4 ms·

I think your vitriol is misplaced; the whole point of a negative interest rate is to stimulate the economy, i.e. increase the value of your investments, which p

I think your vitriol is misplaced; the whole point of a negative interest rate is to stimulate the economy, i.e. increase the value of your investments, which presumably would be good for someone who has built financial security. Suppose for example that a -4% rate spurs a 1% economic boost - that would only be bad for you if you keep more than 20% of your wealth sitting around in your checking account. I'm not saying it would work, as in successfully grow the economy, necessarily. Not my area, and it'd depend on the country and the recession and so forth. Just saying, the "central bank fucks" who toyed with this idea were trying to make people money, not take it away.

zaptheimpaler 5y ago
Valuations of everything are so high they make little sense. In this situation, yes holding cash is bad, but it doesn't exactly feel safe holding superinflated assets. What will happen when interest rates rise? How long are we going to keep inflating stocks and houses 2x in a year? My overall problem is that it makes the entire process of preserving money a time consuming and scary game of predicting what the central bank will do and hoarding assets. We are forced to play that pointless game, when really that is what a simple bank savings account should do. Preserving (not growing) money shouldn't be so complicated.
- ineptech 5y ago
  > How long are we going to keep inflating stocks and houses 2x in a year? Totally agree, there are things about modern fiscal policy that seem scary and weird! But that is pretty much unrelated to... > We are forced to play that pointless game, when really that is what a simple bank savings account should do. I don't think is true. Granted, savings accounts used to have higher returns, but inflation was higher then. It has never been possible to preserve money (i.e. beat inflation) with no risk, nor to grow money without more risk; it's just that the specific investments look different nowadays. Anyway, to put it bluntly, the goal of central bank planners is not to preserve your savings, it's to grow the economy. And what happens if mid-to-upper people get spooked by a recession, and move assets in to cash? That's deflationary, which prolongs the recession! So if low interest rates make you think, "Gah, I'd like to pile up cash in a savings account, but these bankers are forcing me to go invest it", well, guilty as charged, yes that's exactly what they're trying to do. But I don't think it follows that they're mean jerks, or that they're doing their jobs wrong.
  - zaptheimpaler 5y ago
    Yes one of the central banks mandates is maximum employment. But I don't believe people prefer sitting around not working to good jobs. The problem is the majority of jobs pay bad wages, provide little meaning and no agency. Central banks want to bully people into working anyways, but some of us have had enough of that bullshit. If they want more employment then employers should provide jobs worth doing rather than forcing it on people via inflation. Besides the fact that we've had 100 years of incredible technological progress and increasing productivity but somehow that doesn't translate to fewer jobs or lower working hours or better safety nets or anything? You say the banks want us to invest our money, but buying a house or stock just to store wealth is not an investment in any meaningful sense. Yet, people do that because they have no alternative to store wealth and no clarity on when the banks will decide to double the amount of money overnight. So at best they have implemented a policy without considering the most basic second order effects. True investment is making something better, faster, cheaper, new etc. and their tactic of just making saving more and more difficult and making people's lives more precarious is not going to achieve that. That would take education, messaging, community, and perhaps weaning off a growth addicted policy/society.
    - ineptech 5y ago
      I don't really know what you're on about here, man. You don't want to work, but you don't want to invest your capital either? You want to keep your money in cash and not lose it, but you also don't want the low interest rates that minimize inflation? This is a mish-mash of non-sequiters. I'm not sure why you want hoarding cash to be viable, other than the vague general idea that that's how the world ought to work. Well, you're right, it's not viable - but there is no villain responsible, that's just a feature of healthy economies. If you imagine a world in which it were, and then imagine what would happen when everyone did it, it may become clear why.
      - zaptheimpaler 5y ago
        Fair enough, thanks for engaging. I like work and get why hoarding is a problem, but it's just a little scary to think about what happens 30-40 years down the line when it's my turn to retire. Hoarding is bad but with no social safety nets it's also necessary in a sense to secure your future. Investment is necessary but I feel there are very few real investments or they are very time consuming to find - AAPL did not suddenly become worth 2x in a year, that's only a result of people rushing into AAPL. True investment is a full time job, that very few people are good at, and I don't have the time to take on another full time job in addition to my current job just to maintain a sense of safety that i won't be homeless when I'm old or incapable for whatever reason.
razius 5y ago
Nobody talks about the other side of the coin, it disincentivizes savers. What happens when I'm trying to save for a down-payment and the savings depreciates by -4% and house prices rise by 10%?

zaptheimpaler 5y ago

Valuations of everything are so high they make little sense. In this situation, yes holding cash is bad, but it doesn't exactly feel safe holding superinflated assets. What will happen when interest rates rise? How long are we going to keep inflating stocks and houses 2x in a year? My overall problem is that it makes the entire process of preserving money a time consuming and scary game of predicting what the central bank will do and hoarding assets. We are forced to play that pointless game, when really that is what a simple bank savings account should do. Preserving (not growing) money shouldn't be so complicated.

ineptech 5y ago
> How long are we going to keep inflating stocks and houses 2x in a year? Totally agree, there are things about modern fiscal policy that seem scary and weird! But that is pretty much unrelated to... > We are forced to play that pointless game, when really that is what a simple bank savings account should do. I don't think is true. Granted, savings accounts used to have higher returns, but inflation was higher then. It has never been possible to preserve money (i.e. beat inflation) with no risk, nor to grow money without more risk; it's just that the specific investments look different nowadays. Anyway, to put it bluntly, the goal of central bank planners is not to preserve your savings, it's to grow the economy. And what happens if mid-to-upper people get spooked by a recession, and move assets in to cash? That's deflationary, which prolongs the recession! So if low interest rates make you think, "Gah, I'd like to pile up cash in a savings account, but these bankers are forcing me to go invest it", well, guilty as charged, yes that's exactly what they're trying to do. But I don't think it follows that they're mean jerks, or that they're doing their jobs wrong.
- zaptheimpaler 5y ago
  Yes one of the central banks mandates is maximum employment. But I don't believe people prefer sitting around not working to good jobs. The problem is the majority of jobs pay bad wages, provide little meaning and no agency. Central banks want to bully people into working anyways, but some of us have had enough of that bullshit. If they want more employment then employers should provide jobs worth doing rather than forcing it on people via inflation. Besides the fact that we've had 100 years of incredible technological progress and increasing productivity but somehow that doesn't translate to fewer jobs or lower working hours or better safety nets or anything? You say the banks want us to invest our money, but buying a house or stock just to store wealth is not an investment in any meaningful sense. Yet, people do that because they have no alternative to store wealth and no clarity on when the banks will decide to double the amount of money overnight. So at best they have implemented a policy without considering the most basic second order effects. True investment is making something better, faster, cheaper, new etc. and their tactic of just making saving more and more difficult and making people's lives more precarious is not going to achieve that. That would take education, messaging, community, and perhaps weaning off a growth addicted policy/society.
  - ineptech 5y ago
    I don't really know what you're on about here, man. You don't want to work, but you don't want to invest your capital either? You want to keep your money in cash and not lose it, but you also don't want the low interest rates that minimize inflation? This is a mish-mash of non-sequiters. I'm not sure why you want hoarding cash to be viable, other than the vague general idea that that's how the world ought to work. Well, you're right, it's not viable - but there is no villain responsible, that's just a feature of healthy economies. If you imagine a world in which it were, and then imagine what would happen when everyone did it, it may become clear why.
    - zaptheimpaler 5y ago
      Fair enough, thanks for engaging. I like work and get why hoarding is a problem, but it's just a little scary to think about what happens 30-40 years down the line when it's my turn to retire. Hoarding is bad but with no social safety nets it's also necessary in a sense to secure your future. Investment is necessary but I feel there are very few real investments or they are very time consuming to find - AAPL did not suddenly become worth 2x in a year, that's only a result of people rushing into AAPL. True investment is a full time job, that very few people are good at, and I don't have the time to take on another full time job in addition to my current job just to maintain a sense of safety that i won't be homeless when I'm old or incapable for whatever reason.

razius 5y ago

Nobody talks about the other side of the coin, it disincentivizes savers. What happens when I'm trying to save for a down-payment and the savings depreciates by -4% and house prices rise by 10%?