It is a common refrain. We cannot spend our way out of the recession. More particularly, the government cannot spend our way out of the recession. It should be the commercial world that leads the charge and helps pull us our of this recession. The problem is that there are not a lot of corporations who are capable of this level of effort. And then this morning we find one company, part of a much larger, more powerful industry, actually doing everything it can to work against helping us get out of the recession.
I present Exhibit A, the Bank of America, who announced that they are going to charge a fee of $5/month, per debit card, for transactions. These charges are going to be directly against you, the consumer (WTOP). Now, your first reaction might be that a fee of $60/year is not that big a deal. But let’s look at this in more detail.
First, BoA argues that they need these funds because “the cards increasingly replace cash and as banks look for ways to offset the loss of revenue from a new rule that will limit how much they can collect from merchants.” Come again? The cards replace cash?! Well, should you not be looking at this as a good thing. You do not have to count it either to the consumer or coming back from the retail establishment, you do not have to store it, and you do not have to insure it. Not having to deal with cash, but with ones and zeros should be seen as a good thing. Further, limits on the amount of fees you can collect from merchants is actually a good thing. It will bring more merchants into the system because they can accurately calculate the cost of the service. So I am not quite sure I am grasping the BoA’s rational.
Second, there is nothing to prevent them from increasing these fees without warning or appeal. And if you think that will not happen, let me introduce you to the nickel and dime operations of airlines, who have made fees an art form.
But more importantly, here is the banking industry, making huge profits through not paying interest on savings, while charging outrageous interest rates on what few loans they are making, is illustrative of the pure greed mentality that is gripping the United States today. People will continue to pay down debt so as not to be caught paying these fees, and will therefore continue to not spend money. And until these industries stop acting like spoiled children and start acting to the benefit of the economy, we will continue to be mired in the recession we are in. Whether or not the economists agree that it is technically a recession is not even an issue.