This week, the U.S. Postal Service is threatening to default if Congress does not give it more of our money, while the Office of Financial Research is considering requiring financial companies to turn over your trading and transactions data. When will these dinosaur ideas of centralized mail and money finally go extinct?
Three decades ago you would wait anxiously by your mailbox for important correspondence. Today you can email, fax, text, IM, Skype, Vox, FaceTime, call or poke instantly. Three decades ago you might have even placed trading orders by mail. Today, high frequency trading has come to dominate finance. Professional market makers operate at lags where the speed of light is a legitimate annoyance.
The only things that haven't sped up much in that span are government functions. There are about as many post offices today as there were 30 years ago – still more USPS locations than all McDonald's, Burger King and Wendy's restaurants combined. It should come as no surprise that they are now threatening to default unless we pony up more money to support their forced monopoly.
What about banking, which for a century has been a kind of public-private hybrid? It has seen delightful innovation in some sectors, particularly derivative securities, drive-through ATMs and automatic remote check deposits through iPhones. On the other hand, banks have also gotten more bailouts than the post office would ever have the temerity to ask for.
So are banks today as quasi-governmental as the mail or simply as regulated as any other large business sector?
Here's a simple test: try some basic banking tasks, such as opening an account, depositing funds, or taking out a loan. Then offer to pay to make it go faster. When speed is not an option at any price, you're probably dealing with a branch of government.
With anti-money laundering rules, opening an account can be a hassle of bureaucratic proportions. Know-your-customer rules force bankers to shake you down and try to find out what you pay in rent, earn in income, who you work for and where and other totally unnecessary intrusions.
Try getting a mortgage or any other loan in less than a month. A month!
And despite all the astronomical increases in communication and network quality and speed, go ahead and deposit a check for a few thousand dollars and see when that money becomes available. That glacial pace hasn't changed much in half a century.
Checks still go through all sorts of regulatory and bureaucratic hurdles before you can take the cash. Fund availability needs to be verified. The Federal Reserve occasionally needs to be involved. Some transactions need to be reported to the U.S. Treasury. Virtually anything over $10,000 must be separately reported and tracked by the government. Anything that anybody on earth could conceivably label “suspicious” must be separately reported. And that's the fast track compared to what happens if there's an international party involved.
There are certainly ways around the bureaucracy, just like there are ways around Internet censorship. Digital currencies such as Bitcoin transmit value instantaneously. High frequency banking is possible.
Regulators might argue that HFB could aid everybody, including criminals. Well, so can oxygen. That doesn't necessarily mean it ought to be regulated. And it certainly doesn't mean it ought to be forbidden.
You should be able to do with your money anything that you could otherwise do with your time. That's the essence of liberty and property rights. It's basically the definition of money: someone gave you something in exchange for your time, and you'd like to exchange that for something else. If Federal Reserve notes do not fulfill that function, then perhaps their enforced monopoly on their brand of currency needs to be scrapped.
