0:00

Credit unions, known for

0:02

being money stuff, famous

0:05

for being non-profit stuff.

0:08

Nobody thinks much about them,

0:10

so let's have some fun.

0:12

Let's find out why credit

0:15

unions are secretly incredibly fascinating.

0:33

Hey there, folks. Welcome to a whole

0:35

new podcast episode, a podcast all about

0:37

why being alive is more interesting than

0:40

people think it is. My name is

0:42

Alec Schmitt, and I'm not alone because

0:44

I'm joined by my co-host, Katie Golden.

0:46

Katie, what is your relationship

0:48

to the topic or opinion of the topic

0:51

of credit unions? Big

0:54

fan. Big fan of credit unions. I am

0:56

part of a credit union. Oh,

1:01

me too. I feel like I'm biased.

1:03

I'm going to be real with you, Alec. I

1:05

don't really know so much about

1:07

it. I feel like this

1:10

is going to be very educational because

1:12

for me, like a bank or

1:14

credit union is kind of a

1:16

magical space where I go in,

1:20

I give them my money, and I feel

1:22

like they put it in a vault with

1:24

a bunch of other money, and

1:27

they tuck my money into bed

1:29

every night, give it goodnight kisses,

1:32

warm milk. And then

1:34

when I come, I can come and come pick up

1:36

my money, and I'm like, how was your day at

1:38

bank money? And they're like, it was great. It was

1:40

great, Mommy. That's how I

1:42

think banks work. Yeah.

1:48

I share some of those things. And don't worry,

1:50

folks, we're not in the tank for credit unions

1:52

or whatever, but we both are members of one

1:54

separately, it turns out. Yeah. We

1:56

got our mortgage through one, so

1:58

I've only been... part of one for a

2:01

couple of months now. Mostly

2:03

picked it because the loan officer

2:06

was less weird than the other loan officers and

2:08

the rate was a little better. This

2:10

was not a moral

2:13

decision, but I think there's a moral vibe

2:15

around credit unions. There is, right? And

2:18

now I actually understand that after researching it, so

2:20

that's nice. Great, yeah.

2:22

Because I do know

2:25

sometimes banks are bad

2:27

because instead of tucking your

2:29

money in and giving it good night kisses,

2:32

the banks do weird things with

2:34

your money, unspeakable things. Like,

2:37

good morning kisses. That's

2:40

as weird as we're going to go on the show, folks. We're not going

2:42

to go weird. Man, good morning

2:45

kisses are not as good as good night kisses

2:47

because good night kisses, you brushed your

2:49

teeth, everything smells good and minty.

2:52

Good morning kisses smell like butt

2:54

because the mouth, when you

2:56

sleep, the mouth slowly becomes more and more

2:58

smelling of the butt. It's true.

3:01

And then by the morning, the good morning

3:03

kisses taste and smell like butt. Good night

3:05

kisses are minty fresh. That's

3:08

true. Yeah, for some reason, the mouth

3:10

spends eight hours being like some kind

3:12

of bog or marsh or swamp. Exactly.

3:15

And then it's a nightmare. But I was

3:17

just laying there having dreams about high school

3:19

or something, you know? Bacteria gets

3:22

busy in your mouth at night, but that's

3:24

not the topic of the show. We're going

3:26

on a tangent. We're talking about credit unions,

3:28

Alex. How dare you get us off a

3:30

topic. It's, you know? Yeah,

3:34

the topic is not mouth bugs. It

3:36

is credit unions. Credit unions. And

3:40

many thanks to Alice Greger for this suggestion.

3:43

It's such a perfect topic for this podcast.

3:46

As folks might expect, this is kind of

3:48

a money topic. And so

3:50

there's tons of stats and numbers. Money,

3:52

money, money. But also, like, it turns

3:54

out this topic is really the entire

3:56

history of banking and the entire history

3:58

of money. like many of our stuff

4:00

topics where it turns out it's about everything. So

4:03

the structure of this episode is one mega take

4:06

away and then just a

4:08

million stats and numbers. Alright. Let's

4:11

get into mega take away number

4:13

one of one. Credit

4:18

unions are both more positive than

4:20

a regular bank and the

4:22

same as a regular bank because

4:24

all banking is a bizarre

4:26

1300s form of time travel.

4:29

Hmm. Hmm. That's that

4:31

was long. Don't understand it. Don't

4:35

get it. Yeah because it was long

4:37

one more time. Credit unions are both more

4:39

positive than a regular bank and

4:42

the same as a regular bank and

4:44

that's because all banking is a bizarre

4:47

form of time travel that we developed

4:49

in the 1300s. Okay. And then we'll

4:52

talk about how credit

4:54

unions are different from that in four

4:56

ways but they are also

4:58

fundamentally doing the same stuff about this. Okay.

5:01

Okay. So it's financial time

5:03

travel. Less exciting

5:05

than dinosaur time travel but let's go for

5:08

it. We

5:12

got our mortgage through Jurassic Credit

5:14

Union. I can share that because the

5:16

officer was a velociraptor. That was

5:18

very exciting. They're very smart.

5:21

You want a smart loan officer right? That's good. We're

5:23

going to put this money into escrow.

5:25

Okay. So

5:29

you did say so you said that credit

5:31

unions are both better in some ways than

5:34

banks but also the same as banks. How

5:36

can that be true? The

5:38

way that they're the same is that all

5:40

banks are basically doing two things.

5:42

They are storing money and they are

5:44

letting people borrow money. And

5:47

we'll talk about how that was invented

5:49

and created and only began to exist

5:51

around the 1300s. And then later we'll

5:55

get into a few ways that credit

5:57

unions try to be different and In

6:00

practice, probably are. It's also

6:02

weirdly difficult to research credit

6:05

unions for something like this,

6:07

where we're looking for the most interesting

6:09

stories, right? And what are some amazing

6:11

ways a credit union helped an individual

6:13

with something I wanted to find? And

6:16

because of people's financial privacy, you can't really

6:18

find that. So this is

6:20

gonna be a very large scale and global look

6:22

at credit unions. And also

6:24

credit unions are all over the world, whether

6:27

they're called credit unions or cooperative banks or

6:29

a similar name, they're in basically every country.

6:32

It's what's in, it's a wonderful life,

6:34

right? The Bailey's,

6:37

what is it, housing and loan, that's

6:40

a credit union, right? You know, it

6:42

could be. And we'll talk

6:44

about how you could check. Like, main

6:46

reasons are if it's owned by its members

6:49

and a few other qualifications, then it would

6:51

qualify. But it could be

6:53

a private bank that just has that name. Yeah. So

6:56

the jury's out on that Bailey

6:58

fella. I

7:00

don't know if the angels should have helped him or not now. I

7:02

know. Who knows? But

7:05

Mr. Potter, probably not a credit union. Anyway. Probably

7:08

not. Man, they should have kicked his ass at

7:10

the end of that movie. Anyways. Right,

7:13

the Schwarzenegger ending, where he destroys him and then

7:15

says a pun. And then that's the end of

7:17

the movie. Every time I bell

7:19

rings, I kick your butt. And

7:27

then he flies away. Arnold is an angel in the movie.

7:30

Yeah. Everyone's wondering why I'm

7:32

not famous for my celebrity impressions now.

7:35

Yeah. Like, given that you've just

7:37

heard such an incredible Arnold Schwarzenegger. Yeah,

7:40

I mean, how would you experience

7:42

Austrian culture? You live in a

7:44

country that's so wildly far from

7:46

Austria, right? You would never meet

7:48

an Austrian or hear an Austrian. I don't understand what you're

7:50

saying, Alex. My Austrian accent was perfect. So

7:53

credit unions. We're

7:57

diving into history, right? Yeah.

8:00

So before we get to time travel, we're just going

8:02

to start with money. And

8:04

I swear we're getting to credit unions,

8:06

but it's bonkers to just talk about

8:09

money. There are one million podcasts about

8:11

money, and all of them wrestle with

8:13

a basic idea that money is both

8:15

real and fictional. It's

8:18

something we made up and also in

8:21

pretty much every practical sense it's real. So it's

8:23

a really weird concept. Yeah. No,

8:25

I mean, I hear a lot about money.

8:28

My husband is an economist. He's

8:31

always going on and on about money

8:33

and dollars. And no,

8:36

I mean, it's interesting because honestly, like

8:38

money, like from what I have learned,

8:41

economics is kind of a, it's

8:44

like psychology on a really

8:46

large scale. And so

8:48

money is very much social

8:50

psychology or the economics

8:53

is really kind of a study

8:55

of human behavior. So money is

8:58

a reflection of human behavior. Economics

9:01

is also a reflection of like sort of

9:03

a social behavior, human behavior. It's all interlinked.

9:05

It's not when people are doing studies on

9:08

the economy or on money, it's like so

9:10

much of it has to do

9:12

with mass human psychology and human behavior.

9:14

But that doesn't mean it's fake.

9:17

It's still real, but it

9:19

is something that is inextricably

9:22

linked to human

9:24

psychology. Absolutely.

9:27

Yeah. What a cool field. It's

9:29

something that I don't think about a

9:31

lot except when researching something like this.

9:34

And then I have an amazing time thinking

9:36

about it. And two key sources this week

9:39

are the book Money, the True Story of

9:41

a Made-Up Thing, which is by journalist and

9:43

Planet Money Co. Jacob Goldstein. And

9:46

then the book The History of Money by

9:48

Macalester College cultural anthropologist

9:50

Jack Weatherford. And

9:53

both of them talk about that thing

9:55

you talked about, Katie, which is that money

9:58

is an expression of our psychology. and our

10:00

relationships to each other. Part

10:03

of why it took a while to invent banks

10:05

is that a lot of

10:07

our first money was not the thing

10:09

we imagine in modern times as money.

10:12

Maybe the very first money was

10:14

community status. That's

10:18

still a form of currency

10:20

in a big brain way today and

10:22

in many groups today, but it was often

10:24

the only form of money in closely-knit

10:27

small group societies. Because

10:29

if people are making their own clothes and shelter,

10:31

growing their own food, and all know

10:34

each other in this small community, what

10:37

would cash be for? What would you do with that?

10:40

Right. Right. It's essentially

10:42

the way I understand it

10:45

is money is sort of a stand-in

10:47

for I have done some

10:49

labor. I have done something. If

10:53

you have a barter system or a community

10:55

standing system where you're either like, hey,

10:57

I've created these candles and I give

10:59

them to you and then you give me

11:01

some salted pork. That's like

11:03

bartering. Whereas social standing is like, hey,

11:06

you know me. I'm the

11:08

guy who always is making those great candles. I

11:11

can have some salted pork. He's like, yeah, man,

11:13

my house is full of the candles that you

11:15

make. Here's

11:17

some salted pork. Exactly.

11:19

Yeah, a lot of modern money is trying

11:22

to take the friction out of that because

11:24

there might be a situation where one person

11:26

doesn't want pork or the other person doesn't

11:28

want candles. So, oh, what do we do? Trying

11:32

to make it frictionless, most all

11:34

of the money we use today is

11:36

just promises. Right. There's

11:38

no gold or other sort of tangible

11:40

thing behind it. A US

11:42

dollar is a note that says

11:45

the government promises this is money. Cryptocurrencies

11:48

are a promise that a group of internet users say

11:50

it is money. There's

11:53

even gift certificates from companies with

11:55

money qualities. We'll link a

11:57

long ago SIF episode about tires where

12:00

we talk about Canadian Tire money,

12:02

which is a script from a business in

12:05

Canada called Canadian Tire and weirdly popular

12:07

there because it's its own subculture

12:09

of being a form of money. But all

12:11

of that is just promises and

12:14

it is trying to make it so bartering is

12:16

easier. Is this where

12:18

you launch your new currency

12:20

Schmittibucks where you can trade

12:23

in Schmittibucks for cool facts

12:25

about things that seem mundane?

12:27

Yeah, see three slurp Schmitties can

12:29

be turned into one Schmittibuck. It's

12:33

pretty easy to understand. I don't know why everyone's asking

12:35

me questions about this. All

12:37

my Schmittibucks gone. And

12:42

so like status in some ways is

12:45

a more stable form of money. It

12:48

needs to be stored in the minds of the

12:50

people around you. But lots

12:52

of communities developed basically a

12:54

big ritual gathering where

12:56

people give each other gifts in order

12:58

to receive status. And

13:00

then that is fungible for future

13:03

goods or services or whatever you need. One

13:06

of the most amazing examples is potlatch

13:08

gatherings in the northwest coastal part of

13:10

North America, which still

13:12

happen today mainly in native communities. And

13:16

it's people giving each other lavish gifts

13:18

like canoes and furs. And

13:20

that was in a way that exchanged wealth in

13:22

a community and ritual way. These

13:25

gatherings were so big and so

13:27

confusing to colonizers. In

13:30

the 1880s, the Canadian government banned them

13:32

by law and called them uncivilized because

13:34

they just found it too weird that

13:36

people were freely giving each other a

13:39

bunch of stuff. That's

13:41

the most capitalist brain thing I've

13:44

ever heard. Like, yeah, no, you

13:46

guys can't give each other gifts.

13:48

So that's that's making me uncomfortable.

13:52

This is too nice. You're being too nice. That's

13:54

yeah, that's kind of funny for Canadians

13:57

to do like, oh, no, sorry, you're

13:59

being too You're being too

14:01

polite. I

14:03

know though Canada has a long history of racism

14:06

against the natives. It's pretty bad.

14:09

Pretty bad. And they really made

14:12

this a law. They banned pot latches from 1883

14:14

until 1951. So

14:18

nearly 70 years. And

14:21

it was a harsh law. There was one

14:23

attempted pot latch in 1921. The

14:27

police raided it, arrested 45 people

14:29

and jailed 21 of them. Who

14:33

were the 21 who refused to give up their

14:35

pot latch stuff when ordered to. Can

14:38

you like just imagine

14:40

someone like the police breaking down your

14:42

door during like a birthday or Christmas

14:45

or something as people are opening presents

14:47

and being like, this is illegal. I'm

14:50

knocking you over. You

14:52

know, maybe shooting the teddy bears. I don't know.

14:55

That's so disgusting. That's so disgusting

14:57

to criminalize

15:00

cultural gift giving.

15:02

That's yeah. That's

15:05

just horrendous. Yeah.

15:07

And it's tragic and really

15:09

speaks to this range

15:11

of ways we have done money as

15:13

humans. Like it was perceived

15:15

as completely alien to white Canadians, even

15:18

though it was what native people in

15:20

Western Canada had been doing forever. Like

15:23

such, such, such a fragile state of

15:25

mind. Like, well, once people see

15:27

how cool a culture is where you're giving

15:29

gifts and stuff, they're not going to want

15:31

this dumb green paper

15:33

that you use for stuff. You know,

15:36

actually I don't know if Canadian money

15:38

is green, but whatever. It's still dumb

15:40

paper. The only Canadian money

15:42

that's top of mind to me is a like blue $5

15:44

bill. And I think

15:46

it's because you can draw ears on the guy on it to

15:48

make him look like Spock from Star Trek. Oh,

15:51

okay. That's pretty good. Yeah.

15:54

And so this status based

15:57

money, you don't need a bank, right?

16:00

you could write it down if you want to

16:02

or you could keep it in your memory but

16:04

this is one of many societies that didn't

16:06

need banking. Well, you need

16:08

to have a pretty close-knit society to

16:10

do this, right? You can't have too

16:12

many people or at least if you

16:14

do have a lot of people, you

16:16

need to have it being

16:19

segmented into specific communities because

16:21

you have to kind of like know

16:24

what people have

16:26

given to the community for this exchange

16:28

to work or I mean

16:30

I guess you could have like a large

16:33

community and just have these events and assume

16:35

everyone is participating just

16:37

as much in good faith and not

16:39

worry about exactly keeping track. Right.

16:42

But in terms of having it as a currency, like having social

16:45

goodwill as currency, it's like you have to

16:47

have like a strong community because

16:49

it's like you have to know who

16:51

gave you the boat and you know

16:54

know their names and know

16:56

like kind of be

16:58

able to keep track like that. I

17:01

had never thought of that but I guess

17:03

something like a universal basic income, it's

17:06

almost like status-based money. It's just

17:08

a humanist perspective of everyone

17:10

has value as a human so everyone gets

17:12

a minimum amount of money. Yeah,

17:15

like just making the assumption like

17:17

if I have faith in other

17:19

people, like I can have

17:21

faith that they're going to participate in

17:23

society in a good way, I think

17:25

that's a really nice kind of way

17:27

to look at things, this idea of

17:30

hey, you know what, I assume that

17:32

you're probably going to do good in

17:34

society and then act accordingly.

17:38

And that really fits the kind of money. Another

17:40

type of money people have developed is what's

17:42

called commodity money. That's

17:45

different from another type which is where we

17:47

use something like rare metals as a basis

17:49

for money like gold or silver. Commodity

17:53

money is more of a situation where the

17:56

thing we're using as money also has

17:58

some practical purpose. Like,

18:01

you can't decorate with gold and silver,

18:03

but commodity money is usually something that

18:05

you can eat or dress in or

18:07

other thing you can use. How

18:10

is this different from say like bartering? Perfect

18:13

question. Yeah, there's a great example in

18:16

Jack Weatherford's book and it comes from

18:18

the Triple Alliance, which is the now

18:20

speaking empire often called the Aztecs. And

18:24

it turns out the Aztec economic system had

18:26

a lot of government regulation. The

18:29

main thing the government regulated is

18:31

a standardized price for

18:34

cacao seeds. And

18:36

so you can use cacao seeds to grind

18:39

down and make the delicious chocolate

18:41

beverage of Mesoamerica that everyone loves.

18:44

But also there was a lot of

18:46

just trading of giant bags of cacao

18:48

seeds because the government was saying

18:50

that has a set price and a set value

18:53

that everybody knows. I see.

18:55

So it's like it is it's a

18:57

thing that is used as a currency, but

19:00

you can also just directly use that thing.

19:02

Yeah. That's cool. I love that. I'd

19:05

love to be able to eat money. Truly.

19:08

Yeah. Like, I guess one

19:10

of their other main forms of commodity money

19:12

in that society was cotton cloaks and

19:14

it was a standard kind of cotton cloak

19:16

called a quatchly. And

19:19

then its value was pegged to a value of

19:21

an amount of cacao seeds. So

19:24

that was lighter weight and like

19:26

more physically manageable often as a

19:28

form of currency. But if

19:30

the government went away tomorrow, you could make

19:32

chocolate drink out of your seeds or you

19:35

could wear your quatchly. You

19:37

know, it's different from, I guess,

19:39

the wallpaper use of American

19:42

dollars if the government goes away tomorrow. It's

19:45

something that's still something for you.

19:48

Money suit. Gonna sell me a

19:50

money suit. Wow. Now

19:53

I want the government to go away so I can wear that money

19:55

suit baby. Gonna look great. I

19:58

wonder how, so how does inflation... work

20:01

with like commodity

20:03

currency because there's a certain point at

20:06

which you got too

20:08

many barrels of cow

20:10

seeds. Yeah that's a

20:12

good question and it's broadly driven

20:14

by how easy or hard it

20:16

is to make the commodity and how

20:18

the government responds to that. So

20:21

it's a little more chaotic than promise

20:24

money but it's

20:26

still something they can manage a bit. It's

20:28

more delicious though. That's right.

20:32

I can't make a hot promise drink

20:34

you know. Right I mean that

20:36

sounds kind of good though but so

20:38

we've got we've got

20:40

social currency of like hey you

20:42

remember me from last year I

20:45

was given out boats like crazy so

20:48

you've got kind of a social currency in terms

20:50

of receiving goods. Then

20:53

there's the commodity type

20:56

currency where it's like cow beans or

20:58

something where it's like the money you

21:01

can use the money for non-money things

21:04

and how we get to money

21:06

dollars. Yeah the main

21:08

way is precious metal money

21:12

because that could really directly

21:14

be made into stuff like coins and

21:16

so that was an easy way to have a

21:19

money that people felt was worth something without a

21:21

government needing to manage it very much and

21:24

then once we have precious metal money

21:26

and later promise money both

21:29

of those lend themselves to a banking

21:31

format. So now we're getting

21:33

into banking. Banking? Banks basically

21:35

come from the invention of two tasks

21:38

for people to do with money. That's the

21:40

there's two more steps that get us from

21:42

money to the specific institution of a credit

21:45

union which I swear we are talking about

21:47

by talking about this. Okay

21:50

okay how are we gonna get

21:52

from chocolate money

21:54

to credit unions? This

21:57

task you still can kind of do with commodity money

21:59

too but one of the tasks

22:01

is money storage. It

22:04

turns out people start to say, hey, I could

22:06

use help storing my money. Yeah,

22:09

man. It's so big or bulky or

22:11

seedy or something. You know? Help. Yeah.

22:14

Like, I mean, it especially makes

22:16

sense when people had coins, right?

22:18

Because dollars, you can kind of

22:20

stack pretty good, put in

22:22

a mattress. Not saying I have money in my

22:24

mattress. Don't look. But yeah,

22:27

if you have like a huge

22:29

amount of like gold coins at

22:31

a certain point, not only is

22:33

it take up space, but

22:35

it's probably also the security risk.

22:37

Because if someone breaks in, takes all your

22:39

gold, that's it. You're done. You're done

22:42

though. Yeah. But if

22:44

you have it stored somewhere more

22:46

secure, then you're not as much

22:48

of a target for like being

22:50

rated and having all of your

22:52

wealth taken from you. Exactly.

22:55

There's security. And on top of that, there's

22:57

not wanting to use up space in your

22:59

home for it. There's not wanting to lug

23:02

it into town necessary. There's all sorts of

23:04

reasons to want help storing money. And

23:07

writing systems help track like favors

23:10

and status and the concept of

23:12

debt. But then also in

23:14

Europe, there were goldsmiths who

23:17

started running a side business of storing

23:19

valuables like golds. Because goldsmiths

23:21

realized, I'm already locking down my shop

23:23

and all the material I work with.

23:26

Why don't I just collect a small fee from people

23:28

to hold on to their stuff too? Hmm. Yeah.

23:31

Just this easy extra money for me. Yeah.

23:34

And then you can melt the gold into,

23:36

I don't know, what did

23:38

people use gold for? Rings? Sure.

23:41

Tiaras? Yeah. Yeah, yeah,

23:43

yeah. Yeah. Realizing

23:47

the tiara is the ring of the head. Anyway,

23:49

that's great. And the

23:51

ring is the tiara of the finger. So

23:55

you got goldsmiths now kind of storing

23:57

gold for them. their

24:00

customers. Yeah and

24:02

my favorite example of people needing this

24:04

kind of thing was copper

24:07

money especially in 1600 Sweden.

24:09

Hmm. Sweden in the

24:11

1600s used copper as

24:14

currency but it's a lot

24:16

less valuable by weight than gold or silver or

24:18

something else and so

24:20

it led to humongous money. There

24:22

was the biggest

24:24

denomination was called Ten Dailers.

24:26

I don't know if I'm

24:28

pronouncing it right but D-A-L-E-R-S a dailer was

24:31

the currency type. A

24:33

brick of copper worth ten dailers weighed 43

24:36

pounds which is almost 20

24:38

kilos. Man they had

24:40

to have such upper body strength just

24:42

to go shopping. I think

24:45

they lifted from their legs or back

24:47

because what they would do is this

24:49

was about a two foot long brick

24:51

of copper and people would carry

24:53

it on their back with a set of straps. Wow.

24:57

Like go bring their money to town and so

24:59

that was also kind of secure because it's just

25:01

so heavy you know. Yeah

25:04

like a mugger is gonna get tired and

25:07

you just wait for them to get tuckered

25:09

out and go retrieve your huge

25:11

copper chunks. So was it just like a

25:13

brick or was it like a cylindrical

25:17

coin? Like what was it?

25:20

Like a like a too big ingot kind

25:22

of thing. I see. Yeah. Ingot. Yeah.

25:25

Man I'm missing it money. That

25:27

was that was

25:29

really good for her. Like

25:31

his then you don't need

25:33

a gym membership. Like the

25:35

gym membership is just carrying

25:37

your money around. It's really

25:40

true. It's probably why Swedish people

25:42

are so attractive now. Ah we

25:44

figured it out. Now it makes

25:46

sense. But

25:48

so so the task of money storage starts

25:50

popping up on its own. Like just helped

25:52

me put my money somewhere and then people

25:54

would collect a small fee for the help.

25:58

And then the other innovation was lending. And

26:00

that's where we really start to get banks. We

26:03

also get the word bank from

26:06

1300s Venice, where they

26:08

really get this going. The Italian city

26:10

of Venice was its own country for a lot of

26:12

history, including the 1300s. Mm-hmm.

26:15

Venez, yeah. Yeah, those guys. Very

26:19

rich country. Yeah, and they

26:21

had a whole industry of people

26:23

who were currency changers,

26:26

and they had offered the service of

26:28

money storage for a small fee. In

26:31

the 1300s, some of them realized that

26:33

they could lend stored money to other

26:35

people for another fee.

26:38

Mm-hmm. So you can make a

26:40

fee storing money, and you can also make a fee

26:42

lending money and getting interest or a fee for that.

26:45

Yeah, it's really interesting, because

26:47

it's kind of a symbolic

26:50

throwback to the social system,

26:52

right? Lending money to

26:54

someone. It's like, hey, I'm good for it. I'm

26:57

an upstanding member of the community. You

26:59

can lend me money, and no,

27:02

I'm good for it in the future. Plus,

27:04

you'll get a little bit of interest. And

27:07

now, I guess, everything's become just

27:10

like ... It's turned

27:12

into a weird credit score

27:15

system, which, look, we need to do

27:17

an episode on credit scores, because I

27:19

don't understand those. They

27:22

might as well be a horoscope kind of

27:24

thing, where it's like, oh, you know, money

27:26

on Mars is in rotation or

27:29

whatever, and therefore, your credit score just went

27:31

down 20 points. It's like, but I didn't

27:33

do anything. It's like, you know,

27:35

when Venus crosses Mars, and it's like,

27:38

well, you paid off too much debt, or you don't

27:40

have enough debt, or you have too much debt. I

27:42

don't get it. Anyways, I think

27:44

it might have been better when we had a

27:46

system when it was based on how many cool

27:48

boats you gave people. Yeah.

27:52

Started talking about landing as an idea

27:54

in the 1300s here, but it's basically

27:56

as old as our species. Yeah.

27:58

Because it started as just promising. promises, and

28:00

it can be as simple as an IOU. Apparently

28:04

the first written IOUs were clay

28:06

objects from Mesopotamia made about 5,000

28:09

years ago. It was

28:11

a hollow clay ball with clay tokens

28:13

inside, and the tokens meant stuff people

28:15

owed each other. So lending is that

28:17

old. There was also

28:19

encryption back in

28:22

the day too, because what they would do is they would put

28:25

things like contracts inside

28:28

a clay vessel, right?

28:31

And you have to like break open

28:34

the clay vessel to get to the

28:36

contract. You would write some

28:38

contract, right? And both parties would see it.

28:40

They'd know what's on it. You put it

28:43

in the clay vessel, and like

28:45

you'd know, it's like it's broken, and therefore

28:47

it's like, oh wait, this was broken? Like

28:49

did you alter this contract when it was

28:51

broken? So it's very cool

28:53

how clay was used in so

28:56

many different inventive kind

28:58

of ways. Yeah,

29:00

they had security against people

29:02

drawing extra Q&A-form wedges to

29:05

mess with the deal. It's so cool. Exactly.

29:10

All these wedges are from before. That's

29:12

good. That's good. And

29:16

so we have people separately thinking

29:18

of the money storage service and

29:21

thinking of a lending activity. And

29:24

then in 1300s Venice, money

29:26

changers put it together. They say, I could

29:28

do the storage and the lending at the

29:31

same time, and I could use

29:33

the stored money to do the lending money. Then

29:35

I can lend so much money, it's crazy how much I

29:37

could lend. Yeah. No,

29:39

that's, I mean, that makes sense, right? Yeah. And

29:42

now, isn't that, that's essentially just how banks are now.

29:46

Exactly. And I

29:48

think 1300s Venetians are not very

29:50

different from your bank today. It's

29:53

those two purposes, and

29:55

emphasis more on the lending these days,

29:57

but it's those two purposes. Was

30:00

Venice like the first? Did

30:02

they kind of invent the bank? Pretty

30:05

much. Like other than maybe some financial

30:07

arrangements between people and their governments or

30:10

some very small scale versions

30:12

of this, Venetians were kind of the first.

30:15

What you think of as a modern person

30:17

whose entire job is storing money and lending

30:19

money and exploiting that to make money and scale it

30:21

up as much as they can. Is

30:23

that why Shakespeare's The Merchant

30:26

of Venice was like based in

30:28

Venice? Yeah. We're

30:31

only really starting to think of other world cities

30:33

as being banking centers. Right. Bit

30:36

of a problematic play. A whole

30:38

bit of the old... It's

30:42

interesting because I

30:44

saw a production of The Merchant

30:46

of Venice where they took the

30:49

Shakespearean play and through stage direction

30:51

actually kind of flipped it to

30:53

be more of an indictment of

30:55

the anti-Semitism. Cool.

30:58

Now there's like some debate, like some people

31:00

argue that Shakespeare was trying to make a

31:03

statement against anti-Semitism through

31:05

the play, but I don't think that really holds

31:07

up so well. But I

31:09

did see a version, they

31:12

really made Shylock the very

31:14

sympathetic hero of the story.

31:17

It was interesting. That's awesome. Yeah. There's

31:21

also, I mean, that's a whole other thing,

31:23

right? Like Jewish people being

31:25

forced into basically money lending because

31:27

they couldn't own land. And

31:30

also it was something that... Now

31:33

I'm out of my depth, I think Catholicism or

31:35

other kind of Christian religions like, oh, we're not

31:37

supposed to do money lending. And so, but it's

31:40

okay for someone of a different faith to do

31:42

money lending. Yeah. There's

31:44

a saying neither a borrower nor a lender

31:46

be. And then all those

31:49

people smugly benefited from Jewish people doing the

31:51

borrowing and lending that makes the economy go.

31:54

Right, exactly. And so that's since then you've had

31:57

like this kind of... Isn't that cool?

31:59

I don't know. I think that's also

32:01

where a lot of the

32:03

anti-Semitic associations of like, oh,

32:05

Jewish people and money came

32:07

from, because essentially you've created

32:09

this niche where Jewish people

32:11

don't have that many

32:14

other options to generate

32:16

wealth in the society other than money

32:18

lending. And then

32:20

it's like, oh, well, Jewish people are money

32:22

lenders. And it's like, okay, but you made

32:24

it that way with your laws. Right.

32:28

Like, let me own a winery or whatever

32:30

you do. Right, exactly. Yeah.

32:36

And even the name bank or

32:38

banking banker, it is specific to

32:41

one bridge in Venice. Well,

32:44

a lot of the people doing this, some of them Jewish, as

32:46

we said, they did a lot of

32:48

the business in the open air. They

32:51

might have had a room or an office

32:53

somewhere, but they tended to gather on a key

32:55

bridge over Venice's Grand Canal. And

32:58

they would sit and do business on

33:00

benches on the

33:02

bridge. And so people started

33:04

calling these people bench sitters. And

33:08

the Italian word for that was banciari. I

33:10

don't know if that's still the current Italian

33:12

word. Oh, yeah. Oh, that's funny. And

33:15

then banciari has been like retranslated

33:17

and in our language, anglicized to

33:19

become banking from

33:21

banciari. Banciari. Yeah,

33:24

that's really interesting. Banciari. Right. Banciari.

33:27

That correct pronunciation makes it clearer. I like

33:29

that. If

33:32

it's a CH, then it's a hard

33:35

cut sound. Yes. Yep. So,

33:39

yeah, so that's where we get this

33:41

whole thing. And it

33:43

really supercharged economics, like people

33:46

who are able

33:48

to massively lend because they are

33:50

using other people's stored money. It

33:53

transformed the world in a way that could be

33:55

a million podcast episodes. And

33:57

that practice is what we call

33:59

finance. One source

34:01

is Bloomberg Finance writer Matt Levine.

34:03

He describes it as quote, the

34:06

essence of finance is time travel.

34:08

Saving is about moving resources

34:11

from the present into the

34:13

future. Financing is about moving resources

34:15

from the future back into the present.

34:19

And back to the future would have been

34:21

so much more exciting if it was just

34:23

about Doc giving a loan to a little

34:25

what's his name? Oh Marty.

34:29

Yeah like you gotta invest

34:31

Marty you gotta invest in Apple. Just

34:33

shouting more interest back to him but he's just

34:35

having stuff in the car and Marty's like I

34:37

don't want to pay more interest this seems bad

34:39

oh well I've been too deep oh well.

34:42

The DeLorean is gonna be big someday

34:45

Marty just you see. Yeah and so and this

34:51

yeah this one idea it's created

34:53

vast new opportunities it's invented

34:55

economic collapses raised

34:57

standards of living caused imperialism like

35:00

it's profoundly bad and profoundly good

35:02

all at once. Right.

35:04

And it is what banks do and

35:06

it is what credit unions do both

35:09

of those are businesses that are financial

35:11

time travel machines they're

35:13

exactly the same that way. But

35:15

it's still it really still comes

35:18

down to promises right like you

35:20

are promising that in the future

35:22

you're going to be good

35:24

on the money that you're lent or

35:26

the bank is promising that

35:28

it will you know keep your money

35:31

safe. So it's all about sort of

35:33

a social contract so throughout history regardless

35:35

of what we call it it's about

35:38

social contract but I think the the

35:40

power of the the banking system is

35:42

that it is

35:45

you're able to nest social contracts

35:47

like much more easily like you

35:49

can condense the social contract into

35:52

you know numbers and systems

35:54

and patterns that are much easier to kind

35:57

of like nest and like do on a

35:59

mass scale. It's both

36:01

powerful in terms of how that

36:03

can, it can convert human behavior

36:05

and past and present and

36:07

future human behavior into numbers. But of

36:09

course that's also imperfect, right? Because you

36:12

can't actually condense human

36:14

behavior down into numbers perfectly.

36:17

I'm sure Brett's not going to mind me

36:19

saying this. That's one of the issues with

36:21

economics is you make some assumptions about human

36:23

behavior in order to make it sit within

36:25

a certain like model or framework and hard

36:27

to do that perfectly when

36:30

you have to make some assumptions in order

36:32

to make math work. Wow.

36:36

And that fits perfectly with the credit

36:38

union difference. Because

36:40

it's basically human behavior that we are either

36:42

hoping is a thing or we've created a

36:44

few laws to make a thing. And

36:48

yeah, at the top of the

36:50

mega takeaway, I said there's like

36:53

four ways a credit union can be different

36:55

than a bank. Here's the list.

36:57

Number one, credit unions often limit their business

37:00

to a set of members. So

37:03

a bank is theoretically trying to become the one

37:06

bank that is the world's, like

37:09

they're theoretically trying to grow forever. And

37:12

a credit union is usually limited to

37:14

some specific but broad group of people.

37:16

Like mine is for only specific New

37:18

York state counties. Right.

37:20

Yeah, my credit union is like a college. So

37:22

like a lot of colleges will have credit unions.

37:25

Yeah, there you go. And yeah,

37:27

the one with the most members in the US

37:29

is Navy Federal, which is for military people and

37:32

a few other categories of people. Yeah, a lot

37:34

of them are like that. And

37:37

then number two difference, credit unions

37:39

are usually owned by the members

37:41

of the credit union, which

37:43

is a form of cooperative banking. Yeah,

37:46

a co-op you say. Yeah.

37:49

What's another example of a co-op,

37:51

Alex? Just

37:55

one podcast network. Boy, it'd

37:57

be great to be on that one. Oh wait, we are.

37:59

Maximum fund. great. Yeah,

38:02

they're an employee-owned co-op, which is so fantastic.

38:04

And I think I'll just think about it

38:06

because I don't want to make people confused

38:08

and think it's a credit union, but it's

38:10

great. It's a cooperative company, which is awesome.

38:13

And yeah, and so that can be really

38:16

awesome, right? Like all the people who are

38:18

using the credit union have

38:21

potentially a vote on its decisions

38:23

or can elect leadership of it

38:25

or become leaders themselves. That

38:28

super varies in practice, but it's

38:30

different from the bank being owned

38:32

by stockholders and being a corporation.

38:35

Right. Yeah, that's cool. I like that. Yeah.

38:38

And then third difference is some

38:40

credit unions are tax exempt or

38:42

pay different or lower tax rates.

38:44

And that really, really varies by

38:46

country, but that is usually dictated

38:48

at the country level. What's the

38:51

case in the US? In

38:53

the US, they are exempt from corporate taxes.

38:56

And then in Canada, they're not exempt

38:58

from that, but the small ones can apply

39:00

for specific small business rates and then other

39:02

countries do it other ways. And they're credit

39:04

unions in more than 100 countries.

39:07

So this varies a whole lot. And

39:10

so is the ethics argument about

39:12

credit unions that it's because they're

39:15

often like a co-op and they're

39:18

smaller than big banks? Is that sort of

39:20

the main reason that credit

39:22

unions are considered more ethical or

39:24

are other reasons? Perfect

39:27

question. Cause it's, it's that and it's

39:29

this fourth and final difference, which

39:32

is that credit unions might have a

39:34

charter directing them to

39:36

operate with a motivation beyond profits.

39:39

Oh, they might have a founding

39:41

document that says we do

39:44

not just exist to make profits. We're trying to

39:46

do a second thing. I

39:48

see. I see. So it's like the

39:50

Bailey's building and loan or whatever that

39:53

was called. And yeah, it's

39:55

a wonderful life where it's like, I gotta,

39:57

I gotta help the martinis out with their

39:59

bar. Which, by the way,

40:01

perfect naming system for the

40:03

Italian couple in a like,

40:05

one of those 1950s

40:08

movie, just like, of course

40:10

their name, the Martinis. That's

40:12

excellent. The time

40:15

when Italian Americans were still novel, very

40:17

fun pop cultural time, really weird

40:20

and probably prejudicial, I'm

40:22

sorry, but weird. Yeah,

40:26

it's like, here's the one

40:28

Italian family in the movie

40:30

and they're the meatballs. By

40:34

the way, meatballs are not really a big thing in

40:37

Italy. It's not meatballs

40:39

and spaghetti. They'll have a...

40:41

Oh, you guys aren't into beef mounds like we are?

40:43

That's weird. No, they love beef

40:45

mounds, but usually the beef is mounded

40:48

in a different way. There's

40:51

raw beef pucks, like a hockey

40:54

puck of raw beef here in

40:56

Turin, which is quite popular. But

40:59

yeah, they have like Popete, which

41:01

is like meatballs, but they don't

41:03

usually serve it on piles of

41:06

spaghetti. Okay, I can support

41:08

that. Yeah, good. As long as there's beef mounds.

41:12

USA. It's always going to be beef

41:14

mounds. I wonder, have

41:16

beef meatballs ever been a

41:18

currency, like beef mound currency?

41:21

Yeah, I feel like it's got to

41:23

be either pre-Roman or something where beef

41:26

is money. I think there's

41:28

probably almost every culture that has

41:31

livestock trading the live version as

41:33

currency. Right. Or ox, probably back

41:35

then it was or ox, this is like

41:37

ancient cattle. Or

41:40

ox currency. Yeah, weird big cattle.

41:43

Yeah. Anyways, the

41:47

difference is this charter. And

41:50

so a credit union will have a charter

41:52

where we're like, we promise not to be

41:54

evil, and then banks don't have such

41:56

a charter. Yeah. found

42:00

a confusing thing in the research. I

42:02

don't want to call it misleading because I don't think

42:04

anybody's up to something, but when you

42:07

research credit unions, you constantly see

42:09

stuff describing them as non-profits. And

42:12

that is only true by one

42:15

specific meaning of that because credit

42:17

unions are not charities. They don't

42:19

receive donations. They also need

42:22

to lend and save in a way that

42:24

brings in more money than they are spending

42:26

on employees and branches and stuff. So

42:29

they are quote unquote non-profit in the

42:31

sense that they usually have

42:33

a founding document directing them to aim

42:35

for minimal profit and

42:38

then aim for general social

42:40

good or a specific one. One

42:42

shorthand for that is the phrase, not

42:45

for profit, not for charity, but

42:47

for service. Okay,

42:50

so it's like not

42:52

maximizing profits, but still aiming

42:55

to get some profits. Yeah,

42:58

because I think I've heard occasionally people

43:00

talk about credit unions as if it's

43:03

like saving puppies or something. And maybe

43:06

your credit union does like dog events

43:09

or something, but that's not necessarily it.

43:11

It's a bank. And then on

43:14

paper and hopefully in practice, they are trying to

43:16

bank in a way that's communally

43:18

beneficial while also still keeping the

43:20

bank afloat as a business. Now

43:23

I can, from my credit union, get

43:25

a checkbook where the background of the

43:28

checks is a basket of puppies. So

43:30

I feel like they are saying

43:32

that this bank is for

43:35

the puppies. But

43:37

I mean like- Legal promise to let

43:39

puppies bank. They can open accounts. They have to. So,

43:44

but I guess my question

43:46

would be like you can have a charter that's

43:48

like, we promise to be good. We're going to

43:50

like not, our goal is not

43:53

profits, it's people or whatever, but what's actually

43:55

holding them to that? You

43:57

know, like is there, because if the incentive

43:59

strike structure is still for them to turn

44:01

a big profit, it seems like they would

44:04

still go for the

44:06

profit, despite what your charter says. When

44:08

Google is like, hey, don't be evil,

44:10

there's nothing actually preventing Google from being

44:12

evil. They just say that. I

44:15

think they quietly removed that from their

44:17

website at a certain point. Anyways,

44:22

the point is, what

44:25

is actually the enforcement of,

44:27

we're not really aiming for

44:30

big profits. That's

44:32

the biggest question of this entire topic.

44:36

It varies globally and locally. One

44:39

way can be governments or regulators

44:42

that are keeping an eye on their books and

44:44

saying, are you guys making massive profits? You should

44:46

turn some of that into lower rates or something.

44:50

Would they no longer count as a

44:52

credit union and then get taxed at

44:54

a different rate? Okay. Yeah, so that's one

44:57

limit. Another limit

44:59

is if the members of

45:01

the credit union use their voting

45:03

power to command better behavior. That's

45:06

another way that can happen. Probably the main

45:08

way and the biggest way is just if

45:11

people decide to pursue that

45:13

mission. It's very behavior driven,

45:15

it's very promise driven, it's very what

45:18

is in the hearts of the people working at

45:20

the credit union. Most of us are

45:22

not monitoring what our bank or credit union does

45:24

policy wise. The tradition

45:26

of the credit union or the culture of

45:29

the credit union is hopefully positive. That

45:32

means if you, the listener, are looking for the

45:35

most moral and exciting banking option,

45:38

it becomes a project for you to figure

45:40

out whether your credit union is simply

45:43

in a tax classification and small or

45:45

also doing some stuff where they are

45:47

lending to someone who couldn't otherwise get

45:49

a loan or they are inclusive

45:52

or they are going out of their way

45:54

to keep rates low to support people, stuff

45:56

like that. I

45:58

don't want to be the information show that says, and

46:01

now you have a bunch of homework to do

46:03

to fix society, that's not like great or positive.

46:09

So I think it's exciting to

46:11

know that a credit union is simply

46:13

a bank and potentially better. Because

46:17

then you like actually know what's going on.

46:19

You like will maybe be more wary of

46:21

whether you're banking right or not hopefully. Yeah,

46:25

it's tough, but

46:27

yeah, it does seem like on

46:29

average credit unions are going to

46:31

be more, at least more

46:33

ethical than a bank. Worst

46:36

case scenario, it's a bank

46:38

like any other bank, which is fine. It

46:41

still does the things you need it to do if you

46:43

work with them. So cool. Great.

46:46

Yeah. And that's why we needed

46:48

to know where money comes from to understand

46:50

that. Because it's

46:52

still all money at the root of it.

46:55

Bring back the chocolate money. Oh.

46:59

And then a credit union could be like

47:02

Willy Wonka's credit union and then a goose

47:04

disc gloop gets like sucked into one of

47:07

those pneumatic, you know those pneumatic tubes

47:10

that take your money and stuff? My

47:12

childhood bank had that. Yeah, yeah, yeah. Yeah,

47:14

yeah, yeah. God, those are so fun. I always wanted

47:16

to stick my face in one of those. That

47:19

was the good era. Boy. Willy Wonka

47:21

and the chocolate credit

47:24

union trying

47:26

to teach these kids what's fungible,

47:28

what's non-fungible. Wow. Well,

47:34

I'm just going to try to find a way to

47:36

bank at that bank. And so we'll take

47:38

a break while I research that. And

47:40

then we'll be back with mega stats and numbers.

47:42

Stick around. Mega stats and numbers. Oh

47:57

darling, why won't you accept my love? My

48:01

dear, even though you are a Duke, I

48:03

could never love you. You... you...

48:07

borrowed a book from me and never returned

48:09

it! Save

48:12

yourself from this terrible fate by listening to

48:14

Reading Glasses. We'll help you get

48:16

those borrowed books back and solve all

48:18

your other reader problems. Reading Glasses, every

48:20

Thursday on Maximum Fun. I'm

48:25

Emily Heller. And I'm Lisa Hannah-Walt. And

48:27

we're the hosts of Baby Geniuses. We've

48:29

been doing our podcast for over 10 years. When

48:31

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48:53

Geniuses, a show for adult idiots. Every

48:56

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48:59

Geniuses, we know everything. Baby

49:01

Geniuses, a show for adults. Folks,

49:05

welcome back to the Mega Stats and

49:07

Numbers about this topic. This week they

49:10

are in a segment called... Stat

49:13

by Stat. Oh

49:16

baby, gotta

49:18

get it to the numbers.

49:23

Yeah, man. Yeah, that

49:26

name was submitted by Christian Lopez. Thank

49:28

you. Please

49:30

make it as silly and make it as bad as

49:32

possible. Submit through Discord or to [email protected]. I

49:35

feel like I need to learn the saxophone just

49:37

for this podcast. Drop a

49:39

little background. I mean, for

49:41

any podcast. Every podcast would benefit from saxophone.

49:44

Every podcast would. What are we doing

49:46

out here without it? What are we doing? Ridiculous. It

49:49

is a waste of time. So,

49:53

first number here is just giant. About

49:55

80,000. Eight zero

49:57

thousand. That is the number

49:59

of... credit unions or cooperative banks in the

50:01

world. Wow. And

50:04

they're in more than 100 countries. So this is a really global

50:06

topic. It's everywhere. Everywhere. That's

50:08

pretty cool. Yeah. Where are the

50:11

most credit unions? Like which country is

50:13

the most credit union-y? Do you know?

50:16

I couldn't find super solid numbers on it,

50:18

but one of the biggest countries for membership

50:20

is actually the United States. Oh,

50:23

that's interesting. We have many credit unions and a

50:25

big population. So it's actually a lot of us

50:27

doing it. Even though you think of

50:29

us as so capitalist, you know? Yeah. Well,

50:32

yeah. But that's pretty cool. Yeah. And

50:35

it's also especially popular in Central

50:37

Europe. And

50:40

it turns out credit unions got parallel

50:42

invented in many places, but especially Central

50:44

Europe in the mid to late 1800s.

50:48

Oh, that's really interesting. So like which countries

50:50

in Central Europe? The first number

50:52

there is 1845. That

50:56

is when Samuel Yerkovich established a

50:58

credit cooperative for poor farmers in

51:00

his region of Slovakia. Okay.

51:03

Okay. And that is potentially

51:06

the first credit union-ish thing, but some

51:08

of my sources said that it wasn't

51:10

a huge departure from mutual

51:12

aid among Slovakian farmers that already existed. It

51:14

was just more of an umbrella for what

51:16

they were doing. It's

51:18

weird to think of credit unions being that

51:20

recent because I would have thought that credit

51:22

unions would have popped up around

51:25

the time that just like the

51:27

concept of money and banking came

51:29

around. But I guess

51:32

not. Yeah,

51:35

it seems to have come from the rise

51:37

of socialism, but

51:39

also from just adapting existing

51:41

mutual aid. And there's thousands and

51:44

thousands of years of people just

51:46

doing mutual aid without creating like

51:48

organizations and letterhead for it. Right.

51:51

And that's part of why this took a while as people just

51:54

went ahead and helped somebody. Right.

51:56

That's really interesting. So, yeah. Sloane.

52:00

Milwaukee and Bailey's building

52:02

and loan. Yeah. And

52:05

then in parallel, a more influential one

52:07

happens. 1849, a few

52:10

years later, 1849, that's when a

52:12

Prussian mayor, which is part of

52:15

modern Germany, his name

52:17

was Friedrich Wilhelm Reifeisen. That's

52:20

so Prussian, man. I know. Oh.

52:23

That's, like, that's so Prussian. He

52:27

started a charitable credit collaborative, and

52:29

it was partly as a recovery

52:32

effort from a war. Hmm.

52:35

Which war? He did this 1849. One

52:38

year earlier, there was a wave of

52:41

pro-democracy revolutions in a lot of German-speaking

52:43

kingdoms, including Prussia. So it was a

52:45

revolutionary war, and pretty much

52:48

all of them failed to achieve democracy in

52:50

their kingdoms. Whoops. Yeah.

52:52

And that resulted in a lot

52:55

of emigration from Germany to countries like the

52:57

U.S. A lot of German-Americans came here in

52:59

the 1840s from that. And

53:03

then there was also chaos, property damage,

53:05

worsened economic trouble. And

53:08

Friedrich Reifeisen was weirdly

53:10

the mayor of several towns all next to each

53:12

other. He's just really

53:14

into being a mayor and helping the community.

53:18

And so then- And now I'm the mayor over here. And

53:20

now I'm the mayor over here. And

53:22

now- Oh, you guessed it. I'm the mayor over

53:24

here too. All

53:27

the names are stuff like Weibach und

53:29

Flammersfeld. Like they're really German-savvy babes too.

53:31

It's great. And

53:36

so in 1849, he got

53:38

donations from wealthy locals and

53:40

then loaned the donations to people in

53:42

the town of Flammersfeld at a much

53:44

lower rate than private banks. And

53:48

that was so fun to him that

53:50

he and a collaborator set up permanent

53:52

cooperative banks that didn't need donations after

53:54

that. So

53:56

it started as fully charity, but

53:59

with like bank lodges. And then he said,

54:01

why don't I just make a bank that is

54:03

always charity logic? Right, right.

54:05

So it would be, it would lend people

54:07

money at a very like low interest rate. Yeah.

54:10

So they could kind of get on their

54:12

feet, like, like almost like what maybe a

54:14

family member would do for you above zero.

54:16

They were like, it's more than zero so

54:18

we can run, but I'm doing this charitably.

54:20

And so, like, cool. Right,

54:22

right. Cool. Then other

54:24

community leaders either borrowed this Prussian

54:27

idea or parallel invented it in

54:29

Italy, France, Austria, and the Netherlands

54:32

right around that same time. And

54:35

all those countries have a pretty strong credit

54:37

union tradition now. Apparently

54:40

45% of French people use

54:42

one of the three biggest co-ops in France.

54:46

And just one co-op bank in the Netherlands has a

54:48

40% market share all

54:51

on its own. So it's very standard in

54:53

those kind of countries. That's

54:55

interesting. Yeah. I actually

54:57

have no idea if the bank I use here

54:59

in Italy is a credit union or not. I

55:01

suspect it's not. Hmm. Okay.

55:04

It's very difficult to figure out

55:06

financial things here when

55:09

you're bad at the language. Oh

55:11

no. And

55:15

you keep trying to trade the meatballs and they're like,

55:17

we're not such a meatball country actually. Yeah. They're

55:20

like, please. We're more into like the Robbie hockey puck. Have

55:22

you heard of that? And

55:27

so this is a pretty 1800s European idea. And

55:31

then that means it reached European colonies. That's part of

55:33

how it spread worldwide. And

55:36

the next number there is 1900. That

55:39

is when a man named Alphonse

55:41

Desjardins tried to start a community

55:44

lending program in rural French Canada.

55:47

Okay. So in Montreal, Quebec,

55:50

where? Yeah, it was

55:52

a very rural area and it has

55:54

morphed into a modern credit union group

55:56

called the Desjardins Group based in Montreal.

55:58

Yeah. French Canada

56:00

really led the way for North America in

56:02

credit unions. So

56:05

they got rid of the native

56:08

tradition by making it

56:10

illegal to give cool gifts to each

56:12

other. They were like, we've

56:14

come up with this cool idea called a credit

56:16

union where we all own sort

56:19

of community, property, and money. It's like,

56:21

wow, really? You came up with

56:23

that, huh? Yeah, same country, same

56:25

time period. How about that? They banned potlatches and then

56:27

they did this. Yeah. Like,

56:30

hey, instead of this fun potlatch,

56:32

would you like to go to a

56:35

credit union instead? You

56:38

won't get a boat or a jacket, but you

56:40

will get to stand in line. Yeah,

56:46

and this was weirdly almost

56:48

a cultural practice, more

56:51

than a financial practice too, because Desjardins

56:53

did it for poor farmers in

56:55

Quebec and mainly ran it out

56:58

of his local Catholic church. The

57:01

other office was his own house,

57:03

but spread among Catholic French Canadians.

57:06

And also Desjardins' idea bled

57:09

south to New Hampshire. And

57:12

in 1908, the town of St. Mary's,

57:14

New Hampshire started the first credit union

57:16

in the United States, basically

57:19

just copying French Canadians. The

57:22

other North American number here is

57:24

1907, one year

57:26

before that, New Hampshire, Canadian-based credit

57:28

union. 1907 is

57:31

when an American businessman named

57:33

Edward Filene visited

57:35

British India. You

57:38

see, so British colonized India. So

57:40

those two colonies took him to each other. Edward

57:44

Filene is weirdly important for two ideas. One

57:46

is that he made credit unions a lot

57:48

more popular in the US. The

57:51

other is that the Filene family store, he

57:53

had the idea to put a discount section

57:55

in the basement where goods just

57:57

automatically went to the basement. And then that

57:59

was... was such a hit it became

58:01

an entire chain of stores called Filene's Basements

58:04

that only recently went out of business with

58:06

a lot of other department stores. I

58:09

feel like that when I hear

58:11

Filene's Basements I think

58:13

two things one essentially

58:15

a cracker barrel or two

58:18

a sex shop. It

58:23

is very neither of those things I suppose

58:25

the clothes but

58:29

so Filene's name is famous now

58:31

from that but Edward

58:34

Filene visited Bengal in modern India

58:36

and Bangladesh it was all one

58:38

British colony and

58:41

the British government had sort of imposed

58:43

the idea of rural credit unions for

58:45

farmers like many people had been

58:47

doing in Europe Edward Filene

58:49

within one year of that is

58:51

so inspired he goes from India

58:54

back to Massachusetts that states first

58:56

credit union and then

58:58

one year later convinces the Massachusetts legislature

59:00

to pass a law supporting the formation

59:03

of credit unions and

59:05

then in 1934 the federal government copied that idea

59:09

President Franklin Delano Roosevelt signed a

59:11

federal credit union act so

59:14

that laid the legal groundwork for basically all

59:16

credit unions today in the US that's

59:19

a lot of how the US got them as

59:21

the Filene's Basement guy was really passionate about it

59:23

and then there's an interesting other

59:26

connection where the Filene's

59:28

are here partly because of that same

59:30

1848 German Revolution that helped get

59:34

them going there Edward Filene was

59:37

a Jewish German American and his father

59:39

left Prussia in the year 1848 but

59:42

probably partly due to the anti-Semitism but

59:44

also because of the democratic revolutions stirring

59:47

everything up Yeah,

59:49

yeah, for people who don't

59:52

know like pre-holocaust there were a

59:54

lot of pogroms and

59:56

anti-Semitism Yeah Central

1:00:00

Europe and Eastern Europe a lot

1:00:03

of Jewish people were either forced

1:00:05

out or would voluntarily try to

1:00:08

I mean quote-unquote voluntarily leave Yeah,

1:00:12

and that and that trouble and that

1:00:14

awful experience that helped William finally Who

1:00:16

started the file in store and then

1:00:18

his sons including Edward who did all

1:00:20

this credit union stuff that that helped

1:00:22

them care about? Can

1:00:24

banking be social can banking be

1:00:26

positive? Let's just do things that are

1:00:29

social and positive nice Yeah,

1:00:32

and that's a lot of the kind

1:00:34

of modern story of credit unions, too

1:00:36

I'm gonna link about Catholic churches in

1:00:38

Latin America because in the 1940s

1:00:41

some of them pursued what's called liberation

1:00:43

theology Which is a goal of serving

1:00:45

God through economic and social justice Interesting

1:00:49

so Catholic churches set up a bunch

1:00:51

of credit unions across Latin America

1:00:53

that was one of their ideas for doing that Hey,

1:00:56

you know what? Alright not

1:00:59

the worst thing missionaries

1:01:01

have done very

1:01:04

last number is 2006

1:01:06

a Bangladeshi economist and banker named

1:01:08

Muhammad Yunus won the Nobel

1:01:10

Peace Prize And

1:01:13

not not the economic surprise the Peace

1:01:15

Prize because he's done innovative work with

1:01:18

microfinance Where it's very

1:01:20

tiny loans at low rates to people in

1:01:22

Bangladesh where he's from The

1:01:24

institution that developed into is called

1:01:26

Gramin Bank. It's co-owned by its

1:01:28

borrowers and by the government of

1:01:30

Bangladesh So that is

1:01:33

credit union ish But also government run

1:01:35

either way it's one way this idea

1:01:37

has evolved and this idea will

1:01:39

probably keep evolving There will probably be new kinds of

1:01:41

credit and credit unions to talk about in the future

1:01:46

Yeah, so that's the topic and now I

1:01:48

feel differently about my mortgage it's nice I

1:01:53

Feel differently about your mortgage to

1:01:56

really really brought me around okay

1:02:00

but only we get to feel about it the rest of

1:02:02

you stay stay away from it privacy

1:02:05

they can't get away from my mortgage now

1:02:08

we don't have we don't have a lot of the new

1:02:10

marble we still got more hidden so we got a public

1:02:13

it the payoff for more than uh...

1:02:29

uh... what

1:02:32

history you've got to help remembering this

1:02:34

episode with a run back through the

1:02:36

big takeaways mega

1:02:41

takeaway number one of one credit

1:02:44

unions are both more positive than

1:02:46

a regular bank and the same

1:02:48

as a regular bank because all

1:02:51

banking is a bizarre thirteen hundred

1:02:53

form of time travel we

1:02:55

also broke down four ways credit unions are

1:02:58

different from the storing money and the lending

1:03:00

money of a bank credit

1:03:02

unions are limited in their membership

1:03:04

they are usually owned or run

1:03:06

or managed by members often

1:03:08

have a different tax burden and

1:03:10

they often have a charter that

1:03:12

directs them to do something beyond

1:03:14

profit it's not quite non-profit but

1:03:17

something beyond profit that

1:03:19

mega takeaway also unspooled the entire history of

1:03:21

banking you know the venetian bridge guys and

1:03:23

stuff and also the entire history of money

1:03:25

plus a lot of easter eggs within that

1:03:28

and then in our numbers and stats we

1:03:30

explored the mid eighteen hundreds origin of credit

1:03:32

unions the modern spread of them and new

1:03:34

ways their philosophy is evolving those

1:03:39

are the take away and numbers and

1:03:41

stories and stats also i

1:03:44

said that the main episode because there

1:03:46

is more secretly incredibly fascinating stuff available

1:03:48

to you right now if you support

1:03:50

this show at maximum fund.org members are

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the reason this podcast exists the members

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1:04:00

to that main episode. This week's

1:04:02

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1:04:09

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Additional fun things, check out our

1:04:30

research sources on this episode's page

1:04:32

at maxfunfun.org. Key sources this week

1:04:34

include the book Money, the

1:04:36

true story of a made-up thing

1:04:39

by journalist and Planet Money co-host

1:04:41

Jacob Goldstein. Another book

1:04:43

called The History of Money by

1:04:45

Macalester College cultural anthropologist Jack Weatherford,

1:04:48

plus tons of digital resources from

1:04:50

the Virtual Museum of Canada, Latham's

1:04:52

Quarterly, the Cornell Law School, and

1:04:54

more. That page also features

1:04:56

resources such as native-land.ca. I'm using

1:04:58

those to acknowledge that I recorded

1:05:00

this in Lenapehoking, the traditional land

1:05:02

of the Munsee Lenape people and

1:05:05

the Wapinger people, as well

1:05:07

as the Mohican people, Skadigok people, and

1:05:09

others. Also, Katie taped this

1:05:11

in the country of Italy, and I

1:05:13

want to acknowledge that in my location,

1:05:15

in many other locations in the Americas

1:05:17

and elsewhere, Native people are very much

1:05:20

still here. That feels worth doing on

1:05:22

each episode, and join the free SIF

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Discord, where we're sharing stories and resources

1:05:26

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1:05:30

join that Discord. We're also

1:05:32

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1:05:35

and hey, would you like a tip

1:05:37

on another episode? Because each week I'm

1:05:39

finding you something randomly incredibly fascinating by

1:05:41

running all the past episode numbers through

1:05:44

a random number generator. This

1:05:46

week's pick is episode 39. That's

1:05:48

about the topic of playing cards.

1:05:50

Fun fact there, the first playing

1:05:53

card technology spread across the world

1:05:55

in a clear east-to-west pattern. So

1:05:58

I recommend that episode. I also recommend I'm on

1:06:00

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Feature, about animals and science and more.

1:06:05

Our theme music is Unbroken Unshaven by

1:06:07

the Budos Band. Our show logo is

1:06:09

by artist Burton Durand. Special

1:06:11

thanks to Chris Sousa for audio mastering on this

1:06:14

episode. Special thanks to the

1:06:16

Beacon Music Factory for taping support. Extra

1:06:19

extra special thanks go to our members

1:06:21

and thank you to all our listeners.

1:06:24

I am thrilled to say we will

1:06:26

be back next week with more secretly

1:06:28

incredibly fascinating. So how

1:06:30

about that? Talk

1:06:32

to you then. Maximum

1:06:51

Fun. A worker-owned network

1:06:54

of artist-owned shows supported

1:06:56

directly by you.