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>0% inflation would mean there is no penalty for sitting on your money. People putting their cash under their mattress instead of This is an absurd claim. Nob

>0% inflation would mean there is no penalty for sitting on your money. People putting their cash under their mattress instead of This is an absurd claim. Nobody seriously considering mattress vs CD (or bonds in a low rate environment like we had 2008-2020) is swayed by a return of less than a couple percent. It is a security vs liquidity vs trust calculation, not a return based one. Furthermore, as the other commenter points out, rates are correlated but not necessarily in lock step with inflation. The rate on your savings account is probably still sub 1% (although bonds have gone up).

slg 4y ago
Maybe not for you. Maybe not in the short term. But there are all sorts of people involved in the economy with all sorts of risk tolerances. Lots of people don't like losing their money. Putting their money some place with zero risk is attractive for people. It isn't the most up-to-date data and survey results are always a little questionable, but here is some data from 2015[1]: >A new survey of more than 1,800 people from the American Express Spending and Savings Tracker, however, found that 43% of Americans keep their savings in cash. An alarming 53% of those cash-hoarders "plan to hide bills in a secret location at home." Those numbers are big enough that even if they are way off, there is still a sizable number of people who are holding onto their savings in physical cash. That would go up if there was no inflation. [1] - https://www.businessinsider.com/americans-hide-money-under-the-mattress-2015-2 https://www.businessinsider.com/americans-hide-money-under-t...