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.
Don't banks require "savers" as their source of capital for lending?
German banks are hoarding so many euros they need more vaults
141–150 of 327 posts
Re: German banks are hoarding so many euros they need more vaults
#142Earlier quoted context omitted.
>The German Saver knows better than most that inflation destroys savings. Yeah this is not the outcome Germany or the EU needs to worry about. It's experiencing Japanese deflation for 20 years. >This is a looming political issue that's only just beginning. Yes there's been plenty of hard money cranks that have said this for 10 years since the Great Financial Crisis in the US. Zero Hedge, gold bugs, hedge fund manager…
> It's experiencing Japanese deflation for 20 years. GDP per capita (PPP) in Japan has more than doubled over the past 30 years. https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?locat... Slow growth is only a problem if you rely on investing to generate your income. Otherwise, even no growth at all is fine.
Have there been any major issues with declining QOL in Japan? It might be a cultural barrier but aside from the deflation stories making the rounds, I don't hear much about them suffering because of it.
Re: German banks are hoarding so many euros they need more vaults
#143Earlier 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.
>The German Saver knows better than most that inflation destroys savings. Yeah this is not the outcome Germany or the EU needs to worry about. It's experiencing Japanese deflation for 20 years. >This is a looming political issue that's only just beginning. Yes there's been plenty of hard money cranks that have said this for 10 years since the Great Financial Crisis in the US. Zero Hedge, gold bugs, hedge fund manager…
Japanese deflation is brought up a lot. However it didn’t really strike me as a troubled economy when visiting - on the contrary, things looked quite well.
Can someone elaborate on why deflation is so bad?
Re: German banks are hoarding so many euros they need more vaults
#144Earlier quoted context omitted.
In many countries in Europe you can't use cash for large sums. We generally use bank transfers to buy cars.
I'm genuinely curious. Do you need to go to a physical bank location to do this? How do you buy a car in the evening or a Saturday afternoon, when a bank is closed?
Direct account-to-account transfer is supported between all major EU banks. It takes a couple of seconds at most, and it's free.
Re: German banks are hoarding so many euros they need more vaults
#145Earlier quoted context omitted.
True. But it is nice to have large bills when buying something that costs a lot, like a used car. I recently did that in the US and if I had some $500 or $1000 bill things would have went a bit smoother at that nervous time in the transaction when you are handing over to a person a big chunk of money.
You tend to run into the problem that forging large notes has a much greater return on investment. People get nervous about accepting them. In the UK this definitely kicks in around the £50 mark.
Signs stating "$100 notes not accepted" used to be seen in many shops Canada about 15-20 years ago, when cash was much more commonly used. Since the switchover to polymer bank notes around 2011, counterfeiting has become almost non-existent but cash payments in general are much less common too.
Re: German banks are hoarding so many euros they need more vaults
#146Negative interest rates are long time lethal to financial institutions such as banks and insurance companies. Hoarding printed paper is just a hilarious side effect, but the reality is that under negative rates the financial institutions are, at best, delaying their inevitable bankruptcy. https://moneyandmarkets.com/jeffrey-gundlach-negative-intere...
This makes sense to me, but I don't see democratic countries able to stop themselves before it's too late. What comes after? This exact problem is why I liked Bitcoin a few years ago. Although with the scaling issues, it seems less useful than I expected.
Do you think raising the block size would create more issues? Although it seems BTC is committed to layer 2 scaling solutions.
Re: German banks are hoarding so many euros they need more vaults
#147Earlier quoted context omitted.
I'm genuinely curious. Do you need to go to a physical bank location to do this? How do you buy a car in the evening or a Saturday afternoon, when a bank is closed?
Buying a car in Europe is a complicated affair, and certainly not something that can be concluded in an afternoon.
What? You go to a car dealer, sign, pay and drive away.
Re: German banks are hoarding so many euros they need more vaults
#148Can 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.
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 supply.
Re: German banks are hoarding so many euros they need more vaults
#149This 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
According to that same article, the reason for retiring the note was because the people who benefited the most from its existence are criminals, who need to do their business in cash -- the fewer notes, the easier for them. That includes storage, I guess. Still, I'm personally not in the eurozone, but in general terms for the end user high-denomination notes are not very useful unless you're gonna store them under yo…
I've been in the eurozone since it started.. only ever saw 500 euro bills being exchanged in casinos.
Re: German banks are hoarding so many euros they need more vaults
#150Can 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.
Well in Germany's case they believe the economic conditions (inflation) were a cause of Hitler's rise to power, and are understandably extremely skittish about triggering similar conditions https://en.wikipedia.org/wiki/Hyperinflation#Germany_(Weimar...
both the weimar era hyperinflation and hitlers rise to power were caused by the conditions of the versaille treaty.