There's a penalty for hanging on to money. Banks would essentially be fined for not loaning money out, so the net result is insanely low-to-zero interest for borrowers.
The problem is, of course, if the downturn is that bad, you have to weigh having money in reserve that takes a penalty versus loaning it out and losing it all.
"You're thinking of this place all wrong. As if I had the money back in a safe. The money's not here. Well your money's in Joe's house. That's right next to yours and in the Kennedy house and Mrs Melan's house and... and a hundred others."
Yup. Even decades later the system is the same. If I went to my local bank to withdrawal all my money, it's extremely unlikely they'd have enough to cover it unless it was a prominent bank in a fairly large urban center. And that's just one person. Hell, most banks don't have liquid assets to cover all their customers cash if they all start pulling it out.
As soon a they said that this scene popped into my head. I've seen this movie hundreds of times. It's my dad's favorite. He'll watch it any time of year.
Possibly and probably for those who understand what ZIRP or negative real rates implies.
Having money in a savings account would be silly. The value of a dollar today would be more valuable than the value of a dollar tomorrow in such a situation.
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u/BigWhiteDog 5h ago
<negative interest rates How does that work? I've heard the term but don't understand how that would work.