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German banks are hoarding so many euros they need more vaults

bloomberg.com

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

#261

Post by kyuudou »

Melting_Harps wrote: post #87
idiocratic wrote: post #47

Earlier quoted context omitted.

In many countries in Europe you can't use cash for large sums. We generally use bank transfers to buy cars.

> In many countries in Europe you can't use cash for large sums. We generally use bank transfers to buy cars. Some, like Sweden and Italy, going to extremes to phase cash out of existence, the latter making 'large' cash transaction punishable by jail/fine. I lived in EU during the financial crisis, and when cash got scarce prompting places in Greece to issue their own local currency [1] to do basic transactions (kids…

>I lived in EU during the financial crisis, and when cash got scarce prompting places in Greece to issue their own local currency [1] to do basic transactions (kids in school were passing out due to a lack of food, hospitals were running out of medicine and basic supplies in general)

Didn't something similar recently happen when Modi was trying to ban cash in India? Kinda backfired. Cash (and gold) will probably never die there.

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

#262

Post by throwawaycanada »

Scoundreller wrote: post #247
dmurray wrote: post #221

Earlier quoted context omitted.

They aren't getting enough €50 or $100 notes to be a real logistical problem. You can put 10k in your pocket, and count it in a minute or two.

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"?

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

#263

Post by throwawaycanada »

njarboe wrote: post #180
reaperducer wrote: post #153

Earlier quoted context omitted.

This problem has probably been exacerbated by the fact the the $500 euro note has not been issued since 27 April 2019 The United States used to print $100,000 notes. They were only available to banks for moving from bank to bank, I believe, and so were useful for reducing the number of notes that needed to be stored by banks, while keeping them out of the hands of criminals.

The US also had lower denomination bills like the $500 and $1000 until 1969. They were not in much use then but I think that they could have useful legal uses today considering all of the inflation that happened since 1969. The $500 now would be about like $75 in the 1960's.

We had 1000's well into the 90's in Canada. I got to hold one as a kid. Apparently 98% of them have fallen into mafia hands somehow which I find hilarious given our history. Especially since they can't get them back, want them back, and if used they have to be honoured. It must drive certain people crazy.

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

#264

Post by throwawaycanada »

leosarev wrote: post #257
jimmaswell wrote: post #186

Earlier quoted context omitted.

Cash will continue to be #1 for Craigslist/yard sale-type transactions for a long time I'd say.

Why won't use something like Visa Money Transfer?

Because unless you want to read someones multi-page terms and conditions you can never know whether they can claw the money back.

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

#265

Post by kyuudou »

Fishysoup wrote: post #177
pergadad wrote: post #164

Earlier quoted context omitted.

That's nonsense. The reason for low interest rates is so that Italy won't collapse. It's widely hated in Germany as bank accounts have basically zero interest nowadays.

They also blamed Greece for the bailout, which was a bailout of German banks. Yes the situation obviously isn't completely one-sided and there's more than one actor here, but don't pretend Germany is doing everything out of the goodness of its heart and to protect the EU. They're as selfish as any other country.

I heard there was quite a fire sale on pretty Greek islands during that time.

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

#266

Post by kyuudou »

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…

EXCELLENT synopsis. Also, some consider inflation outright theft from the middle and lower classes or in the least morally questionable.

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

#267

Post by econcon »

Aperocky wrote: post #50
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.

Savers are bad for business because liquidity stops when money hits them. US has such a strong economy because barely anyone save. Japan had so much savings that they literally need exports to survive, there’s no home market to speak of because everyone save so much. Once export tanks, their economy tank.

Exports account for 25% of Japan's GDP. So in all - it has strong local market.

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

#268

Post by kyuudou »

Despegar wrote: post #93
growlist wrote: post #77

Earlier quoted context omitted.

I think the moralizing is useful if it means future generations aren't going to pay the price for today's profligacy.

This extremely poor misunderstanding of macroeconomics is likely to lead to the outcome you're supposedly trying to avoid.

So... when does the music stop? Some kind of debt jubilee or currency reissue?

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

#270

Post by dcolkitt »

n0mad01 wrote: post #155
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

the real reason why the 500 euro bill has been revoked was that for storing physical money (for banks, in those quantities) would become more expensive in order for the ECB to lower the interest/deposit rate. next thing will be 200 euro bills revoked, then the base rate can go down to around -1%.

I mean, there's an easier way to set a negative interest rate on cash. Periodically select X% of the circulating serial numbers and declare that they're no longer valid currency.

In effect this makes X% of cash "burn off" every period, and allows the monetary authority to set any negative effective interest rate that they want.

This is by no means an endorsement of negative rates. But if you're going to go down that road, it's a better scheme than just trying to make holding cash too much of a pain in the ass.

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