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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

#81

Post by brokensegue »

mrsun wrote: post #78
brokensegue wrote: post #37

Earlier quoted context omitted.

you seem confused, did you read the article? I don't know about German laws but if you deposit $10k in a US bank you are definitely tracked and not anonymous. Also, no "cash owner" would buy gold to save vault space. The incentives don't make sense.

One of the main points is mentioned in the article: > Germans were already well known for their love of physical money and data privacy. I think the most important point here is privacy. If you deposit $10k into a bank account, of course you are tracked. But if you put the $10k into a bank vault you are not tracked. > Also, no "cash owner" would buy gold to save vault space. Saving vault space is only one of the reas…

the cash in bank vaults mentioned in the headline come from cash deposited into accounts. nobody in this situation is putting cash into a safety deposit box.

banks can't just convert their cash to gold because if gold were to drop in price then they wouldn't be able to cover the money they owe their account holders.

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

#82

Post by timlin »

idiocratic wrote: post #47
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.

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?

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

#83

Post by Analemma_ »

bilekas wrote: post #35
Despegar wrote: post #20

Earlier quoted context omitted.

This is absurd in the context of Germany. They have a fetish with "fiscal responsibility". It'd be the natural inclination of every politician to cut back on deficits (and I imagine within a few years there'd be pressure to). Germany is a country with a broken military and infrastructure. They should spend money on that. They should cut taxes for workers. There's plenty of shit for Germany to spend money on, and it w…

I really hate this idea that everyone needs to just constantly be spending. It's useful but there is nothing wrong with having a slow stable fincal conscious ecconomy.

National economies are not households. My spending is your income, and your spending is my income. You can talk about "investment" all you want but without consumer spending there's never any return on that investment and so no one will bother.

Having household savings is good but at a certain point it bottlenecks the economy.

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

#84

Post by petre »

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.

The EMU is about the federalisation of Europe through the back door.

https://m.youtube.com/watch?v=5TPpuIslzG4

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

#85

Post by njarboe »

SilasX wrote: post #45
VBprogrammer wrote: post #36

Earlier quoted context omitted.

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.

If you spend time in casinos, $100 notes flow around like water.

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

#86

Post by jldugger »

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.

What an absurd position. First off, risk isn't the goal, reward is. Risk is just the price of increasing rewards. But we shouldn't mistake the two, or valorize risk itself. Any high risk business not taking risk mitigations available to it is a poor one. And any investor who isn't using low risk, uncorrelated assets to juice their returns is missing out!

Secondly. Bonds are not assets that "do nothing for no one;" they don't sit there in a vault. They are a loan to busineses, and they allow businesses and governments to build factories, bridges, and even other companies. They invite additional capital into the market, which can be used to make more high risk / high reward investments, for a small cut of the rewards. Even savings is a loan to the bank, which recirculates the money with their own loan desk. Negative interest rates in Germany aside, very little money in the system sits in an idle 'pile of gold.'

And that's really the problem here -- electronic deposits with the ECB cost banks money, so they're not using the central bank. The money still exists, and economy is still moving, but the normal holder of cash deposits is charging instead of paying for it. This is why it was theorized that 0 percent was the lower bound on interest rates, so it would be a more surprising outcome if this sort of thing didn't happen.

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

#87

Post by Melting_Harps »

idiocratic wrote: post #47
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.

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 in school were passing out due to a lack of food, hospitals were running out of medicine and basic supplies in general) many were confident you would see something like this: Germany hoarding cash while the PIIGS were left to their own devices.

Its sad, the problems paper fiat currencies beget: be they the promises of utilitarianism or the illusions of prosperity its one I wish we can finally overcome soon.

[1]: https://www.nytimes.com/2011/10/02/world/europe/in-greece-ba...

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

#88

Post by 300bps »

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.

There are many factors and others have pointed out some of them. Here's another one:

The dollar's relative value to goods and services isn't rising... and it's because of countries like China that make goods and services for so few dollars.

Think about it - I can go to oldnavy.com and buy a shirt for $9. That shirt was made literally on the other side of the world, shipped, marketed, sold, packaged and delivered for $9.

The disparity in incomes and environmental protections between the U.S. and other countries makes it very difficult to trigger price inflation. And things just keep getting cheaper. Prices don't rise when supply of goods and services keeps pace with the demand from dollars.

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

#89

Post by pornel »

timlin wrote: post #82
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.

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?

In the UK online bank transfers work 24/7 and clear in seconds (all banks are required by law to have APIs for fast inter-bank transfers).

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

#90

Post by blazespin »

jldugger wrote: post #86
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.

What an absurd position. First off, risk isn't the goal, reward is. Risk is just the price of increasing rewards. But we shouldn't mistake the two, or valorize risk itself. Any high risk business not taking risk mitigations available to it is a poor one. And any investor who isn't using low risk, uncorrelated assets to juice their returns is missing out! Secondly. Bonds are not assets that "do nothing for no one;" th…

Not true. The government sells bonds to suck money out of the economy, and buys them back to add more. How the fed operates.

Inflation is like ante at a poker game. Without the ante, everybody would just keep folding until they get the nuts and there would be no action.

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