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Comment by raverbashing | Hacker News Reader

While I'm a big proponent of cards, and a firm "mythbuster" of the "getting cash is free" myth, going 100% cashless worries me a great deal.

What if I'm visiting and my card is not accepted, for example?

Also, this facilitates central bank policies. Like negative interest rates and lending massively to banks

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What is the connection betweek cash-vs.-plastic and central bank policies? Is it the amount of money held in cash? That has to be pretty small already in a place like denmark?

"The difference to other jurisdictions is however that negative interest rates have become so pronounced, that it is by now worth it to simply withdraw one’s cash and put it into an insured vault."

http://www.zerohedge.com/news/2015-04-25/war-cash-migrates-s...

A few days ago there was an article [1] posted here [2] about negative interest rates:-

  As long as paper money is available as an alternative for 
  customers who want to withdraw their deposits, there’s a 
  limit to how low central banks can push rates. At some 
  point it becomes cost-effective to rent a warehouse for 
  your billions in cash and hire armed guards to protect 
  it.
  [...]
  Bank notes, as an alternate storehouse of value, are a 
  constraint on central banks’ power. “We view this 
  constraint as undesirable,” Citigroup Global Chief 
  Economist Willem Buiter and a colleague, economist 
  Ebrahim Rahbari, wrote in an April 8 research piece. They 
  laid out three ways that central banks could foil cash 
  hoarders: One, abolish paper money. Two, tax paper money. 
  Three, sever the link between paper money and central 
  bank reserves.

Of course, inflation already serves as a tax on savings, so this isn't as radical as it sounds if governments really want to discourage saving.

[1] http://www.bloomberg.com/news/articles/2015-04-23/negative-i... [2] https://news.ycombinator.com/item?id=9496568

I have read much less economics than I would like, but at negative inflation/interest rates, I can't see why one would chose to hoard billions in cash (whose value is set by a central bank that is likely eager to increase inflation by printing more) rather than hoarding some other resource ?

I guess you didn't read the part that said "Negative Interest Rates", charged directly to your bank account

When I get my money out of the account because of deflation, why would I choose cash over, for example, gold? In financial unrest, holding cash gives zero return at best, and more likely a large negative return due to inflation.

Negative interest rates will primarily affect big players like for example pension funds, even at -0.75% percent interest these will loose a lot of money. And buying gold is not particularly easy / cost effective when you need to convert tens of billions of dollars. Not only will will you hugely inflate the price as you keep buying, but also introduce much bigger fluctuations than would result from deflation alone in the long term.

Lately, the Austrian central bank was rumoured to play with the idea of negative interest rates so the Austrian pension funds quickly brought up the idea of just storing their paper in secure vaults. As long as the costs of storage / protection are lower can the losses due to the negative interest rates, it's a net gain for the funds.

The central bank isn't directly allowed to prevent anyone from just getting their money in cash and while they could delay it by "process", only the government itself could issue a blockage on cash deposition.

Gold is cumbersome, but on the other hand, billions in cash is too. Swedish M3 money supply is $300Bn, the cash (M0) is only 4% of that, or around $13Bn. The largest pension fund has more than 3 times M0. So clearly, there is little chance that this pension fund could convert its assets to cash, at least not swedish currency. I'm not sure what the Swedish law is here, but I can't imagine that they would be required to issue the amount of money required, if such a large fund suddenly wanted to store cash? (You could mint the famous platinum coin I guess).

Why wouldn't you just transfer your money offshore? Are capital controls part of the policy as well?

If it were me I'd start hoarding euros.

What if I'm visiting and my card is not accepted, for example?

Just like shops in Canadian border towns which accept US dollars (and vice versa), I imagine the shops frequented by visitors will either continue to accept cash -- or, if 20 years from now it's phased out entirely, accept Euros (at a discounted rate, of course).

Or the equivalent of a currency-exchange booth: a shop which sells local prepaid credit cards and accepts foreign cash.

> the "getting cash is free" myth

Can you explain what you mean by this?

People complain about card processor fees, but handling cash also has a cost: transportation to/from the bank, theft/fake currency, procuring change, etc

Canada has abandoned the penny, and that's IMHO a good thing.

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