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People in many of the world’s most advanced nations — including the United States, the euro area and Japan — are holding more of it than ever. In the U.S., for example, currency in circulation stood at an estimated $1.76 trillion as of late September, according to the Federal Reserve. That’s about 8.2% of gross domestic product, up from just 5.6% before the 2008 financial crisis and close to the highest level in at least 36 years. Los Angeles Times reports:
If people need less cash to pay for stuff, why do they want to hold so much of it? The answer, it seems, is that they’re turning to currency as a store of value.
Consider the kind of cash they favor: Increasingly, it’s large denominations such as $100 bills, which are the most convenient for stashing away big sums. Benjamin Franklin’s share of total U.S. currency in circulation reached 80% in 2018, up from 73% a decade earlier, Federal Reserve data show.
Since 2017, the $100 bill has surpassed the $1 note as the most widely circulated U.S. currency…
When safe investments such as deposits or government bonds yield little or less than nothing, people aren’t missing out by holding paper money. This illustrates why central banks can’t push rates too far below zero: Instead of spending the money or watching their savings shrink while sitting in the bank, people will just withdraw their cash and put it in the mattress.
The number of rich Chinese has surpassed the count of wealthy Americans for the first time as both countries keep churning out millionaires, a study by Credit Suisse showed. The Swiss bank’s annual wealth survey released on Monday found 100 million Chinese ranked in the global top 10% as of the middle of this year versus 99 million in the United States. Reuters reports:
“Despite the trade tension between the United States and China over the past 12 months, both countries have fared strongly in wealth creation, contributing $3.8 trillion and $1.9 trillion respectively,” said Nannette Hechler-Fayd’herbe, global head of economics and research at Credit Suisse.
The ranks of the world’s millionaires have risen by 1.1 million to an estimated 46.8 million, collectively owning $158.3 trillion in net assets, 44% of the global total, the study found.
Goldman Sachs CEO David Solomon called his bank’s rollout of the Apple Card “the most successful credit card launch ever.” CNBC reports:
Solomon provided investors with an update on the bank’s new initiatives at the start of a conference call Tuesday.
“In three short years, we have raised $55 billion in deposits on the Marcus platform, generated $5 billion in loans, and built a new credit-card platform and launched Apple Card,” Solomon said, adding “which we believe is the most successful credit card launch ever.”
Continuing on the Apple Card, which the bank built in partnership with the iPhone maker, Solomon said that “since August, we’ve been pleased to see a high level of consumer demand for the product. From an operational and risk perspective, we’ve handled the inflows smoothly and without compromising our credit underwriting standards.”
The Rockets and the NBA could have stood up for Morey, for decency, and for the protesters and their human rights. More than 2,000 have been injured in months of demonstrations that the Chinese government characterizes as “riots,” but selling sneakers, jerseys, and the game But they instead folded all too readily, all too eager to hold onto the dollars that they glean from the Communist nation. RollingStone reports:
The NBA issued a sorry statement, declaring the league realizes that the tweet may have “deeply offended” Chinese fans and that they “have great respect for the history and culture of China,” as if that had anything to do with a bill that could be used to disappear journalists and critics of an autocratic regime. Morey, who The Ringer reports was at one point in jeopardy of losing his job, tweeted his own apology that read like it was dictated by his boss. Brooklyn Nets owner Joe Tsai, a co-founder of Chinese e-commerce conglomerate Alibaba, published an open letter on Facebook that referred to protesters as a “separatist movement.” Even James Harden, the Rockets’ star guard, issued a mea culpa for some reason, even though he wasn’t involved.
That last bit of rank submission to an autocratic regime captured the full extent of the NBA’s sellout to China. Several politicians on the left and right, including presidential candidate Julián Castro and Rep. Ben Sasse (R-MO), called out the NBA’s cowardice. Even Rockets fan Ted Cruz took a principled stand:
As a lifelong @HoustonRockets fan, I was proud to see @dmorey call out the Chinese Communist Party’s repressive treatment of protestors in Hong Kong.— Ted Cruz (@tedcruz) October 7, 2019
Now, in pursuit of big $$, the @nba is shamefully retreating. https://t.co/7waMde5KrM
CNBC also reports:
China’s increasing economic engagement with the free countries of the West was supposed to open the country up to more democracy and freedom. Instead, the overwhelming evidence shows the government in Beijing has used its growing wealth and economic influence to suppress the population even more, build up its military to antagonize more of its neighbors, and increase its repressive influence abroad with massive infrastructure programs that actually translate into high-risk debt for the takers.
The first data from an experiment in a California city where needy people get $500 a month from the government shows they spend most of it on things such as food, clothing and utility bills. Associated Press reports:
The 18-month, privately funded program started in February and involves 125 people in Stockton…. But critics say the experiment likely won’t provide useful information from a social science perspective given its limited size and duration. Matt Zwolinski, director of the Center for Ethics, Economics and Public Policy at the University of San Diego, said people aren’t likely to change their behavior if they know the money they are getting will stop after a year and a half. That’s one reason why he says the experiment is “really more about story telling than it is about social science.” Plus, he said previous studies have shown people don’t spend the money on frivolous things. “What you get out of a program like this is some fairly compelling anecdotes from people,” he said. “That makes for good public relations if you are trying to drum up interest in a basic income program, but it doesn’t really tell you much about what a basic income program would do if implemented on a long-term and large-scale basis.”
The researchers overseeing the program, Stacia Martin-West at the University of Tennessee and Amy Castro Baker at the University of Pennsylvania, said their goal is not to see if people change their behavior, but to measure how the money impacts their physical and mental health. That data will be released later….
Since February, when the program began, people receiving the money have on average spent nearly 40% of it on food. About 24% went to sales and merchandise, which include places like Walmart and discount dollar stores that also sell groceries. Just over 11% went to utility bills, while more than 9% went to auto repairs and fuel. The rest of the money went to services, medical expenses, insurance, self-care and recreation, transportation, education and donations…. “People are using the money in ways that give them dignity or that gives their kids dignity,” Castro-Baker said, noting participants have reported spending the money to send their children to prom, pay for dental work and buy birthday cakes.
Seventeen percent of millennial and Generation Z homebuyers from ages 18-34 regret purchasing a home instead of renting, according to a Zillow survey. These young homebuyers have regrets about their mortgage, saying they rushed through the process. The Mercury News reports:
Speculating as to why, Josh Lehr, industry development at Zillow-owned Mortech, said getting the wrong mortgage may have driven that disappointment. For example, the Zillow survey showed 22% of young buyers had regrets about their type of mortgage and 27-30% said their rates and payments are too high.
Lehr pointed out that 57% of the millennials shopped lenders online. Yet, they didn’t know what they didn’t know regarding the details of various financing instruments and finding the best fit for them.
Personal finance site Kiplinger just released its list of the most and the least tax-friendly states in America. To determine how big of a tax bite each state would take out of your hard-earned cash, Kiplinger used a hypothetical couple with two kids and $150,000 in income a year plus $10,000 in dividend income, and then looked at their income, property and sales tax burden.
Some of the most tax-friendly states don’t have income tax including Wyoming, Nevada and Florida. Tennessee has income tax but it only applies to interest and dividends and doesn’t apply to salaries and wages.
The 10 most tax-friendly states:
7. South Dakota
8. North Dakota
10. New Hampshire
As for the least-tax friendly states, Illinois took the No. 1 spot on the list due to their very high property taxes. Both Connecticut and New York, which have pretty high income taxes, are next on the list. Surprisingly California didn’t crack the top 10 least-friendly tax states due to Kiplinger’s calculation method.
The 10 least tax-friendly states:
3. New York
5. New Jersey
If you had a Yahoo account anytime in 2012 through 2016, a pending class action settlement may affect you.
A Class Action Settlement has been proposed in litigation against Yahoo! Inc. (“Yahoo”) and Aabaco Small Business, LLC (together, called “Defendants” in this notice), relating to data breaches (malicious actors got into system and personal data was taken) occurring in 2013 through 2016, as well as to data security intrusions (malicious actors got into system but no data appears to have been taken) occurring in early 2012 (collectively, the “Data Breaches”).
- 2012 Data Security Intrusions: From at least January through April 2012, at least two different malicious actors accessed Yahoo’s internal systems. The available evidence, however, does not reveal that user credentials, email accounts, or the contents of emails were taken out of Yahoo’s systems.
- 2013 Data Breach: In August 2013, malicious actors were able to gain access to Yahoo’s user database and took records for all existing Yahoo accounts—approximately three billion accounts worldwide. The records taken included the names, email addresses, telephone numbers, birth dates, passwords, and security questions and answers of Yahoo account holders. As a result, the actors may have also gained access to the contents of breached Yahoo accounts and, thus, any private information contained within users’ emails, calendars, and contacts.
- 2014 Data Breach: In November 2014, malicious actors were able to gain access to Yahoo’s user database and take records of approximately 500 million user accounts worldwide. The records taken included the names, email addresses, telephone numbers, birth dates, passwords, and security questions and answers of Yahoo account holders, and, as a result, the actors may have also gained access to the contents of breached Yahoo accounts, and thus, any private information contained within users’ emails, calendars, and contacts.
Plaintiffs claim that Defendants failed to adequately protect their Personal Information and that they were injured as a result. Defendants deny any wrongdoing, and no court has made any ruling in these matters.
Who’s Included? If you received a Notice about the Data Breaches, or if you had a Yahoo account at any time between January 1, 2012 and December 31, 2016, and are a resident of the United States or Israel, you are a “Settlement Class Member.”
What does the Settlement provide? Yahoo has enhanced, or, through its sucessor in interest, Oath Holdings Inc. (“Oath”), continues to enhance security of its customers’ Personal Information stored on its databases. Defendants will also pay for a Settlement Fund of $117,500,000. The Settlement Fund will provide: a minimum of two years of Credit Monitoring Services to protect Settlement Class Members from future harm, or Alternative Compensation instead of credit monitoring for Class Members who already have Credit Monitoring Services (subject to verification and documentation); Out-of-Pocket Costs for losses related to the Data Breaches; and reimbursement of some costs for those who paid for Yahoo premium or small business services. The Settlement Fund will also be used to pay for attorneys’ fees, costs, and expenses, and Service Awards for the Settlement Class Representatives. These are only a summary of the benefits. For complete information, dates, and details on the benefits, visit the Settlement Website www.YahooDataBreachSettlement.
What are my options? In order to receive any benefits, you must file a claim online or by mail by July 20, 2020. If you want to keep your right to sue the Defendants yourself, you must exclude yourself from the Settlement Class by March 6, 2020. If you exclude yourself you will not receive any credit monitoring or monetary relief from the Settlement. If you stay in the Settlement Class, you may object to the Settlement, and/or the amount of attorneys’ fees, costs, and expenses, and/or the amount of Class Representative Service Awards by March 6, 2020. If you do nothing, you will not receive any credit monitoring or monetary benefits but you will still be bound by the Court’s decisions. Complete information and instructions on Filing a Claim, excluding oneself from the Settlement, or Objecting are available on the Settlement Website at www.YahooDataBreachSettlement.
The Court has scheduled a hearing in this case at 1:30 pm on April 2, 2020, in Courtroom 8 of the U.S Courthouse, 280 South 1st Street, 4th Floor, San Jose, CA 95113, to consider: whether to approve the Settlement; any objections; a request for Class Representatives’ Service Awards; and attorneys’ fees, costs, and expenses for investigating the facts, litigating the case, and negotiating the settlement. The motion for attorney fees, costs, and expenses will be posted on on the date it is filed or as quickly thereafter as practicable. You may ask to appear at the hearing but you do not have to.
America’s massive debt will doom us. That’s common wisdom, but wrong. In Manhattan, a giant clock displays not only the total — almost $23 trillion for now — but your share, ticking up every second. Pundits say it’s trouble. But U.S. debt fears have lurked forever and those troubles are no closer now than decades ago. In some ways, they’re further off. Ken Fisher writes on USA Today:
The $23 trillion total seems jaw-dropping, but says little about what really matters: How readily Uncle Sam can pay the piper.
Pundits cite our debt-to-GDP ratio as evidence of a debt addiction. With $21 trillion of GDP, that ratio is 103% — lower than Italy’s and Japan’s, but higher than Germany’s and Britain’s. Debt topping GDP sounds dire. But that’s misleading. The federal government itself owns more than a quarter of U.S. debt, money the government essentially owes itself. It’s an accounting entry. As an asset and a liability, it effectively cancels out. Otherwise, net outstanding public debt is $16.7 trillion— 76% of GDP. That’s still unimportant…
Government solvency isn’t about paying off debt. It’s about affording interest payments and rolling over maturing bonds. Currently, annual U.S. interest payments represent just 9.8% of tax revenues, lower than any time in the 1980s and 1990s, when they peaked at 18.4%.
Scientists at the University of Dundee in Scotland found that hunger significantly altered people’s decision-making, making them impatient and more likely to settle for a small reward that arrives sooner than a larger one promised at a later date. The Irish Examiner reports:
The research suggests being hungry actually changes preferences for rewards entirely unrelated to food and may carry over into other kinds of decisions, such as financial or interpersonal ones.
Benjamin Vincent, who carried out the study, believes it is important that people know an empty stomach might affect their preferences and there is also a danger those in poverty may make decisions that entrench their situation.
Dr Vincent added: “This is an aspect of human behaviour which could potentially be exploited by marketers, so people need to know their preferences may change when hungry.
“People generally know that when they are hungry they shouldn’t really go food shopping because they are more likely to make choices that are either unhealthy or indulgent.
“Our research suggests this could have an impact on other kinds of decisions as well.
“Say you were going to speak with a pensions or mortgage adviser – doing so while hungry might make you care a bit more about immediate gratification at the expense of a potentially more rosy future.”
Paper out now in Psychonomic Bulletin & Review… “Hunger increases delay discounting of food and non-food rewards”— Benjamin Vincent (@inferencelab) September 16, 2019
Massive thanks to my former undergrad dissertation student, Jordan Skrynka who won the 2017 @UndergradAward, Psych section. pic.twitter.com/cGgaRIpxyx
Financial independence, once a hallmark of adulthood, has gone by the wayside as adult children increasingly depend on their parents to help them cover the cost of rent, student loans, health insurance and more. But parents’ desire to give their children a financial assist could be misguided — and even backfire in the long run. Half of American parents are unable to save as much as they’d like to for retirement, and their grown offspring — whom they still count as dependents — are to blame, according to a new Bankrate.com study.
CBS News reports:
Half of American parents have cut back on their retirement savings to help pay their children’s bills, a Bankrate.com study shows.
Parents are putting their kids’ car insurance, cell phone bills, credit card debt and health care costs ahead of their own needs to grow their retirement funds.
Kids miss out on learning to be independent. “When you write your first rent check or car loan check it feels so good to be able to face some problem and fix it for yourself,” says one expert.
Getting rid of debt doesn’t just unburden finances, it takes a weight off the mind that clears up cognitive functioning, lessens anxiety and improves impulse control. MarketWatch reports:
The findings come from researchers at the National University of Singapore’s Social Service Research Centre, who studied almost 200 low-income people who unexpectedly had portions of their long-running mortgage, utility and municipal debts paid down by a charity.
The study found:
• Average error rates in the cognitive function tests fell to 4% after the debt was paid down, compared to a 17% error rate beforehand.
• The proportion of participants showing generalized anxiety disorders went from 78% to 53% after the debt relief.
• Numbers of people showing so-called “present bias,” which favors instant gratification, dropped to 33% from 44%, a sign that their impulse control had improved.
The average size of mortgages U.S. consumers were looking to obtain to buy a home or to refinance one hit a record high of $354,500 last week, suggesting resilience in the higher end of the housing market, the Mortgage Bankers Association said on Wednesday. Reuters reports:
On the other hand, the rise hints that first-time buyers face a challenge in finding their home of choice heading into spring, which is typically the busiest time of the year for home sales, the Washington-based industry group said…
The average interest rate on 30-year fixed-rate mortgages with conforming loan balances of $484,350 or less decreased to 4.64 percent from 4.67 percent.
Most other fixed mortgage rates that the MBA tracks fell by 0.05 to 0.06 percentage point last week.
However, interest rates on 30-year “jumbo” mortgages with loan balances greater than $484,350 averaged 4.45 percent, up from 4.41 percent the week before.
A study of bankruptcy filings in the United States showed that medical expenses contribute to two-thirds of bankruptcy filings in U.S. For many Americans, putting one’s health first can mean putting one’s financial status at risk. Study Finds described:
The study, led by Dr. David Himmelstein, Distinguished Professor at the City University of New York’s (CUNY) Hunter College and Lecturer at Harvard Medical School, indicates that about 530,000 families each year are financially ruined by medical bills and sicknesses. It’s the first research of its kind to link medical expenses and bankruptcy since the passage of the Affordable Care Act (ACA) in 2010.
“Unless you’re Bill Gates, you’re just one serious illness away from bankruptcy,” Himmelstein says in a release by the Physicians for a National Health Program. “For middle-class Americans, health insurance offers little protection. Most of us have policies with so many loopholes, copayments and deductibles that illness can put you in the poorhouse.”