Monthly Archives: February 2016

Ever Seen a Million Dollar Brick?


February 22, 2016

Low and even negative interest rates are causing pain for people around the world. I talk to investors daily who express frustration at earning a few cents each month for cash balances on their checking accounts. I have a “premium preferred interest checking” account that is paying 0.01%; so a $10,000 balance earns me 10 cents in a year! Maybe we should stop complaining. Banks in some certain countries are beginning to charge their customers to keep cash in their checking accounts. I wonder what I would do if that ever happens here.

One story this week demonstrates the actions some people will take when faced with negative rates. Recently the Swiss banking authorities lowered their overnight rate from negative 0.35% to negative 0.50%. In other words, a million Swiss francs deposited in a Swiss bank account will now cost the depositor $5,000 a year. As a result, some depositors are saying, “Enough with the safety of the bank. Let me just keep the money in cold, hard cash”. It was reported this week that the demand for the thousand Swiss franc notes is so great that banks are running out. Apparently bundles of cash in this denomination are being held in the form of “bricks”.

You might know that the use of the expression “brick of cash” is popular in rap music, but it is also now being used in the global banking community. Let’s look at what a “brick” means. A hundred notes of any currency are referred to as a “strap”, and ten straps are commonly known as a brick.  In other words, a brick is a thousand notes. Given this stack of bills is about the size of a building brick, the source of the term becomes obvious. So a brick of one-dollar bills is equal to $1,000, and a brick of $100 bills is $100,000. For those interested in transporting large sums of money (none of whom read this column), a standard briefcase will hold about seven bricks of cash, which in total weigh about 15 pounds.

So back to Switzerland – where some investors are opting to take cash out of their negative interest paying accounts, and bricks of money are the device of choice. The Swiss have a thousand franc notes, so an investor can very easily walk out of a bank with a brick of one million Swiss francs. Moreover, as noted above, a standard briefcase can discretely carry seven bricks. With the current exchange rate against the dollar close to parity, that means they can easily transport about $7,000,000!

Just as the million franc brick gains appeal, we hear that the US Fed and Treasury Department are considering getting rid of the $100 bill. Could this really be the end of Ben Franklins – what an outrage! Part of the proposed rationale for eliminating large bills is that they are the denomination of choice for illegal activities. I understand the argument, but if negative interest rates hit the US, some law-abiding investors may well start thinking about the benefits of holding their cash in bricks.

Carl Gambrell


Have a Business Card, Eat a Lunch


February 22, 2016

How many times have you been stopped at an intersection of a busy city and seen a man with a handmade cardboard sign saying, “Homeless and Hungry”?  Many of us try not to make eye contact, while others roll down their windows and give some loose change.  If you are stopped at the intersection in a convertible with a coworker, the situation can be uncomfortable.  It can feel like there is nowhere to hide.  This situation happened to me this past week, and led to a lively debate about the state of charity in America.

The non-profit sector in the U.S. is actually quite bullish.  Americans can be proud of the fact that we are a very charitable country.  The most recent figures available are for 2014, when charitable giving was $358 billion.  Total giving in the USA has increased every year since 2009, and is almost back to pre-recession levels.  Charity in the US is not just coming from the rich.  In fact, the more generous donors tend to be at either end of the income spectrum.  Those making between $45,000 and $50,000 a year donated 4% of their earnings, and those that made $10,000,000 or more gave 5.9%.  It is also interesting to note that individual giving accounts for 72% of the total, with corporations chipping in only 5%.  The remainder comes from foundations (15%) and bequests (8%).

Charity comes in many forms.  There are those that love to volunteer their time.  Some chose to help by donating money.  I used to struggle with whose choice was more valuable, but I have come to the realization that both are needed to get good deeds done.

The Charitable Aid Foundation produces a “World Giving Index” which claims to be the leading comparative measure of generosity across the globe.  The Index does not look at amounts given but instead focuses on behaviors.  The three criteria measured are the proportion of people who help a stranger, volunteer their time, or donate money.  Under this system, the USA ranks second in the world.  Surprisingly the “most charitable” country is Myanmar (formerly Burma) where 92% of people donate money to a charity.  This level of philanthropy might be because the majority of Burmese people are highly devout Theravada Buddhists, and Buddhism preaches that generosity is the first of six “perfections,” or virtuous qualities, one cultivates for spiritual awakening.

Years back, a coworker and I came up with a plan to address the discomfort of facing beggars in downtown Atlanta.  We cut a deal with the owner of one of our lunch venues that he would provide a meal to anyone who presented one of our business cards, and we would settle up with him later for the expense.  After about three weeks of passing our cards out for the free meals, we went to settle up with our restaurant partner.  To our surprise and disappointment, not a single card had been redeemed for a hot lunch.  I guess we were naïve, or perhaps our restaurant partner was just not up to “street’ culinary standards.

Carl Gambrell