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Comment by throw0101a | Hacker News Reader

You should have an emergency fund. After that you should be investing for retirement, or any other larger goals you may have, e.g., home ownership, replacing car.

But having a pile of money beyond those things "just because" does not really serve the purpose of money: as a medium of exchange for goods and services. Money in itself is not useful, it is only useful for the things it can give you: shelter, water, food, and the various other things as you work your way up Maslow's hierarchy.

At most having a (digital) pile of cash may help you sleep at night (assuming it's covered by deposits insurance). Paying a fee may be worth peace of mind.

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> But having a pile of money beyond those things "just because" does not really serve the purpose of money: as a medium of exchange for goods and services. Money in itself is not useful, it is only useful for the things it can give you: shelter, water, food, and the various other things as you work your way up Maslow's hierarchy.

Neither you nor anybody else has any business in telling me what my hard-earned money is meant to be used for. I put blood, sweat and tears into earning it, and I deserve the reward for my work. Maybe I'm saving it up for my future descenants to finally lift my family line from poverty that they've been in for generations, or want FIRE for myself. Maybe I'm saving up for a flight into space. It's none of you g-damn business. Get your hands off my money.

This is exactly why I'm against both negative bank interest rates, and high inflation.

If your idea of achieving generational wealth involves a bank savings account there are some bigger educational issues you need to address first. Bank savings accounts rarely, if ever, keep up with inflation regardless of interest rates. You are losing purchasing power in a savings account even if the nominal value of the account increases year over year.

I'm not saying it's anyone's business what you do with your money, but keeping more than 6-ish months of expenses in a savings account is objectively burning money and a pretty idiotic thing to do in general. Anything more than that should be invested. Hedges exist for a reason. There are dozens - hundreds? - of ways to hedge your investment and keep market exposure by limiting or even eliminating downside. Hell, Mark Cuban has a great story about after the broadcast.com acquisition where he was fully invested in the market but also heavily hedged in case his stocks tanked. When the market crashed he made money.

All that is to say that yes it's totally your right to keep half a million dollars in a savings account. But it's an objectively stupid thing to do.

>This is exactly why I'm against both negative bank interest rates, and high inflation.

The reason why we have negative interest and mild inflation (2%-3%) is that the Fed wants the economy of the US to continue to exist in the next 100 years, which is in line with your goals.

Owning a growing share of a shrinking economy is amazing for people born in the past and terrible for people born in the future, owning a shrinking share of a growing economy is acceptable for people born in the past and good for people born in the future. The former is deflation, the latter is inflation.

The Fed can print dollars, but not future consumers and taxpayers. As long as the total fertility rate continues to decline, they’re bailing water out of a boat forever.

> This is exactly why I'm against both negative bank interest rates, and high inflation.

Use it however you wish. But having it sit around, even with positive bank interest rates and low inflation, will still have it lose value over time. If you have a savings goal, then for any period beyond 5-10 years you'll have to invest it.

And negative rates are not unreasonable:

* https://www.bloomberg.com/news/articles/2019-08-08/the-non-w...

* https://archive.is/zlyRi

That’s only true if you are saving your money under the mattress. Savings in a bank account will be loaned by the bank to another business. There was a time when politicians encouraged saving to help the economy; and I’m not really that old.

> Savings in a bank account will be loaned by the bank to another business.

This has not been how banks have worked for decades:

* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1905625

Banks create loans typing something into a computer screen and money shows up in the businesss' account. No savings required.

99% of money created is not by the Fed "printing money", but rather by private bank loans. A twenty minute video summarizing the above paper:

* https://www.youtube.com/watch?v=K3lP3BhvnSo

Interview with the paper's author:

* https://www.youtube.com/watch?v=uZi4QE_EfCw

If you have a growing economy that cannot do all the investments it wants to do, encouraging more savings will lead to more growth. Right now something is preventing investments from being made and nobody knows what that something is.

And can you really define where this beyond lies? You know, emergencies costs variance is huge, and home ownership too.

Also, "piling" money in a bank account doesn't remove money from economy.

It removes it from the demand side of the economy, which, in period of low interests, is the part you want to boost.

The demand side of the economy doesn't seem to be the problem right now. There's enough demand that there's shortages and price increases for almost everything at this point.

The shortages seem to be caused by hiccups in the cupply-chains bottlenecks that have a hard time to adjust to the slowdown and recovery of the economy. It is not caused by a unusually high demand, but compared to its depressed self six month ago, it is comparatively high.

Interest rates are still very low. There is still a strong case to argue that the demand is lagging.

But isn't that "removed" money being lent out by the bank?

Yes, typically as investment, that feed the supply side.

Which pays their workers and suppliers, and the money circulates.

No, investments typically feed growth, not normal operations, which are funded by clients, ergo the demand-side.

For most people in Denmark, emergency funds are not necessary. If you live somewhat frugally, dagpenge will take care of you (and if you maintain yourself within the framework). It ensures a living wage for up to 2 years if you get laid of (or if you resign, just with the caveat of one month quarantine).

> For most people in Denmark, emergency funds are not necessary.

So you'll never have a car break down? With a home ownership rate of 60%, people who have burst plumbing and flooding, leaky roofs, etc, will never have to deal with a sudden repair bill?

I live in Canada, and we have decent employment insurance, but if by water heater bursts and floods the basement, or my furnace dies in the middle of winter, EI won't be useful.

I stand corrected.

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