It's possible for bond rates to go negative. Just because rates are near zero now doesn't mean there isn't room for further movement.
If it's in a bank account then welp, $250k FDIC limit. If it's physical then welp, gotta rent and secure a warehouse that is literally chock full of cash for anyone to steal. Etc etc.
Zero/negative interest rates are supposed to encourage productive activity, or at least spending.
If you're talking about holding a vault full of physical cash, that's not free either. It has to be physically secured in a building and someone wants to be paid for the building and the security.
All of which I said above. Holding cash isn't free at a macro scale, holding cash already has a negative return.
From an article:
* $1k bill: 165,372 in existence
* $5k bill: "fewer than 400 believed to exist", valued at significantly more than $5k
* $10k bill: "only a few hundred survive" (also valued at significantly more than face value)
* $100k bill: 42,000 ever printed and can only legally be used for transfers between federal reserve banks, illegal for private entities to hold
https://www.investopedia.com/6-famous-discontinued-and-uncom...
So no, not really enough physical large-denomination bills for everybody to hoard physical cash.
The FDIC commits to ensuring bank liquidity, it covers retail withdrawals, I don't think it's ever committed to printing specific combinations of bills to make it easy to hoard physical cash. In fact, they have already argued they don't need to, in order to discourage money laundering. The existing bills are mostly leftovers from the 1890s-1930s.
If they choose to give you a billion dollars in all 100s, well, sucks to be you. And again, they don't even really need to do that since only $250k per account is actually covered.
So I mean, to wit, have you ever seen 100 million dollars in a single bundle? Unless you work for the Federal Reserve doing inter-reserve settlement I doubt it, seeing as there’s only $165 million of $1k bills in existence. That would be over half of the $1k bills in existence and there's no other large bills in private hands in any significant quantities. Maybe you saw it as a movie plot point somewhere?
Regardless, not something that can be executed at scale. There are $21 trillion of treasures in private hands alone, there are only $165 million of $1k bills in existence.
Yeah I see people mention this a lot on HN. That particular number ($250k) has been increased over the years. It was partially upped in response to the S&L crisis. So do you really think T. Rowe Price is going to go under and you'll lose all your savings above $250k? Charles Schwab? Morgan Stanley? Even back when Lehman Brothers collapsed, no one lost cash holdings.
Unless you're with a mom and pop bank down the street, this doesn't strike me as a real threat.
https://portfoliocharts.com/2019/05/27/high-profits-at-low-r...
Of course the reverse is true as well. If rates go up, you get equivalent capital losses. (You can avoid taking the loss by holding to maturity, but you'll have the same result as if you sold your low-interest bond, taking the loss, and invested your remaining money in a new higher-interest bond that matures at the same time.)