Products buy products. If this basic truth were understood, a lot of awful legislation and rulemaking could be avoided.
Which is why it’s important to press on the point. When you walk into a small neighborhood store, to a Walmart or Target, or into a restaurant in Rome, what you get is an exchange of the goods, services, management skills, or knowledge that you bring to work each day, all in return for what you don’t have.
Some will say that money buys things, but money, purchasing power, and credit are an effect of what we produce on the job. While economists imagine that consumption powers economic growth, the truth is that there’s production and there’s nothing else. Money is the reward for production, and it positions us to once again exchange our production for the myriad products and services we don’t have.
Where it becomes exciting is in the globalized nature of our exchange. Translated, we can transact anywhere in the world seamlessly. Stop and think about what a miracle this is.
The owners of the businesses don’t know us, but with debit or credit cards we can exchange our production for the world’s plenty. No background checks, no calling of banks, nothing. It’s all so easy, which is the crucial point as regulators and legislators try to figure out what to do with a paused Rule 1033. A Joe Biden-era decree by then-CFPB head Rohit Chopra, the Rule unwittingly and obnoxiously decreed this remarkably sophisticated and wildly expensive payments system free for others to access.
Forget that the biggest U.S. banks have spent billions creating a globalized payments system that positions their customers to transact locally and around the world with ease, regulators mindlessly decreed costless what enables so much global exchange. We produce to get, and financial institutions have made the getting limitless.
Which speaks to the danger of the Rule. As domestic and global production grows, so will grow a vast array of businesses eager to connect to these expensively produced payments systems. Which is a beautiful thing. A world populated by growing amounts of producers from all four corners seeking to exchange with each other is prosperous, and also quite peaceful. When we have customers around the world, we don’t want to be at war anywhere in the world. Get it?
Just the same, as businesses of all stripes and apps of all stripes proliferate, so will scammers of various stripes. While 99.99% of us exchange products for products, there are always going to be non-producers feverishly devising ways to fraudulently relieve the productive of what they’ve earned.
Which means that the financial institutions behind the global payments systems will have to be even more vigilant about fraud, more creative when it comes to detecting it, and invest more in human and physical capital to keep the payments systems equal to an increasingly prosperous world. Stating the obvious, payments systems capable of conveniently bringing the world together economically will cost more and more as a reflection of an urgent desire among financial institutions to protect their customers.
It's a reminder that what safely binds the world doesn’t come cheap. Which is why Rule 1033 must remain on pause, and ideally put out to pasture altogether. Its existence implies that banks “didn’t build that,” and that if they did, it didn’t cost anything. Except that miracles are never cheap. How dangerous for government officials to pretend they are.
