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Comment by enaaem | Hacker News Reader

Why should guarding your money be free? The concept of negative interest is very natural.

Banks have found ways to reinvest your deposits. If the earnings there are higher than the storage costs they can share some of the earnings with you. But if they can’t, they have to charge for their service.

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Banks don’t “guard your money” at all. They use it to make loans. Leaving money at a bank exposes you to vastly more systemic risk than just putting bills in a safe or something. If they’re not remunerating you for it, you’re getting screwed.

> Leaving money at a bank exposes you to vastly more systemic risk than just putting bills in a safe or something.

This is very dependent on the country you are in. Some countries have very conservative risk tolerances for their banks which are imposed on them and watched closely.

Still, there's risk, right? If there were zero risk the bank would be unable to make any loans at all. It would just be like a safe.

Before central banks there were local banks that operated like that, you could pay them to keep your money safe, or you could let them lend it out for a share of the interest, but you also had a share of the loss/risk.

With central banks the risks of loss is low enough that nobody needs the just keep my money safe service anymore - except now they do because rates are so low

BoA charges me for savings if keep under a certain amount. In the process of refinancing so I don’t want to hurt my credit and it’s the oldest account. Soon it will be closed. Most of my savings is in a credit union due to favorable interest rates.

If anyone charged me negative interests rates on the whole balance I would cancel my account.

Banks have given interest rates lower than inflation for as long as I can remember. If negative real interest rates are natural, then it is weird people are so alarmed by nominal interest rates being negative as well

A lot of Banks already charge account fees, service fees, overdraft fees, maintenance fees, transaction fees - I'm sure there is more.

And they are also loaning out your money to others at a non trivial rate of interest.

Are they loaning it out at non trivial rates? Outside things like credit card debt I have understood that part of the problem is that rates are or are becoming trivial.

The reason is (or so my bank claims) that the ECB charges negative interest, and all banks have large deposits there. They don't store the cash at home in a vault.

Well, aren't you "loaning" the bank your money when you put it in an account? If everyone wanted to withdraw all the money from all their accounts at once the bank would be unable to pay; you get paid interest because you take on slight risk.

The bank is also providing a service (tracking your money, making it easy to manage and transfer) and that costs. We’ve just ended up in a situation where the cost of the service exceeds the value of the interest paid.

In the UK at least, I'd say we have ended up in a situation where banks found that their approach to 'selling financial services' vastly abused their customers and now they are having to pay massive sums in compensation, they need to fleece account holders in some other way to meet their income and profit targets.

Long-gone are the times when high street banks were based on loaning out the deposits from savings accounts. Building Societies do/did this, but of course the banks bought up most of those too in their spending sprees of M&A to become 'bigger and better'. Well, bigger anyway

Bank notes are a liability of the central bank. When you withdraw your money the central bank can just buy the bonds off that bank. Of course a bank without bonds is basically dead but from the perspective of the person holding onto the bank note nothing changed assuming the zero lower bound is strictly followed by the central bank.

If you ignore the volatility, crypto makes a lot of sense.

Other than that, how was the play, Mrs Lincoln?

Yes, if you ignore the possibility of losing access to your funds, the possibility of getting hacked, the massive environmental impact, the inability to use it to pay for most legal things, and a couple of other things - crypto makes a lot of sense!

Chuckle, do you either work in a bank or government? Scared of losing job? Understandable. You have to be computer illiterate to not know how to keep your keys safe. We'll get there. While you are ok with funny money. Just a matter of time.

Not really? I mean, the cost of storing 100M of my cash is exactly the same as 100 of it, but in the former case I’d pay 1,000,000x more

By storing your money you are missing out on any potential gains from investing it instead. AKA Opportunity costs.

You have to keep cash on hand for emergencies. I can’t wait to cash out a mutual fund or stocks. Not to mention that I don’t want certain savings, such as a new car, to be at the mercy of the market.

A couple years ago I put a lot of my HSA into investments and the market tanked.

> I don’t want certain savings, such as a new car, to be at the mercy of the market.

New and used car prices are like a jump rope this year, regardless...can't hide from the market in cash.

Depends on the make and model. BMW and Mercedes didn’t fluctuate in the 6 months we looked at them.

I can’t have a down payment plunge because Yellen made an announcement or (as I saw last year) a roller coaster of an election year.

There's an important difference between simply storing funds with a bank, and using the convenience services that a bank provides when you are their customer.

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