German banks are hoarding so many euros they need more vaults • Hacker News Board

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

#61

Post by rusk » Mon, Feb 03, 2020, 5:35 PM UTC

jldugger wrote: post #52

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 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.

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

#62

Post by LeoTinnitus » Mon, Feb 03, 2020, 5:35 PM UTC

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.

I'd normally agree but I think I just have more faith in Keysnian economics. You basically pay for today with the future. If you no longer can afford the future, you still have the infrastructure or asset that exists. Normally it isn't a 0 valued item (unless we're talking bankrupt securities, worthless commodities, or education) so even in an economic crisis, there is something tangible that came be used as collateral.

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

#63

Post by espinchi » Mon, Feb 03, 2020, 5:37 PM UTC

MrRadar wrote: post #34

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.

Why couldn't you use a cashier's check?

That's not a thing in (most countries of) Europe any more. I was shocked when I came to the US and saw that checks are still in use

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

#64

Post by epanchin » Mon, Feb 03, 2020, 5:37 PM UTC

Angostura wrote: post #46

I don't see why Germany doesn't handle it the same way as the Bank of England where the chief cashier signs special notes called 'Giants' worth £1,000,000 and 'Titans' worth £100,000,000. These are obviously only used for inter-bank transactions.

Wouldn’t that undermine the point of negative rates?

Better to just charge interest on cash stored at banks.

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

#65

Post by odyssey7 » Mon, Feb 03, 2020, 5:37 PM UTC

Angostura wrote: post #46

I don't see why Germany doesn't handle it the same way as the Bank of England where the chief cashier signs special notes called 'Giants' worth £1,000,000 and 'Titans' worth £100,000,000. These are obviously only used for inter-bank transactions.

The US has considered doing this for other reasons. It’s an interesting idea.

https://en.m.wikipedia.org/wiki/Trillion-dollar_coin

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

#66

Post by njarboe » Mon, Feb 03, 2020, 5:37 PM UTC

MrRadar wrote: post #34

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.

Why couldn't you use a cashier's check?

People in the US don't trust cashier's checks. For good reason. They are easily forged.

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

#67

Post by goodcanadian » Mon, Feb 03, 2020, 5:38 PM UTC

Angostura wrote: post #46

I don't see why Germany doesn't handle it the same way as the Bank of England where the chief cashier signs special notes called 'Giants' worth £1,000,000 and 'Titans' worth £100,000,000. These are obviously only used for inter-bank transactions.

The short answer is that they don't want to make it easy for banks to hold cash; they want the banks to loan the money out (ideally) or deposit it with the European Central Bank where they will have to pay for the privilege in the form of negative interest rates (which is what the banks are trying to avoid by holding the cash).

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

#68

Post by firebird84 » Mon, Feb 03, 2020, 5:38 PM UTC

MrRadar wrote: post #34

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.

Why couldn't you use a cashier's check?

Some people would balk at the idea since they have bad credit and no bank account, and hence have to fork over a fee to walmart/publix/your local check cashing place in order to make it liquid. Cash works for everyone.

I agree, cashiers checks are safer, but some people have reasons to prefer cash.

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

#69

Post by jotm » Mon, Feb 03, 2020, 5:38 PM UTC

H8crilA wrote: post #5

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

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.

I used one at Real, think I bought like 30 Euros worth of stuff. They did look at it for a bit, but accepted it without complaint. Amazing compared to a 50 pound note in England :D

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

#70

Post by dontbenebby » Mon, Feb 03, 2020, 5:39 PM UTC

Angostura wrote: post #46

I don't see why Germany doesn't handle it the same way as the Bank of England where the chief cashier signs special notes called 'Giants' worth £1,000,000 and 'Titans' worth £100,000,000. These are obviously only used for inter-bank transactions.

Large notes were used like this in America as well - up until 1934 we had up to 10k notes.

It's my understanding the larger ones were mostly used for storage or transfer?

https://en.wikipedia.org/wiki/Federal_Reserve_Note#Large-siz...