Are subzero interest rates igniting cash hoarding?

Under the mattress? In the microwave? Buried in the backyard? Cash hoarding is the latest trend for consumers everywhere, and with negative interest rates coming soon, you’ll start to take part as well.

Since several central banks have adopted a negative interest rate policy, consumers have become wary of depositing their cash into bank accounts. With subzero rates, banks can charge you for cash deposits. So not only are your cash savings trying to fight inflation, they’re also being demolished with negative rates.

The central bankers like the Bank of Japan (BOJ) and the Riksbank believe negative rates can stimulate the economy because consumers will spend, investors will turn to high-risk investments and banks will lend an increased amount of money out. However, it’s not actually achieving anything. In fact, it’s forcing consumers to hoard their cash.

With negative rates not doing much for economies, the establishment is now calling for an outright ban on cash. Both are preposterous and inane concepts generated by those who are throwing anything at the wall to see what sticks and what doesn’t. The mind of someone who conjures up this scheme thinks to themselves: since there is no cash then consumers can’t take their money out of bank accounts with subzero rates.

Indeed, subzero rates aren’t found in most countries as of yet, but in the countries that are witnessing this monetary policy are already taking action. And for those who don’t have negative rates, they’re beginning to take notice.

The Wall Street Journal published a report Monday that found a surge in demand for safes in Japan. Why is there such a strong demand for safes? Negative interest rates and cash hoarding.

“In response to negative interest rates, there are elderly people who’re thinking of keeping their money under a mattress,” one saleswoman at a Shimachu store in eastern Tokyo told the newspaper.

Consumers protect themselves, and they read the newspapers, watch the television news and peruse blogs. When they read a stock market has dropped 10 percent, while a certain stock has collapsed 43 percent in one day, why would they even consider allocating their cash into dangerous investments? They won’t. They’d rather put it in a footstool, as Sweden is currently doing.

No one can ever argue the fact that this is the unintended consequence of subzero rates. When Japanese lawmaker brought this up, Finance Minister Katsumasa Suzuki responded, “It suggests a vague sense of unease among the public.”

Central bankers and politicians have lost their minds with power.