
The Non-Weirdness of Negative Interest Rates - throw0101a
https://www.bloomberg.com/news/articles/2019-08-08/the-non-weirdness-of-negative-interest-rates
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throw0101a
Some illustrative paragraphs:

> _If you want to hold gold and watches and sentimental things at a bank, you
> pay to rent a safe deposit box. If you want to hold oil or grain to use it
> or sell it next year, you can pay for storage in a tank or some other
> facility. And if there’s a surge in the supply of oil or a bumper crop of
> grain, and storage capacity is scarce, then you can expect to pay even more
> for warehousing capacity. If you want to hold your wealth in land, then you
> pay in insurance and security and property taxes._

[...]

> _In other words, to store money at a bank requires the existence of some
> other borrower who will pay the bank. As such, just as you’ll pay more to
> store grain when grain is abundant and warehouse space is scarce, you have
> to pay more to hold money when savings are abundant but demand for borrowing
> is scarce._

[...]

> _If negative interest rates still seem odd to you, then it might be helpful
> to just turn the question around. Ask yourself why you think that at a time
> of limited growth opportunities in Europe, savers are entitled to get paid
> for their wealth in Switzerland or Germany. Why is that something worthy of
> remuneration?_

[...]

> _In the meantime, there’s lots of money out there and a limited capacity to
> store it all. So increasingly, savers are going to have to pay for money
> storage services. And although it’s not much consolation, we can at least
> remember that whether it’s fees for oil tanks, safe deposit boxes, security
> guards, insurance, or wealth managers, there 's nothing unnatural about
> being forced to pay to preserve your wealth._

~~~
linksnapzz
"There's nothing unnatural about being forced to pay to preserve your wealth"
said the rat-faced man in the expensive suit. He and his two burly associates
had wandered into my shop, taken in the quality of my merchandise, but
declined to purchase anything. Instead, perplexingly, he tried to sell me an
"insurance policy", equal to 20% of my gross per month. After all, he said, to
have the value of monthly sales in my boutique, I need to have an actual
structure to sell from, and clearly, the continuity of my having possessions
wasn't going to come for free!

~~~
wavepruner
Couching negative interest rates as wealth preservation fees is ridiculous. We
already have mechanisms to charge for wealth preservation. Why is something so
round-about as negative interest rates required?

Because it's not about charging people for wealth preservation. It's about
encouraging people to spend money that is created out of thin air on things
they don't need so the economic indicators look good and the masses are "fully
employed". Many of the jobs in this setup tend to be selling addictive
substances, addictive entertainment, and extracurricular actives that are hard
on the environment.

I don't know about y'all but I think an economy based on what people actually
need is essential for human survival and sustainability.

