American dollar

Heads – Americans Win; Tails – Mexicans Lose

The American dollar is “heading north” of 18 pesos (no pun intended). This is great for Americans living in Mexico. But, is it good for the Mexicans whose businesses we patronize?

Here’s just one example…

Hole-in-the-Wall Bakery

Hole-in-the-Wall Bakery

There’s a little hole-in-the-wall (really…see the picture) panaderia, or bakery, around the corner from where I live. Its proximity makes it difficult for me to stay on a diet. Six days a week, José Maria and his wife bake a selection of breads, rolls, and sweets. There’s plump bolillos (rolls), biscuits, donuts, cinnamon rolls, muffins, and cookies. They supply the little corner stores, abarrotes, in San Antonio. They also have a small shop in the front of the bakery where they sell at retail. There you can buy whatever is available for 4.5 pesos each (about $.25).

José Maria and I have briefly talked several times. Once I remarked about his large selection of items. He looked over his shelf and agreed. “Making them is the easy part,” he shared. “Selling them is difficult.” He’s a good baker, and his selection keeps growing. Once people discover his place, I can’t imagine that being a problem.

Since that conversation, I’ve seen him walking down the street to Jesus’ little store or Laura’s Superette with a tray piled high with baked goods. Or he might be driving his car to stores farther away with a pastry-filled back seat.

Last week I was curious about how the increase in the dollar was affecting him. I asked him about the ingredients he used. “Where do you get your wheat,” I asked him.

“About half of it comes from the United States,” he answered. The other half comes from Mexico. The stuff from Mexico is better,” he chided.

“So, have your prices for ingredients gone up,” I continued. His expression became more serious.

“They haven’t gone up yet,” he explained. “But they will.”

When you understand that his market is local working people, you realize why he’s concerned. 4.5 pesos doesn’t seem like much. However, a house cleaner makes only 50 pesos ($3) an hour. Laborers don’t make much more. There’s a guy who will wash your car while you shop up the street for 35-40 pesos. At some point, José Maria will have to raise his prices to keep up. And, his customers will have to pay more.

I wrote about the rise of the dollar back in December. Back then the dollar had appreciated 10.6% in the short time I was here. The recent exchange rate means that, in 11 months, the dollar has risen about 40%. Yikes!

I usually don’t pay much attention to the prices in the markets and stores. I eat out a lot, so I pay attention to menu prices. In December, I discussed the rise in the price of a steak at one restaurant that was tracking right along with the dollar. As its price increased in pesos, the cost of the steak stayed at $9.52US. This past spring, that same steak had risen from 119 pesos to 179 pesos, costing 50% more in pesos. Meanwhile, today that steak costs me $10.22 or about 7% more.

The restaurant appears to be doing well. There’s no shortage of middle class Mexicans frequenting it. Someone’s doing well in Mexico! While the Canadian dollar has been relatively stable against the peso, some Canadians I know are starting to complain. They buy their airplane tickets in U.S. dollars, some pay their rent in U.S. dollars, and it’s more expensive to buy a steak at that restaurant. It will be interesting to see if fewer Canadian snowbirds make the trek down here (and Florida too) this winter.

One thing is for sure. The dollar won’t stay up forever. You know what they say: What goes up…

If the doom-sayers are correct, the dollar may have a hard fall at some point in the not-so-distant future. Then the Americans among us down here on fixed incomes and meager savings will feel the pinch.

Until then, let them eat steak!

How to Launder Money

18 USC § 333

As I promised at the end of my last post, I will now show you how to launder money. In the last post, I cited an article claiming that American bills are “filthy.” Unfortunately, I’m not filthy rich…not even a little bit. So, I’m hoping I can contribute a little – very little – to public health.

The citation above from the U.S. Code is a little scary. How many times have you used a dollar bill to write a note or telephone number on a dollar bill when you couldn’t find a piece of paper? At pick-up bars across the country, every night of the week you’ll find unsuspecting lawbreakers. Staking out one of those places might be a better Secret Service assignment than accompanying a diplomat to Colombia.

Or maybe you’ve used scotch tape to piece together an old bill until you could exchange it at a bank or give to some unsuspecting store clerk? Is there a penalty for receiving “defaced” currency too?

Let’s get one thing straight. As I illustrate two money laundering methods below, I had no “intent to render such bank bill, draft, note, or other evidence of debt unfit to be reissued.” I only intended to have a little fun. And luckily, wiping the sweat from my brow, I think I avoided prison.

So let’s get on with it. First, I’ll show you the manual method, and then the mechanized way.

The Manual Way to Launder Money

Not everyone has a washing machine, and sometimes you don’t have time to wait through wash, rinse, and spin cycles. So here’s what you do…

  1. Gather your materials. You’ll need some hand sanitizer to clean up after handling un-laundered bills, a pair of rubber/latex gloves, and some disinfectant wipes.

    All you need!

    All you need!

  2. Put on the gloves, then place the bills to be laundered on a flat surface.
  3. Gently wipe both sides of each bill with a disinfectant wipe.

    Cleaning Andy Jackson's Nose

    Cleaning Andy Jackson’s Nose


The Mechanical Method to Launder Money

If you have the time and/or have a lot of money to launder, the 12-point mechanical or “batch” method is a bit more involved. But, with a little experience you can ensure yourself a supply of fine, clean, and “reissuable” paper currency.

Latex Gloves

Latex Gloves

  1. Put on your rubber/latex gloves.

    Slightly Used $10 Bill

    Slightly Used $10 Bill

  2. As you can see, we’re going to use a slightly-used $10 bill. Notice the colors (they used to be all-green, but the newer ones are multi-colored) and the fine engraving…and of course the gloves.Folded_10
  3. Fold your dirty bills, so they are compact. This will also help protect the bills from damage should an errant bill escape the pocket.

    Putting $10 in Pocket

    Putting $10 in Pocket

  4. Put the bill in the pants pocket. I suppose, you could use a lingerie bag. But, being a single (‘n’ retired) guy, I didn’t have any lying around.

    Jeans In Wash

    Pants Go into Washing Machine

  5. Put the pants in the washing machine with the rest of your laundry.Laundry Soap
  6. Use a gentle detergent. This one has color enhancers to preserve the subtle colors of the money. We don’t want to risk defacing it.Machine Dial
  7. Select a gentle cycle and start the wash.
  8. At the end of the cycle remove pants from the tub.

    Taking Pants out of Dryer

    Taking Pants out of Washing Machine

  9. And remove the now-clean money from the pockets. Oh no!!! The money’s not there.  At this point, I’m breaking into a cold sweat, with visions of jail bars dancing in my head!

    Oh No!!! No Bill!!

    Oh No!!! No Bill!!

  10. Getting to the bottom of things, I find the missing bill at the bottom of the tub nestled between two tee shirts, and breathe a sigh of relief. Whew!

    Whew!! There's the $10 Bill

    Whew!! There’s the $10 Bill

  11. Having been washed, rinsed, and spun until Alexander Hamilton wanted to puke all over my clean clothes, the money survived the ordeal none-the-worse-for-wear…and clean too (thank you Al).

    Is Alexander Hamilton a Little Woozy after Spinning?

    Is Alexander Hamilton a Little Woozy after Spinning?

  12. I don’t like to run my money through the dryer. This new money the U.S. is issuing has all sorts of anti-counterfeiting features. I wouldn’t want to melt some plastic strip. Then, I’d really be in trouble!

    Hanging it Out to Dry

    Hanging it Pot to Dry

Instead, I hang it up to dry gently in the breeze.

So, there you have it. I hope this “how-to” blog post helps save you or some poor person from a cold, the flu, or… jail. And, in my next blog post, I will NOT be showing you how to counterfeit money.

Are You Laundering Money?

Mexican and American Money

Mexican and American Money

Last week, I got a cryptic legaleze email from an investment firm informing me that, starting in October , I might not be able to buy mutual funds within my IRA account – only sell them. This is because they may determine that I live abroad. It seems that every month we find out about some new regulation that has taken effect and limits what we can do with our money. Much of it is spurred by government paranoia about money laundering by criminals.

Have you tried to transfer money from a U.S. bank to a Mexican one or open a Mexican bank account? Maybe your bank is restricting the amount of money you can transfer abroad in a given month. And maybe you’re unfortunate enough to run a-fowl of “know your customer” rules that turn your friendly bank teller into a snitch for the IRS if your deposits are too large or too small.

Now let’s be honest. We all know that most of us are really down here to snooker the American government and launder the meager savings we depend on to live.

Since a lot of us down here are retired and getting long on the years and short on the memory, many of us have unknowingly managed to launder a bit of money in our time.

Why I remember just last week, I got a new crisp $500 peso note from the ATM machine, and couldn’t find it for a few days…until I did a load of wash. Low and behold, as I lifted the laundry into the dryer, a damp $500 peso note fell to the floor. I’ve probably found enough 10 centavo coins in the bottom of my dryer to fund several round-trips from Chapala to Ajijic.

Actually, I can’t see anything wrong with laundering money. And, I’m surprised the Center for Disease Control and the BATF haven’t implored the IRS to permit it.

According to Time Magazine, “the stuff is filthy. Studies show that a solid majority of U.S. bills are contaminated by cocaine. Drug traffickers often use coke-sullied hands to move cash, and many users roll bills into sniffing straws; the brushes and rollers in ATMs may distribute the nose candy through the rest of the money supply.”

This is actually bad news if you’re stopped by the police in the US. Asset forfeiture laws allow a cop to confiscate any amount of money from you if they suspect you’ve acquired it illegally. So, that $20 bill you just got from the ATM could find itself into a cop’s pocket and land you in jail.

Time also reported “A 2002 report in the Southern Medical Journal showed found pathogens — including staphylococcus — on 94% of dollar bills tested. Paper money can reportedly carry more germs than a household toilet. And bills are a hospitable environment for gross microbes: viruses and bacteria can live on most surfaces for about 48 hours, but paper money can reportedly transport a live flu virus for up to 17 days.”

And so we now have a concerted effort by the powers that be in Washington and Wall Street to do away with cash and go cashless. And, it’s not because paper money is filthy and disease ridden. You can’t launder paper money you don’t have. Although credit and debit cards can go through the wash, they also leave a trail of every expenditure you make. Try buying cocaine with a credit card!

Currency controls are the latest affront to hardworking American taxpayers foisted on us by Congress. In the name of saving us from the clutches of the dirty 1% and their ilk, champions of the poor and retired, really stuck it to us – the very people they supposedly wanted to “help.”

Let’s not forget, they also needed to protect us from those nasty drug dealers who have now legally set up shop in places like Colorado. And make sure that the few bad apples, who have actually laundered money overseas, are able to screw up the banking relationships and investment opportunities for the rest of us honest folk. In typical Federal government fashion, U.S. currency regulations are overkill for a free society, and the unintended consequences reach deep into our quickly emptying pockets.

Target Stores Photo

Target Stores Photo

So the next time you even contemplate laundering money, let me give you some advice. Wash bills recently acquired from an ATM, lest their residue incriminate you. And, use Tide Plus with Colorguard to preserve the colors, and the gentle cycle when washing older bills so they don’t fall apart.

Look for my next post when I’ll give you specific tips on how to launder your U.S. bills and keep yourself safe from the bio-hazard you carry in your pockets and wallets.

Pesos and Dollars

How can prices rise and you pay the same? Be a U.S. citizen living in Mexico!

The American dollar has been having a rally of sorts. Its value has risen against every major currency, including the Mexican Peso.

If you’re an American living here, and the value of the dollar is rising, your dollars can go further, depending on the item – at least until the higher costs Mexicans pay for foreign goods catches up.

Here’s an example: the cost of a pretty darn good skirt steak dinner at a restaurant here called Tango. When I first visited in September, the 14 oz. skirt steak with a side dish cost 119 Pesos (US$9.52). The exchange rate was about 12.5 Pesos to the dollar. Today, that same steak dinner costs 140 Pesos, a 16.6% price increase. But, with the exchange rate at 14.7 Pesos to the dollar, it’s still only US$9.52.

Another example: my first night in Ajijic this past September. I went to a restaurant on the plaza called El Jardin. My beef fajitas cost 73 Pesos (US$5.84). El Jadin hasn’t raised its prices in Pesos since. So, the same beef fajitas, today, cost US$4.97.

Every week, I usually withdraw about 2,000 Pesos from my U.S. bank account. The table below shows the settlement amount of each transaction.

Week 1     $154
Week 2     $150
Week 3     $148
Week 4     $144
Week 5     $141
Week 6     $138

Today, the same amount of Pesos is costing me 10.3% less than when I arrived. If you’re an American, with a lease, paying rent in Pesos (unfortunately, I’m not) you’re in even better shape, because your rent has gone down about 10.3% in the past 4 months. That means that US$1000 per month rental now is costing less than $US900 in real terms.

Mexico’s central bank is trying to change this situation. I’m not sure how long it will last, but as an American living in Mexico, I’ll enjoy the ride.