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'No other storage service works this way. I can’t put a bunch of furniture in a warehouse and not only pay nothing, but receive a percentage of the value each m

'No other storage service works this way. I can’t put a bunch of furniture in a warehouse and not only pay nothing, but receive a percentage of the value each month.' The distinction is that your savings in a "storage" scenario are yours exclusively. That is not how it actually works. Banks lend out your "stored furniture" to get a return. Due to fractional reserve lending and the fungibility of currency, the illusion of you being able to receive your stored furniture back is preserved. But there is never actually a scenario where there are truly idle resources--capital is always utilized at some ratio, and that ratio is independent of consumer behavior. The bank is investing on behalf of their customers. As banks can only invest based upon the deposits of their customers, I think it is actually extremely unreasonable for customers to have to pay for the privilege in the form of a negative interest rate. That's not "natural" either. Guaranteed checked deposits is the only reason that this swindle can occur.

JumpCrisscross 7y ago
> it is actually extremely unreasonable for customers to have to pay for the privilege in the form of a negative interest rate You’re paying for access to a checking account, an electronic payment mechanism. Savings should be invested, not stored with banks. That’s the nudge ZIRP and negative rates provide. Forcing investment decisions into the hands of the savers over banks’ lending managers. Decentralising the economy’s pool of investing decision makers.
- abernard1 7y ago
  I understand the nudge, but my comment was qualified by a statement that is essentially "savers are already joint investors in the operations of a bank." On principle, receiving a guaranteed negative return for providing an investor your own capital is very unnatural. With regard to fees: the only reason banks charge them is due to the fact they believe that the possible returns from low income customers will never match their cut of the investment. The fact that this interest rate also applies to high income customers exposes the "what about fees" argument. This is about incentivizing moving capital out of the safer investments that bank make (homes, relatively light personal loans, modest business loans) into equity markets. As true "savings" rates in the form of completely unallocated capital is low, my guess is this is pushing on a string.
  - JumpCrisscross 7y ago
    > savers are already joint investors in the operations of a bank And highly privileged ones. First in line. Guaranteed by the government. If savers want to be pari passu with the bank’s capital, they can buy bank bonds and stock. Those yield well, even in the EU.
- wongarsu 7y ago
  There is lots of capital that an individual can't reasonably invest. Even if I live paycheck to paycheck then I still on average have half my salary in my bank account. As an individual that's just my working capital, but as a bank I can take advantage of the fact that some people (in Germany) get payed on the 1st and some on the 15th, meaning there is some constant amount of money that can be invested.
pgwhalen 7y ago
>As banks can only invest based upon the deposits of their customers This is not strictly true, read about the money multiplier myth. As another (much more informed than I) HN commenter put it, banks think about constraints on lending in terms of the cost of money, not the quantity of money.

JumpCrisscross 7y ago

> it is actually extremely unreasonable for customers to have to pay for the privilege in the form of a negative interest rate You’re paying for access to a checking account, an electronic payment mechanism. Savings should be invested, not stored with banks. That’s the nudge ZIRP and negative rates provide. Forcing investment decisions into the hands of the savers over banks’ lending managers. Decentralising the economy’s pool of investing decision makers.

abernard1 7y ago
I understand the nudge, but my comment was qualified by a statement that is essentially "savers are already joint investors in the operations of a bank." On principle, receiving a guaranteed negative return for providing an investor your own capital is very unnatural. With regard to fees: the only reason banks charge them is due to the fact they believe that the possible returns from low income customers will never match their cut of the investment. The fact that this interest rate also applies to high income customers exposes the "what about fees" argument. This is about incentivizing moving capital out of the safer investments that bank make (homes, relatively light personal loans, modest business loans) into equity markets. As true "savings" rates in the form of completely unallocated capital is low, my guess is this is pushing on a string.
- JumpCrisscross 7y ago
  > savers are already joint investors in the operations of a bank And highly privileged ones. First in line. Guaranteed by the government. If savers want to be pari passu with the bank’s capital, they can buy bank bonds and stock. Those yield well, even in the EU.
wongarsu 7y ago
There is lots of capital that an individual can't reasonably invest. Even if I live paycheck to paycheck then I still on average have half my salary in my bank account. As an individual that's just my working capital, but as a bank I can take advantage of the fact that some people (in Germany) get payed on the 1st and some on the 15th, meaning there is some constant amount of money that can be invested.

pgwhalen 7y ago

>As banks can only invest based upon the deposits of their customers This is not strictly true, read about the money multiplier myth. As another (much more informed than I) HN commenter put it, banks think about constraints on lending in terms of the cost of money, not the quantity of money.