Hacker News Reader

Comment by raverbashing | Hacker News Reader

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.

Reply on news.ycombinator.com