Larry Summers knows a thing or two about money. He ran the Treasury Department under President Clinton, and his signature is on the $20 bill. When he has a gripe about the price of something, it’s worth paying attention.
So what’s bugging him today? Speaking to a room of finance leaders in New York, the present day counterpart of Alexander Hamilton groused about the price of earphones.
“In a world of very sophisticated information technology, it’s kind of a remarkable thing that if I go outside and buy a $400 pair of headphones, $8 will be removed for processing the payments. That’s a lot,” he told Fortune’s Alan Murray at Consensus 2016, a three-day event about financial technology.
The source of Summers’ ire, though, is not the price of electronics. Instead, the point of his comment was how the U.S. financial system still permits middlemen, like credit card processors, to extract a 3% levy on every consumer transaction, and even more in the case of big ticket items like houses.
In the future, Summers believes that much-hyped blockchain technology will let banks and other financial institutions clear transactions infinitely faster than they do now. And at a small fraction of the