Wednesday, 17 August 2016

much coin, much care or the beagle boys versus the money bin

Part of the unintended but certainly foreseen consequences of holding interest-rates at historic lows has not provided the incentive for banks to loan money rather than hoard it.
And now faced with negative interest rates and the prospects of penalties on liquid assets with no end in sight, as Boing Boing reports, financial institutions are not backed into a corner but are rather redeeming their æthereal electronic funds for hard currency to avoid the fines put in place to stimulate the economy. The commercial bankers don’t strike me as protesting the policies of central banks—or even smugly side-stepping the regulators, merely taking the next logical step. Maybe we do not get to rush them with pitch-forks after all.  Though somewhat of a liability and inconvenience, banks are looking to secure all that physical cash in hidden vaults, just waiting for the tipping-point when negative interest becomes more costly than the price of guarding and moving around all that coinage. What do you think? I wonder if such an evasive manoeuver might hasten the demise and access to physical tender. I guess the next step would be to store one’s wealth in real-estate and start the boom and bust cycle all over again.