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Comment by RickJWagner | Hacker News Reader

I think a significant portion of America is not going to like a cashless society.

It's also sort of mind boggling to imagine interest being charged on deposits. Completely non-intuitive.

It would be crazy. As for intuition, I actually thought it was counterintuitive as a kid that banks would safeguard your money for free. I had the naive intuition that banks were providing a service of keeping money safe and accessible via debit cards, so you should be paying them.

Of course my intuition is now totally different, especially after a college degree in economics, but there is some sort of intuition to be had in negative interest rates. I wonder if there are historical precedents -- maybe in the dark ages, or in historical places without moneylending/investment ecosystems.

> safeguard your money for free.

I'm stating the obvious here, but they never did keep the money for free. They used deposits as leverage for loans and received 100% of the interest as payment for keeping that money. Even then, for the longest time a lot of banks didn't have a "free" tier account like they do today so they were double dipping so to say.

Negative interest rates aren't a new thing though. I'm more interested in where modern monetary theory will end up taking us and if that will make negative interest rates more common. It seems like a lot of people want to go in that direction. I don't know enough about it yet to know if that's good or bad.

It seems mind boggling that you'd punish people for being fiscally responsible and living within their means. There are so many people today living paycheck to paycheck and who could be ruined by a minor financial shock, negative interest would encourage this behavior. In this scenario wouldn't you also be better off hoarding cash instead of putting money in a bank?

The next step would be to abolish cash, only allowing digital transactions.

And once again people fail to mention that digital transactions are taxed. Taxed more, relatively speaking, if you're poor.

It's only mind-boggling if, in the reserve banking world of today, you think money is anything but a social accounting ledger, rather than something concrete like a potato. As others have said, real rates can already be arbitrarily negative. It is only in the false belief that the numbers mean something intrinsically that you have such attachment to their not decreasing nominally.

People will get used to anything. Airline miles expire. Fruits rot. Buildings decay. It's not such a leap to see money exponentially "expire", too.

The thing is, people generally do view currency as something concrete, and its value is largely based on faith in that concreteness. Once they stop having faith in that, it seems likely that they’ll stop valuing it.

I'm not saying it should be completely unhinged, but something like a -1% interest rate, is that so much more shocking than a +1% interest rate? I don't think so. People can deal with airline miles, hotel points, credit card rewards rationally; heck some are even paid in stocks or options which are much more volatile and uncertain. They seem to do fine.

Except no one in a stable developed economy equates those loyalty programs and how those systems operate with how their nation’s currency operates, or should operate. Are you not annoyed at all the random games those companies play with those point systems? I don’t value those points highly at all because of the frequent devaluations they go through. I would not want the same fate for my currency. Are you willing to subject everything you’ve ever worked for to that kind of thing?

And one of the key reasons for maintaining a positive interest rate on lending is to encourage sound investment decisions by the capitalists borrowing it. Low interest rates beget more and more speculative investments, and more and more of those will go bad. And then you get a debt crisis.

There is a huge psychological difference between 1% and -1% interest. People do not react logically to loss (https://en.wikipedia.org/wiki/Loss_aversion). Even though regular bank accounts have provided negative real interest for years, once they actually switch to explicitly "paying" negative interest, accounts will empty fast.

Good luck with your pension fund then.

i think that's the whole point :-)

Haha touché.

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