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Comment by nickff | Hacker News Reader

Unless someone is literally putting their money under the mattress, the money is in a bank which is loaning most of it out, so the money is almost never actually "hoarded".

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Excess reserves are near a record high: https://research.stlouisfed.org/fred2/series/EXCSRESNS

Banks are just sitting on their cash. Also, the Fed is paying the banks not to loan out this money, currently 0.5%.

The solution is negative interest rates for banks and corporations, positive interest rates for individuals.

Forces business investment (or dividends), but promotes savings for individuals.

Modern corporations (at least those with cash balances that matter) have a choice of monetary systems, and will overweight those competing for their money and underweight those penalizing them.

On a multinational scale penalizing Apple and Ford cash reserves, but not extending the same penalties to Samsung, Xiaomi or Toyota, gives the foreign players greater flexibility.

It's actually higher prime interest rates. Sure, people can borrow at 3% interest (or whatever is provided) but why would banks want to necessarily want to loan out at such a low interest rate?

I don't understand the question. Are you asking why would banks use negative rates?

Pretty much. What's in it for the banks to loan out at incredibly low rates? Remember that there isn't only an aversion to high interest rates for people trying to secure loans. The banks want higher interest rates to make loaning worthwhile.

what if us-corps keep most money offshore?

Aren't most first world central banks going negative interest rates already? I guess they could always try to park cash in Venezuela.

Or its in a non-productive asset like being parked in vacant real estate in a world city or any number of other non-productive assets that remove it from circulation.

The money is not "parked" in the real estate, it has been transferred to the seller.

But the ongoing value derived from use of the real estate is lost. If someone were living there, both the seller and the local economy would benefit -- the seller got paid for the real estate, and the local economy benefits from the resident's own economic activity.

As long as property taxes are paid on time, the local economy has probably extracted bulk of renumeration from that property. In the age of giant corporate retail chains and Amazon, how much of the locals' spending goes towards their local butcher, seamstress, blacksmith, cobbler, milkman and vacuum repairmen anyways?

That's true and I chose a poor example.

Great, so the banks can loan more money to people who can't afford anything.

including the trillion dollars the top 5 firms are holding offshore?

Which is in a foreign bank, many of which have U.S. subsidiaries. What's your point?

except since 2008 business loans have only go up 400b and consumer loans are flat or have gone down some. The problem with the idea that banks loan out what isn't spent is wrong because they have underwriting and can't just loan it to credit unworthy borrowers. don't get me wrong it would have caused inflation and a bigger stock bubble if more money flowed into the US. But it's my theory why we haven't seen the massive inflation predicted from quantitative easing.

That they are hoarding money, not loaning it.

Most US-traded companies prefer to limit their foreign currency exposure and keep their offshore assets in USD by buying short-term US government debt, so in effect they are loaning it.

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