5 ms·
> I was brought up to work diligently, not take on debt, and save - a simple approach to building wealth - but I'm concerned that will put me at a disadvantage
by chosenbreed37 7y ago
> I was brought up to work diligently, not take on debt, and save - a simple approach to building wealth - but I'm concerned that will put me at a disadvantage under an economic system with negative rates.
Interesting take. Why would you be at a disadvantage and to whom would this be in relation to? I think it's fair to say that in the very long term inflation, etc will erode the value of your cash, but I imagine that there is still value in saving. I'm not sure these rates will last forever anyway.
- calderarrow 7y agoI'm going to oversimplify here, but negative interest rates effectively mean you pay the bank to store your money. So on top of inflation, you're losing real money. For someone who saves, negative interest rates mean savers end up with less money at the end of each year, and since OP indicated their preference to saving, that puts them at a disadvantage. Negative interest rates also that you get paid for taking out debt, which is a tremendous opportunity to buy something that costs $100 for less than $100, but because OP indicated their aversion to taking on debt, this puts them at a disadvantage.