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Comment by codeecan | Hacker News Reader

Wouldn't this cause a bank run? Why are people keeping money there if they're getting charged 0.75-1% interest.

No it just causes more money to go into the stock market as people put everything except a nest egg, there. I wonder whether this ends up decreasing consumption, as people are less able to buy impulsively when their money is locked away.

But in my opinion what our problem in Europe is, is a very conservative investment culture at the very top. It is very hard to get funding for anything. No wonder there is barely any growth. Even most flashy startups here get money from government grants.

> No it just causes more money to go into the stock market

A bank run is when people pull their money out the banks. If you want to put your money in the stock market you need to pull it out of the bank.

The banks themselves act as the brokers in most cases. Sometimes the banks themselves get the money because a lot of people put their money in structured investments managed by the bank itself.

They aren't pulling the money out of the bank and using a third party broker.

This isn't how it works. When customers pull their deposits out of their bank accounts, the bank can't turn that into loans, which is what drives a lot of the income.

If the customers shift that money from the bank account into a trading account in a brokerage, they can't do the same thing with those funds that they do if it were in a savings account.

That's the idea, less money in the bank; less money to keep at ECB

If you buy stocks, someone else sells stocks and has the same problem as you.

Problem is that all banks have this.. so you either suck it up, or put your money in many banks to keep below the threshold, but that becomes difficult to manage.. The alternative is investing them which is probably okay if you know you won't need funds immediately available, but since everything points to the next financial crisis, it'd probably be better to wait a bit with investments..

So far, it appears that most people are either willing to suck up the interest or invest them. There aren't a lot of withdrawals going on. Probably still less safe to sow the cash into a mattress than paying about 600 DKK a year per 100'000 you have above 100'000.

I'd think the competition would be safety deposit boxes, not a mattress. So it depends on how much the smallest safety deposit box costs per year.

Thing is that safety deposit boxes are rarely insured for as much money, and they do also cost something.. Another problem is that since our economy is almost entirely digital, you can't actually withdraw or deposit large amounts of cash without significant problems with paperwork and fees. You're going to have a bad time trying to buy a new car, house or even high-end TV with cash here :D

A lot of banks explicitly prohibit storing currency that is still in circulation in their safety deposit boxes.

In the US I'd just get a money order from the post office and put it in there. No currency, no expiration, backed by fedgov.

Maximum per money order is $1000. Couple that with $1.75 per money order, the rental of the box, and needing extra insurance to get the same protection as in a bank account and it might very well be cheaper to accept negative interest in many cases.

For those who are outside of US, can you please explain what is "a money order from the post office"?

* upd after some Googling, so it's like a cheque. Got it

They exist many places outside the US too. It's closer to a bankers draft, which is pretty much like a cheque except you buy it and it's drawn on the issuing organisation rather than your account, which both makes it less risky for a recipient and is what would make it potentially work here (since with a cheque the money would still be in your account).

The biggest issue with this is that it usually costs money, there are often limits ($1000 for US Postal Service money orders), you'll have to expect reporting requirements above certain limits, and you'll still need to buy extra insurance if above relatively low limits if you want your money to be remotely as secure as in a bank account.

The upshot is that while this gets you around bank limitations on storing actual currency, it takes effort to store lots of money cheaply.

Too bad 500€ notes have not been issued since 2 years ago... Makes it much harder to store money as cash...

Hmm, I have personally considered if I could pay my taxes extra early!!!

I even if I loose my job and don't need to pay so much, I'm sure the government is good for it and can pay me back :)

Sadly, I still have to pay interest if I don't pay taxes on time.

For Homo Econimus, the fake economic model, sure.

Real humans tend to move in crowds, though. Everyone will stay in until relatively suddenly, everyone will start getting out. Perhaps there will be a precipitating event, maybe it'll just be time. It's the same thing as trying to time the market.

When everyone wants to get the money out, they won’t be able too. There are limits on how much cash you can take out and those limits can be decreased.

People are willing to pay the government to specifically not invest in the trash options in the market

They’d probably be willing to pay a lot more, -5% yielding government bonds anyone?

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