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Keep in mind that Sweden, like many european countries, has much stronger social policies than the USA. In the USA, due to the anemic social care programs for
by Mithaldu 11y ago
Keep in mind that Sweden, like many european countries, has much stronger social policies than the USA.
In the USA, due to the anemic social care programs for people in dire straits (long-term unemployed, sick, young, old), it is necessary for people to individually save up money to guarantee safety in emergencies. To that end, saving in banks is rewarded with interest rates.
In more social countries though such emergency savings are spread across the entire population in big pots. People saving their money in bank accounts are effectively keeping it out of those pots, and from society at large, which society punishes by making such individual savings volatile.
- adventured 11y agoHow does this punish people that are holding their savings in property instead of a bank account though? Low interest rate policies rather massively encourage placing your cash into property. Which also explains why Sweden has such an extremely bad household income to debt ratio, with among the most over-leveraged households of any nation.
- Mithaldu 11y agoInvesting in property gets the money moving on the market, which is also a positive outcome.
- adventured 11y agoHoarding cash increases purchasing power for everyone else looking to spend, also a positive outcome. Is it a positive outcome if property prices inflate so much due to this, that it pushes Sweden's households into such extreme levels of debt that the economy barely grows and debt service levels become untenable? Sweden is at that point right now. Eg: http://www.bloomberg.com/news/articles/2015-06-29/swedish-politicians-face-tricky-choice-on-hefty-household-debt http://www.bloomberg.com/news/articles/2015-06-29/swedish-po... http://www.cnbc.com/2014/11/09/sweden-grapples-with-massive-household-debt-as-rates-hit-zero.html http://www.cnbc.com/2014/11/09/sweden-grapples-with-massive-... http://blogs.wsj.com/economics/2015/06/03/riksbank-sees-increased-risks-to-swedish-financial-system/ http://blogs.wsj.com/economics/2015/06/03/riksbank-sees-incr...
- Mithaldu 11y agoI don't know, that level of complexity is beyond what i can usefully comment on. Maybe the decision makers in sweden think the benefits outweigh the downsides?
- cissou 11y agoThis is completely inaccurate. Savings account in the US have one of the lowest interest rates in the world, sitting at 0.06% right now [0]. If anything, US citizens are rewarded for NOT keeping their money in the bank, investing it anywhere else (but at a higher risk). Complete opposite of what's happening in Europe. [0] https://www.fdic.gov/regulations/resources/rates/#one https://www.fdic.gov/regulations/resources/rates/#one
- Mithaldu 11y agoKeep in mind that the article talks about negative interest rates.
- cissou 11y agoThe article explicitly says that negative rates are not being passed on to the banks' customers right now, and then goes on to speculate that it will in the future. Deflation means that 1 unit of currency will be worth more tomorrow than it is today, hence it is explicitly rewarding keeping money instead of investing it.
- Mithaldu 11y ago> not being passed on to the banks' customers right now So who is paying them now? And once they get passed on, the scenario will look like what i described, no? I also do not understand why you bring up deflation.
- deleted 11y ago[deleted]