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Comment by camjw | Hacker News Reader

Putting money under the mattress is an awful outcome.

If people want to save then they should put their money in to a _bank account_ where they can earn interest and their money can be put to use productively.

Not only does this mean they’ll have savings, but it’s also safer (can’t get robbed) and it leads to the positive outcomes GP described around things actually getting built, and the saver ends up with more money than before because your bank account has a positive interest rate.

Where this fails is if the currency is deflationary, because then it’s extremely hard for the bank to offer a non-negative interest rate and so it really is more attractive to put money under the bed, modulo the risk of it being stolen or lost

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Under the current system yes. People do need a savings technology. Not everyone should have to be a part time investor. Gold was that technology but it didn't survive the tech transition. Now we have Bitcoin trying to continue gold's mission.

If the currency was not inflationary, people saving would mean that everyone else's money becomes more valuable. You save first, then you invest. Not the other way around. Unless you want dumb money pilling in everything and creating mega bubbles that will burst and destroy everyone's value.

I guess you are not living in Europe (or Germany for that matter) where interest rates are now negative and you are actually paying 0.5% for the service of the bank holding your money.

Central bank interest rates are negative but consumer savings accounts are not negative. A quick google search shows that savings accounts are offering either zero or nominally positive rates (0.02%). I agree that interest rates are super low in Europe right now but they aren't actually negative for consumers.

In Germany, as an existing customer, you have negative rates with many banks.

You also don’t switch banks on a whim. Not only because it’s a hassle to change your payment info on dozens of sites, but also because you’re going to be punished by SCHUFA, a corporate abomination that has a monopoly on credit ratings. Their algorithms try to infer financial responsibility from how many bank accounts you have (fewer is better), and from how often you open new bank accounts (rarely is better). Once it decides to punish you for shopping around, its effects are devastating.

Well then you will have to tell that to the banks. I am not claiming that because I read it somewhere but because of firsthand experience.

They are not calling it negative interest rate but "Verwahrungsgeld", so basically a fee for keeping the money that is a percentage of how much money you hold there.

And their policy is, "if you don't like it you are happy to withdraw your money and go somewhere else"

That assumes that you thrust your bank and government not to steal the saving. Hi form Argentina! Take a look at https://en.wikipedia.org/wiki/Corralito and the immediate follow-up.

Doesn't this money get lent out to other people? This creates debt and the risk that the money won't get paid back.

Honestly, you can make a superficially convincing argument for any economic position.

Yes, that's the point. The money gets lent out for people to go out and do things they wouldn't otherwise be able to, causing economic activity. A simple example: If you needed a truck to perform a job, but you'd sit home doing nothing because you couldn't buy it outright, that'd be a loss to the economy. The risk of a default is priced into the interest rate.

Saving money in the form of hoarding is bad. If everyone does it, the economy slows down, we become materially poorer, because the amount of work we perform for each other is lowered. That's why there needs to be an incentive to invest money, through inflation and interest rates.

And the other side could argue that continuously investing in things puts you at continuous risk, and stops you from saving for a rainy day. Also, it's impossible even under deflation to hoard wealth completely, because you still need to buy food and clothes. Presumably, under deflation you would buy more necessities and consume less unnecessary things. Also, setting interest rates is a form of price control (on borrowing money), and maybe lenders should be allowed to respond to supply and demand organically like they can with every other good.

Without hard mathematics, these debates are pointless. I don't understand why you can't see that. This isn't physics.

(Disclaimer: I don't own crypto. I sold all of mine.)

There's no such thing as not putting yourself "at risk" when it comes to finance, or life in general. Even a hypothetical form of money that was perfectly stable puts you at risk of not benefiting from economic growth - the continuous refinement that happens unless we all just stop showing up for work.

Ultimately, this is a philosophical argument about human behavior that mathematics can't model, because our very beliefs shape the outcome. In other words: Dude trust me.

(Disclaimer: I also don't currently hold crypto)

> Yes, that's the point. The money gets lent out for people to go out and do things

No not really, the bank does not need deposits for that, the bank can just create money and making an entry in a database and then just put that in the person loan account, that person then can use it for buying house/business etc.

Using savings then giving that savings as loans is an outdated concept.

> Not only does this mean they’ll have savings, but it’s also safer (can’t get robbed)

https://www.bbc.com/news/world-europe-21814325

Maybe I should say: "but it's also safer (less likely to get robbed vs everyone keeping their cash under the bed)"

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