all cases, they have the deepest liquidity in global markets. But its easy enough swap out of e.g. USDC to dollar-credit when needed until more adoption of onchain payments is accepted.
You can opt out of ACH and into USDC for pay. There are plenty of companies that do this. Here is one that put it right in the job description:
"Compensation options include payment via USDC-SPL or several fiat currencies."
https://jobs.solana.com/companies/triton-2/jobs/35968289-senior-full-stack-ruby-on-rails-software-engineer
Agreed. I think its useful to have a bank to use as an on/off ramp. You'll also need a bank for undercollateralized loans. Personally I keep very little personal funds in my bank, just enough to cover mortgage and credit card bills. Excess funds I keep onchain where I own it. I also mainly try to do USDC transfers over wire transfers, after having a couple instances of wire transfers "getting lost" and having a headache with the banks to resolve those issues.
For a huge number of customers, a bank’s primary and often only purpose is a safer, more comfortable alternative to stuffing cash under the mattress.
You might be comfortable installing and securing a proper safe and keeping your assets in bullion (literal or metaphorical) - you might even consider it preferable - but the vast majority of people absolutely do not want to deal with that, or with its digital equivalent.
Even at the most basic practical level, I’d expect to pay a lot more in disaster insurance if I’m looking after my own valuables rather than leaving it to the professionals with centralised security.
Right, someone could absolutely compromise my bank account. My bank might even turn out to be insolvent during a crisis. For those situations where there is counterparty risk with the bank I absolutely want fraud protection and FDIC receivership.
Because you bring up the possibility of the global aspect: Last I heard, cryptocurrency (of any kind)’s throughput was still far below the required levels necessary for global, mainstream adoption. And not just slightly – IIRC, it was on the scale of ≈10,000 transactions per second with the highest-performing cryptocurrency (I forget which one but keep in mind that wasn’t necessarily a stablecoin)… compared to e.g. the VISA card network, just one portion out of credit card, cash, checking etc. systems, capable of >100,000 tps.
Has that changed?
Furthermore (as you may be able to tell, I haven’t looked into the topic at all for a few solid years), are the most popular stablecoins now underpinned by proof-of-stake or still proof-of-work? If it’s the latter, I can’t imagine the energy requirements to be low enough for making cryptocurrency a feasible alternative or even the day-to-day main payment option for billions of to-be users…
VISA is doing research on Solana as the high-throughput general purpose blockchain for payments.
https://usa.visa.com/solutions/crypto/deep-dive-on-solana.html
USDC works on (I think) over a dozen networks now, all proof-of-stake. But just an FYI, transaction volume doesn't have a linear effect on energy spend in proof-of-work. PoW energy spend is a function of difficulty adjustment and block confirmations (blockspace production). Implied energy per transaction goes lower the more transactions are aggregated into a block, rather than higher. It's like a dishwasher, adding more plates doesn't increase the energy pull per wash cycle, it just makes energy-per-plate lower.