Last September I published a piece about postal banking with a link to an article by Public Banking’s Ellen Brown. Since that time, the Inspector General of the US Postal Service published a study of the feasibility of adding banking services to the millions of post offices around the country. The most shocking fact contained in this article published in the New Republic is that 68 million Americans are unbanked or have otherwise insufficient commercial banking services. This article reports that the study also found that these Americans pay an aggregate of $89B annually in excess interest and fees as a result of their lack of access to competitive commercial banks. This amounts to an average of 10% of income for those 68 million Americans.
What does all this have to do with investment advice, you might ask. As I pointed out in my earlier post, the financial markets (where the vast majority of investors invest) are not the economy but they are closely linked to it. In times of economic contraction, the financial markets usually decline. Therefore, economic growth has a positive impact on financial markets (usually) and that makes for growing investment portfolios. Providing tens of millions of households with access to financial services will help stimulate economic growth through lower borrowing costs and fees. How? Much of that $89B now lost to excessive interest and fees will now become disposable income to the unbanked; boosting consumer demand for goods and services.