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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

#41

Post by blazespin »

aazaa wrote: post #23
Despegar wrote: post #3

The crazy thing is that Germany is killing their own banks. They refuse to run fiscal deficits while at the same time they criticize the ECB for lowering rates and hurting the German Saver, when the German Saver is who would benefit if they decided tomorrow to run deficits for the next 10 years.

> ... 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.

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.

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

#42

Post by hackeraccount »

Despegar wrote: post #3

The crazy thing is that Germany is killing their own banks. They refuse to run fiscal deficits while at the same time they criticize the ECB for lowering rates and hurting the German Saver, when the German Saver is who would benefit if they decided tomorrow to run deficits for the next 10 years.

Germany is obsesed with having a trade surplus in good & services. Every Euro that ends up in a bank is one less euro that might be used to buy foreign goods. So they repress spending and the money having no where else to go ends up sitting in a vault or paying for US securities.

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

#43

Post by OscarCunningham »

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.

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

#44

Post by rwmj »

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

If this was an actual problem, couldn't the ECB issue (eg) €1 million bearer bonds to the banks that have to store cash (these notes wouldn't need to go into general circulation). In fact, why don't they do that?

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

#45

Post by SilasX »

VBprogrammer wrote: post #36
njarboe wrote: post #31

Earlier 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.

Heh, yep, like to joke that $100 feels like a lot of money whenever you try to spend a $100 bill. I can barely fathom what it's like trying to pass a 500 EUR note.

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

#47

Post by idiocratic »

njarboe wrote: post #31
H8crilA wrote: post #5

Earlier quoted context omitted.

500 euro was (and is) essentially not used for any day to day payments - i.e. the most important reason for having printed paper as money.

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.

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

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

#48

Post by rusk »

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.

Well, the simple answer is that they’re actively fighting inflation for political reasons.

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

#49

Post by vidanay »

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.

I'm not so sure about that RE Google share price.

Even if they were to magically slice 20% of the share price, it would immediately start a buying rally. Anything that would have a permanent effect on the share price would probably have to threaten the very existence of the company.

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

#50

Post by Aperocky »

blazespin wrote: post #41
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.

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.

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