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German banks are hoarding so many euros they need more vaults

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Re: German banks are hoarding so many euros they need more vaults

#271

Post by econcon »

wefarrell wrote: post #32
aazaa wrote: post #23

Earlier quoted context omitted.

> ... when the German Saver is who would benefit if they decided tomorrow to run deficits for the next 10 years. The German Saver knows better than most that inflation destroys savings. Inflation benefits debtors by allowing them to pay back their loans in depreciated currency. Germany isn't exactly a nation of debtors, although most of Europe is. This is a looming political issue that's only just beginning.

What good is the EU if its wealthier members are unwilling to subsidize the poorer ones? Germans want the benefits of federation without the drawbacks.

While EU does subsidize poor EU countries but we must question what's the impact of that subsidizing.

1. EU is single market 2. Germany micraclously had strong currency at the time EU was created, so Germany businesses bought everything in cheaper EU countries and winners became bigger winners engulfing all small players across whole EU 3. EU taxes winners of the game and sends some money to improve the quality of life in poor nations but this ensures that poor EU nation get trapped in middle range and never surpass Germany.

They've managed to get all benefits of "imperialism" without any of the downsides.

Re: German banks are hoarding so many euros they need more vaults

#272

Post by econcon »

erichocean wrote: post #260
OscarCunningham wrote: post #43

Can someone explain to me why central banks find it so hard to create inflation? It seems to me that the difficult direction should be convincing people that your currency is worth something. Making your currency lose value should be easy, shouldn't it? If Google wanted to tank their share price they would have no problems.

They don't find it hard, because it's trivial: just restrict imports (i.e. available inventory). If there are less things to buy, inflation will rise as people "compete" to buy whatever is available. When you hit your target inflation number, relax the restriction on imports to reduce the inflation. Season to taste. This policy likely has 2nd and 3rd order effects, as it will hurt other countries, but that's a simple…

Or like in India - make imported oil/gas expensive and inflation goes up.

Re: German banks are hoarding so many euros they need more vaults

#273

Post by smokeyfish »

throwawaycanada wrote: post #262
Scoundreller wrote: post #247

Earlier quoted context omitted.

If you have large piles of money to launder, one way is to build a rental property and pay all the materials/contractors in cash. But now harder to do that with 5x the bills. Or suddenly stuck with 500s that nobody wants to take.

Wait... how do you explain the appearance of the building with no expenses shown except "from cash"?

There are expenses, they're just not the right expenses.

Re: German banks are hoarding so many euros they need more vaults

#274

Post by econcon »

ahakki wrote: post #148
jldugger wrote: post #52

Earlier quoted context omitted.

I suspect the problem is creating only a little bit of inflation. Hyperinflation is easy, just ask the Weimar republic.

what simple mistake did the weimar republic do that caused a hyperinflation? I thought it was primarily caused by a massive reduction in the supply of goods following the versaille treaty without a corresponding reduction in monetary supply. At that point there really wasn't a lot the government could do to stop it. Zimbabwe faced similar problems after disowning their most productive agricultural providers, reducing…

Mostly because of the world war they waged, they created bonds and then printed more and more currency to pay it off, creating hyperinflation.

Re: German banks are hoarding so many euros they need more vaults

#275

Post by econcon »

rusk wrote: post #61
jldugger wrote: post #52

Earlier quoted context omitted.

I suspect the problem is creating only a little bit of inflation. Hyperinflation is easy, just ask the Weimar republic.

Or Zimbabwe or Argentina even ... but I think these extremes are absurd. They are blunders. What we are talking about here is why EU isn’t taking prudent steps to provoke growth, and that’s all down to keeping certain dominant nationa happy.

The reason they managed to create hyperinflation is because when you print more currency, inflation doesn't immediately change in reaction.

So they ended up printing more and more till, it all corrected at once and hyperinflation was already here before they could roll back their currency printing machines.

They took a practical approach to managing inflation yet paying off debt obligations with more currency but didn't realize it all could backfire - they didn't do something as stupid as others will have you believe.

Re: German banks are hoarding so many euros they need more vaults

#276

Post by Amarok »

njarboe wrote: post #2

This problem has probably been exacerbated by the fact the the $500 euro note has not been issued since 27 April 2019[1]. I wonder if making storing euros in cash 2.5 times harder (500 versus 200 euro notes) was part of the reason the 500 euro was retired. [Edit] The legal storing of cash. The stated reason was the criminal use of cash. [1] https://en.wikipedia.org/wiki/500_euro_note

I was storing 500 euro bills under my bed during the 08 crisis. When I moved to the UK, Barclays was the only non shady place that accepted them.

Re: German banks are hoarding so many euros they need more vaults

#277

Post by [deleted] »

chii wrote: post #188
toss1 wrote: post #165

Earlier quoted context omitted.

Deflation is bad because it is a self-reinforcing slowdown in the economy. The money gets more valuable and the assets get cheaper. so the incentive in every micro-decision is to hoard money and not spend. Why spend when the same thing will get cheaper tomorrow/next week/month/year...? So, the key factor of the Velocity of Money declines, and the entire economy either grinds or crashes to a (relative) halt. My unders…

Deflationary problems seems to me a overblown issue, and the cure may be worse than the disease. Inflation prevents low income earners from saving, but they aren't in a position to take risk and invest. Therefore, it causes their networth to drop in relation to the wealthy (who can take risks to keep up by investing). Inflation also keep wages down, as it's easier to pay the same wage , and any increase must be above…

[deleted]

Re: German banks are hoarding so many euros they need more vaults

#278

Post by modo_mario »

imtringued wrote: post #234
blazespin wrote: post #41

Earlier quoted context omitted.

Savers are bad for the economy at large though because they don't invest in high risk businesses, but rather in low risk assets (RE, bonds, etc) that do nothing for no one. They're like scrooge mcduck swimming in their pile of gold.

>that do nothing for no one I'm not sure you understand these assets if you think they do nothing. If you want to rent an apartment then someone has to build and own it first. If you want to borrow money for your business then someone has to save money and put it aside so it becomes available to you. Your comparison to scrooge mcduck doesn't make sense because you're assuming that the money will never be used. If you…

>If the stock market crashes the same year you wanted to buy your car the you will need to obtain liquidity by borrowing money from a bank (remember those stupid scrooge mcducks swimming in their pile of gold? now you're begging them to give you money)

Are banks not able to in effect create money in todays system?

Re: German banks are hoarding so many euros they need more vaults

#279

Post by orthoxerox »

leetcrew wrote: post #252
Frost1x wrote: post #191

Earlier quoted context omitted.

Would you accept a $1000 or even $500 note from a craigslist transaction? I'm usually pretty hesitant to accept anything over a $20 or even deal in cash for small exchanges. I wouldn't even consider $500 unless I had a way to strongly guarentee the bill I'm looking at isn't fake. It would take a bit of time and research before I felt confident enough at identifying these bills to accept them in a trade. I'd have to d…

unless it's just a one-off purchase, I feel like a much better strategy would be to pay in $20's and have a fraction of them be fake. if someone paid me with a (hypothetical) $500 bill, I damn sure take at least a minute to hold it up to the light and look for security features. they paid me with 25 $20 notes, I would probably just count them and call it a day. if 10-20% of them were fake, I might not realize until I…

I think it depends on the cost of counterfeiting a single note. All the security features must add up, and I won't be surprised if the cost, unless you're printing literally industrial quantities, makes fake $20 bills unprofitable to make.

Re: German banks are hoarding so many euros they need more vaults

#280

Post by orthoxerox »

Symbiote wrote: post #170
virgilp wrote: post #131

Earlier quoted context omitted.

To be fair, in Romania I was refused too, ~5years ago. All cards have a percentage fee - when you spend tens of thousands on something, even a small percentage adds up. Thus the car dealers require a bank transfer, which is generally free of charge for both parties.

It looks like the change in 2015/2016 to reduce card fees, while enabling us to buy a single bottle of milk by card with a 0.2% fee for the merchant, has made things worse for people selling cars. Instead of a small, fixed fee (e.g. £0.10) it's now also 0.2%. https://www.am-online.com/opinion/2016/12/06/opinion-debit-c... (The article does at least tell us that "many" customers pay for the full price of the car with…

0.2%? You could probably wring a greater discount from the dealer by haggling half-heartedly.
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