This is a quote from a memoir by Dorothy Wordsworth, reflecting on a trip she took with two famous poets, her brother, William Wordsworth, and their similarly gifted companion, Samuel Taylor Coleridge. We sat upon a bench, placed for the sake of one of these views, whence we looked down upon the waterfall, and over the open country ... A lady and gentleman, more expeditious tourists than ourselves, came to the spot; they left us at the seat, and we found them again at another station above the Falls. Coleridge, who is always good-natured enough to enter into conversation with anybody whom he meets in his way, began to talk with the gentleman, who observed that it was a majestic waterfall. Coleridge was delighted with the accuracy of the epithet, particularly as he had been settling in his own mind the precise meaning of the words grand, majestic, sublime, etc., and had discussed the subject with William at some length the day before. “Yes, sir,” says Coleridge, “it is a maj...
Christopher,
ReplyDeleteI had not previously encountered the term "negative interest rate." Logically, it must mean that the lender pays the borrower instead of vice versa. If interest rates are negative, then it still might pay to lend your money to a bank for safe keeping.
But the link you provide states, "If banks charge customers negative rates of interest in a cashless society, those customers are not able to withdraw their money as cash to shield it, under their putative mattresses. Consumers’ only choice in such a scenario is to spend it or let the bank take it."
How does "a cashless society" come into this? It seems to be a concept that is separate from negative interest rates. And, does "let the bank take it" mean "let the bank hold it until you spend it? If so, why "take," which is usually used to mean "keep"?
A negative interest rate applies not just to lenders and borrowers as usually understood, but to banks and depositors. (Depositors = lenders.) You can have a savings account, but it doesn't accumulate money -- in fact you're paying the bank for the privilege of letting them hold on to your money. So you are letting the bank "take" your savings, even though only by relatively small increments.
ReplyDeleteThanks. That answers my "take" question. But why can't the depositor withdraw his money in cash?
ReplyDeleteAnd a new question: If you google "negative interest rates," you'll see that Janet Yellen promises them. What's going on in the United States? You mentioned only Sweden.
That's the whole point of the disappearance of cash-dispensing ATMs from some regions in Sweden and other govt inspired move toward a cashless society. If you COULD withdraw cash, you'd be able to serve as you own bank, with an interest rate of 0. But the goal of the social experiment is a society in which they only way to get money out of a bank account is to do something else wit it: transfer it to another bank, or buy something. Anybody who wants to save will have to use their krona to buy another currency, euros or dollars or whatever, and keep them in bank accounts in other countries. OR ... buy valuable things, that could be used for re-sale in the future, and that may even appreciate in value in the meantime, getting one's self back to an approximation of positive interest rates.
ReplyDeleteThe idea is that hoarding is a bad thing, that an economy is stimulated as people buy and invest rather than putting money 'aside for a rainy day,' so the latter should be impeded. In part, the idea is also that people with cash (and savings) are probably up to no good.