Going Cashless is Closer to a Reality Than Many Think, Maxwell Arias Explains
A cashless society would mean that debit and credit cards are used for everything. There would be no paying people cash under the table. There would be no coins to throw into a fountain for good luck. Maxwell Arias, a finance graduate from The Wharton School explains what a cashless society would look like.
Maxwell Arias first explains that going cashless means that the government would have the ability to see every transaction. Everything is digitized. A person wants to use a credit or debit card, every transaction is linked to their bank account. Even the argument of using decentralized currency, such as Bitcoin, is still traceable.
Using cash allows people to conduct business in a way that is untraceable. People can choose to work under the table without having to report their income to the government. People can choose to commit various crimes and be paid with cash that the government does not know about. Maxwell Arias explains that cash can be seen as both good and evil.
While some argue that a cashless society means that people cannot earn “extra” money or sell assets for quick cash, Maxwell Arias has a rebuttal. There are many ways in which people can exchange money quickly without having to write checks. Companies like Zelle, PayPal, and Venmo make it easy for people to pay one another using their mobile devices. It allows children to earn money at a lemonade stand. It allows homeowners to make quick money at a garage sale. Maxwell Arias explains that having these solutions can make it easier to go cashless.
Particularly with the pandemic leading to a change shortage, it is showing how going cashless can be a reality faster than many realize. Many stores don’t want to deal with having to short their customers because of not having a few coins in the register. As such, signs are appearing in stores around the country saying that they are accepting the cards only.
Cash is already becoming obsolete. In the pandemic, people don’t want to touch cash. It can contain too many germs. By going cashless, it also means a contactless form of payment. People can tap a credit card onto a machine or scan a Venmo QR code without having to touch anything, Maxwell Arias explains.
While going cashless means that there’s a record of every transaction, it can reduce crimes. Maxwell Arias explains that the future of cashless may or may not be in cryptocurrency. However, many of the arguments that people have of why going cashless is bad are easily disrupted, Maxwell Arias explains.
2020 has been a year like no other in American history, and we cannot yet know what major effects still lie down the road from COVID-19. One thing we can be certain of, however, is that the stimulus sent to Americans as relief from the financial squeeze of mass unemployment will affect the economy in both the short and long term. However, a thorough analysis of the stimulus by those with backgrounds in economics, like Max Arias of the Wharton School, reveals that there’s some evidence to show that the long-term effects may not be what we think. Specifically, Maxwell Arias has ideas that the spending might not hike inflation, a major concern of some economists.
The link between stimulus and inflation is fairly clear on paper, says Max Arias: more money pumped into the economy as emergency relief means that each individual dollar is worthless, just like how nobody is willing to pay $100 for a gallon of milk when each grocery store has hundreds and hundreds of gallons. This relationship is primarily based on the economics of the 1970s, when monetary policy was upended and governments began to pump more dollars into flagging industries, resulting in the “stagflation” where dollar values dropped while salaries stayed flat. Yet Maxwell Arias explains that this isn’t necessarily the case this time, for several key reasons.
First and foremost, the demand for goods has dropped with the over availability of money, meaning that prices must come down because fewer consumers are willing to spend. With purse strings tight, explains Max Arias, inflation will be limited, since household budgets are shrinking due to cut wages and jobs, meaning that there are not as many people pursuing consumer goods. Additionally, the COVID-19 pandemic is global instead of local, meaning that investors are looking for safe havens as economies across the globe dip, and the historical strength of the American dollar and the American economy make it an attractive investment target. Thus, says Maxwell Arias, we have less to worry about in terms of inflation than we do about the speed of the economy reopening.
It remains to be seen whether the economy can re-capture most of the losses in the first half of 2020; some project it to be strong going forward, while others say it may take years to make up the difference. If the economy grows strong, inflation is more likely as demand rises, but gains over a longer period of time are more likely to keep inflation modest, as it will dampen overall spending patterns. Or, in other words, if dollars are kept in pockets, they will retain their value; but if dollars are spent on the market, their value will drop.
Learning About Finance Can Fight Wealth Disparities Across Various Groups and Communities explains Maxwell Arias
Wealth disparities are found all across the country, particularly among Black and Latino communities. These wealth disparities are generational. Maxwell Arias, a student at The Wharton School, explores how financial literacy can be used to combat the disparities.
“Having a strong grasp on personal finances and ways to save, budget, and invest from an early age may be the best way to combat intergenerational wealth disparities. A savvy propensity to save and invest could start ameliorating some of the wealth disparities that have arisen through certain groups having better access to property and education for generations,” explains Maxwell Arias.
According to Pew Research, there is a black-white income gap of approximately $33,000 – and that has grown from $23,800 in 1970. When many Black communities are asked about their financial literacy, they come up short. This is why Maxwell Arias explains the importance of teaching financial literacy.
Additionally, when looking at surveys conducted by the FDIC, those who lack access to loans and banking services are disproportionately Black and Hispanic. Although the numbers are declining year after year, the numbers are considerably higher in those two groups in comparison to Asian or Caucasian background. Maxwell Arias argues this is in part due to a history of discriminatory policies such as redlining.
Often, certain groups aren’t taught about the importance of saving and investing. “Instruments like exchange-traded funds are great ways to get access to market returns without taking on the risks and ambiguities of actively managed investments which often turn away novice and first time aspiring investors,” says Maxwell.
Additionally, financial literacy can be used to overcome many of the generational crutches. Maxwell Arias points out that many people who make a lower income are on welfare and other government subsidy programs. In certain circumstances where opportunities are sparse, it can be argued that they are on such a program because their parents and grandparents were on the same programs.
“Through financial literacy and a long term investment outlook,” Maxwell Arias argues, individuals can potentially set up a path towards future financial stability. They will have the ability to manage a budget, pay bills on time, improve their credit score, and become a homeowner. It can also lead to understanding how to pay for college and plan for retirement, leading to higher earnings and a better overall quality of life.
Max Arias of Wharton School has been trying to communicate the importance of financial literacy to his friends and family members for years. This concept is one that he believes could help fight income disparity, particularly between the generations. Intergenerational income disparity is a significant problem, Max Arias of Wharton School feels and is one that financial literacy courses could easily correct if implemented properly.
The Nature of Financial Literacy
Financial literacy is a term that defines how well a person understands various factors of financial health. For example, Max Arias of Wharton School states that people who know to set up a savings account or an IRA to prepare for retirement have a high level of financial literacy. Unfortunately, these ideas are not always learned well by people and may impact generations of individuals.
This problem is compounded by the fact that these types of lessons are not being taught in schools well enough, Max Arias of Wharton School believes. If students don’t learn these financial literacy lessons from their teachers, they may not learn from their parents. Max Arias of Wharton School states that parents with poor financial literacy – such as those who don’t prepare for retirement or who spend too much without investing – will pass on bad habits to their children.
As a result, these individuals are likely to stay within the lower-income range into which their parents fall. This type of intergenerational income disparity is devastating, Max Arias of Wharton School says, because it is leaving millions of people stuck in very challenging financial situations. That’s why he believes that financial literacy initiatives are so important for these individuals.
Why Max Arias of Wharton School Believes in Financial Literacy Initiatives
A growing movement for financial literacy initiatives has helped to narrow the income disparity gap a little, Max Arias of Wharton School says. These initiatives reach out to people in lower-income areas and teach them and their children better ways to save. Some of these people may not have a lot of money to save, but Max Arias of Wharton School believes anybody can benefit from these initiatives. He says:
“Having a strong grasp on personal finances and ways to save, budget, and invest from an early age may be the best way to combat intergenerational wealth disparities. A savvy propensity to save and invest could start ameliorating some of the wealth disparities that have arisen through certain groups having better access to property and education for generations.”
For example, Max Arias of Wharton School believes that teaching children how to budget and avoid unnecessary purchases at a young age can help them prepare for the future. And by understanding better investment skills through financial literacy initiatives, Max Arias of Wharton School believes that anybody can succeed and move past the financial limitations placed on them.
Even Though States are Opening Back Up, Supply Chains Will Continue to Be Impacted, Says Maxwell Arias
All across the United States, states are starting to open their economy again. COVID-19 is still prevalent, it states feel as though they have no option but to open. Safety precautions are in place, yet supply chains will continue to be impacted long-term. Max Arias of Wharton School has been a teacher’s assistant within the finance department and explains why the supply chain will continue to be damaged.
Maxwell Arias believes that many companies will see a significant disruption within the global economy as well as the supply chains, particularly those conducting business in China. He believes that many of the “essential” industries will see their supply chains move into a protectionist model over the next two years. Such industries include those that provide medical devices, active ingredients in pharmaceuticals, and more.
Many studies suggest that governments may start to offer financial incentives to improve cost structures so that supply chains remain local. With having to rely less on China over the past several months, supply chains have been significantly impacted. Although many US-based companies are starting to produce locally, they cannot keep up with the demand as of yet.
Maxwell Arias suggests that there may be greater pressure on some of the large tech companies, such as Apple, to switch to a “make where you sell” model. This would mean they would need to start manufacturing in the United States.
There is the belief that the Chinese communist government covered up the virus for several months prior to when it was released into the press. As such, there is already a significant amount of tension and increased skepticism. Many companies don’t want to go back to their traditional supply chains. As such, Maxwell Arias explains that this will lead to separate themselves from China. With so many supply chains starting in China, it will disrupt everything. It will cause many companies to look at US-based companies as well as other companies outside of communist China.
Unfortunately, many US factories cannot start producing immediately. It can take time to get the necessary supplies, templates, and more. Additionally, many factories are still struggling because of not having enough staff for the virus.
This is where Maxwell Arias warns that it could take a significant amount of time before supply chains start to level out again. It could take months or even years for some companies to get all of the supplies that they need in order to make a full switch to the “make where you sell” model.
Maxwell Arias continues his studies in finance and believes that financial literacy is critical to understanding behavioral economics. The pandemic has helped to identify problems within the supply chain and may be what the United States needs to strengthen its economy.
Max Arias of The Wharton School of Business Discusses the Macroeconomic Relationship Between USA & China
By all accounts, Max Arias is one to watch as he enters employment in the finance industry. After securing his Bachelor of Science degree in Economics from the Wharton School at the University of Pennsylvania this spring, the financial sphere will have a well-rounded asset in Maxwell Arias. He offers his take on how America can dig itself out of the economic trench created by the COVID-19 pandemic. A fresh and innovative approach to the problem is related by Max Arias.
Max Arias Suggests that the Macroeconomic Relationship is Crucial
Simply stated, Max Arias proposes that the $1 trillion debt the US owes to China should be fundamentally restructured. This punitive measure is a direct response to China’s failure to warn America and the world about the virus in a timely fashion. In fact, Maxwell Arias asserts that China should have warned the world at least three weeks earlier given what is known about the timeline of their research. This lag undoubtedly has caused catastrophic death tolls and economic woes. Max Arias suggests that America begin institutional shifts in risk preference toward safer yields in the form of treasuries, as opposed to public equities.
Max Arias Lends Credence to his Argument
Max Arias supports his argument by identifying the need for timeliness in this macroeconomic endeavor. Currently, the world sees that the virus originated in China, therefore they held responsibility in relating the information, globally. Maxwell Arias states that there is “clear negligence”, on the part of China in their delayed reporting. Max Arias believes that explicitly tying this action to the punitive damages – restructuring the debt – will be seen as a just measure. This will support America’s creditworthiness as seen by the world. If the relationship is not depicted clearly between the punitive action and COVID-19’s impact, it could damage the creditworthiness of the country.
How to drastically reduce the US’ debt service according to Max Arias
This is also a fantastic time to be creative with financial strategy. Releasing the burden of the debt owed to China would allow America to become stronger economically without becoming weaker internally. That is, instead of raising taxes and cutting public services to its citizens, the United States of America can continue to properly support Americans fiscally. China will assume the burden of financial responsibility for one of the worst economic situations since The Great Depression.
Maxwell Arias has taken the time to bring forward a vigorous answer to the current state of America’s economic picture. After much careful study at his soon-to-be alma mater, Max has married his financial strategic acumen and his knowledge of biology in a thought-provoking solution. Unfortunately, with more pandemics to come, we are fortunate to have young, strident visionaries like Max Arias.
In the midst of the COVID-19 pandemic, future global economic activity has become increasingly uncertain. Specifically, there is an ongoing debate about how supply chains might change once the world emerges from this crisis. Max Arias, a senior at The Wharton School has analyzed current global trends in the context of Covid-19 to predict how global supply chains may evolve in response to unprecedented global disruption. Maxwell Arias highlights changes he expects to see on a global scale as world economies adjust to new realities.
Max Arias of The Wharton School believes that most industries will not consider the COVID-19 pandemic to be an anomalous event, but rather a new structural risk of global supply chains necessitates long-term adjustment. He argues that the extent and speed of supply chain movement and economic decoupling away from China depends on several factors including relative cost structures, manufacturing capacities of other nations, and government created monetary incentives. “What is most certain is that supply chains for medical devices and important pharmaceutical reagents will be the first movers. They will either be either nationalized completely or at least shifted to North America,” Maxwell Arias explains. The US government will not tolerate PPE and drug shortages during a crisis because of a foreign nation again.
One adjustment we might see for many consumer goods companies, according to Max Arias of Wharton School, is a switch to a “make where you sell” model in which product manufacturing is moved closer to the United States or other locations where products will be sold, leveraging automation to offset higher labor costs. This is a potential reaction to increased skepticism toward the Chinese government given news that they covered up the severity of the COVID-19 virus for several months, and may not have ever provided a full picture of the virus on China.
Decoupling supply chains from China would be a long-term effort, likely taking 5-10 years thanks to how deeply entrenched the country is in the supply chain. But we may start to see things move in that direction as companies consider the best way to avoid potential economic disasters in the future. Maxwell Arias sees this as a positive move for many businesses looking to ensure long-term security. Over the next few years companies will be even more interested in moves the Chinese government makes that either support or suppress business interests.
Despite the negative aspects of having a supply chain deeply rooted in the Chinese economy, and the harsh realities of those ties that have been revealed lately, there are still reasons for businesses to consider maintaining ties with China. As Max Arias of Wharton School points out, the qualities that drew companies to China in the first place may be the same qualities that keep them there. Significantly lower cost structures allow for cheaper production in China compared to most other countries, and those cost savings can make or break some companies. The decision each company will need to make is whether the benefit of lower prices is worth the risk of supply chain disruption if another situation similar to the COVID-19 pandemic arises.
Maxwell Arias lends his expertise in global supply chain economics to an analysis of the current COVID-19 pandemic. Max Arias believes that the scenarios that have emerged in the last few months and the level of disruption experienced by many industries will cause many companies to begin transitioning away from reliance on China as part of their supply chain.