Breakfast with Herb & Mike

Father and son have much in common including an interest in finance and investing. They are avid readers and share their research, coach each other and compare notes. While Herb has more time in the market, Mike is a quick learner and has found success even in these volatile times. And so, the journey of breakfast with Herb and Mike continues…

Mike: Let’s talk about money and how its form has changed over your business career. Tell me how you were paid when you were a young man.

Herb: When I was in the Air Force, we reported to the paymaster each week and he counted out what we were owed. It didn’t change much when I went to work at the police department. The station was on the first floor of City Hall and every two weeks staff from the City Chamberlain’s office would come downstairs with a box of money, we would get in line and they would count out our pay.

Mike: Then what?

Herb: We would take our cash, go to a bank and deposit it. Bank checks were the way almost everyone paid their bills in those days. To buy things, we carried a roll of money.

Mike: When did credit cards come into use?

Herb: Their use came about slowly. In the 1960s there were cards issued by retailers that could only be used in their stores. Cards issued by banks became common by the mid-1990s, but it took years before most people had one.

Mike: I remember how those first cards were processed. A store had a little machine that required a clerk to insert a carbon form and then swipe a bar across it to make an impression of your card. Then you needed to sign the form and it was submitted to the store’s bank in the bag with its daily deposits.

Herb: There was no fee to use credit cards in the early days. They were really charge cards and you had to pay them off completely each month.

Mike: A lot has changed since those days. Today most people have at least a debit card, and likely, a credit card as well. And using a card has become easier. No more carbon forms and bank deposits. Today we slide our card into a machine or, if a store’s technology is ready for it, we just tap our card and our payment is transmitted electronically. If I buy a cappuccino at Starbucks on my way home, the charge will show up in my account before I get there.

Herb: Technology has impacted financial transactions in many other ways too.

Mike: ATMs sure made money more available. If you needed cash, you used to have to go to a bank between 9 am and 3 pm Monday through Friday, to make a withdrawal. The idea of being able to access your account 24 hours a day, seven days a week was incredible. And then in recent years, ATM machines started showing up at all kinds of locations — restaurants, convenience stores, gas stations — not just at banks. There is a fee to use the independently owned ATMs, but people are willing to pay for the convenience.

Herb: Another advantage of new technology was direct deposits of paychecks that made things easier for employers and employees.

Mike: You’re right about that. I remember having to run to the bank on my lunch hour to deposit my check. In effect we have gone from a time when cash was king to an economy that is virtually cashless. Gone are the days when you had to stop at a toll both when you were traveling on a major highway. Now it’s likely there will be an electronic pass on your windshield and it will be scanned when you drive through a check point. Another way we have gone cashless is at sporting events and concerts that are held at large venues. All transactions at those places are paid for with credit cards. No money changes hands.

Herb: I read an article recently that predicted we will see a significant increase in the use of crypto and digital currencies in the near future. I don’t know enough about either one to know whether that will be good. What do you know about them?

Mike: Not much. Sounds like a good topic for us to research. But what I do know is that change is inevitable. In your lifetime you’ve gone from being paid with money that was carried around in a box to waving a piece of plastic to make a purchase. The evolution of money has been amazing, scary, exciting.