Gyroscopic Investing

Negative Rates Have Made Danes Richer Than Ever

After almost five years of negative interest rates, Danish households are richer than ever.
With more cash than they know what to do with, households are stuffing their banks full of deposits.
The upshot is that the country with the world record in negative rates now also boasts a record in bank savings.

https://www.bloomberg.com/news/articles ... tive-rates

0% beats negative any day, but those banks could start charging fees any day now.

If that ever happened here, think US savings bonds!!! I wonder if the banks here are still expecting short term rates to drop. They haven't increased savings account yields despite the jump in T bill rates. I expected a lag but this is getting a little ridiculous.

sophie wrote:0% beats negative any day, but those banks could start charging fees any day now.
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I wonder if the banks here are still expecting short term rates to drop. They haven't increased savings account yields despite the jump in T bill rates.

They certainly didn't hesitate to raise mortgage rates.

Shocker

The title of the article is pretty misleading. You become richer by having more wealth, not by having more bank deposits.

The increase in wages is also nothing to shout about. If the figures in the article are nominal, then private sector wages are up by ~6% in the last 5 years, while inflation has risen by about 3.7% during the same period. No biggie. And besides, what about the public sector?

A large chunk of the Danes' wealth is in real estate. What happens if the Danish housing market collapses by 30 percent? Will they still be "richer than ever"? This is far more important than what happens to wages or bank deposits...

I don't know, I think hefty bank deposits are a pretty universal sign of "rich."

Lang wrote:What happens if the Danish housing market collapses...Will they still be "richer than ever"? This is far more important than what happens to wages or bank deposits...

You may very well be right, but I don't think the author is saying their wealth is safe for all time. I mean, you may as well ask, "What if this so-called millionaire loses a million dollars?"

Any Danes here? They're probably busy eating sugar and snuggling by candlelight.

This article is insane in its casual acceptance of obvious absurdity.

So apparently in our double-speak, anti-truth world it is now "obvious" that the path to sustained and durable wealth is that of issuing bonds that cost the owner to hold. This is an economic absurdity that even a six-year-old would recognize, yet it is apparently accepted not only as 'normal', but 'optimal' by our society, now.

We've entered the realm of the bizarre, folks. Quasi-permanent negative interest rate policy is the path to prosperity like Mao's Great Leap Forward was the path to agricultural abundance.

Whatever. Bring on the negative interest rates, I say. The value of my currently held LTT will only rise, and as they do I'll be selling them off and buying gold, which will protect me when this whole crazy game that central banks are playing gets the blue screen of death.

haha!
I doubt that the same phenomenon would translate to hefty deposits in other countries. Almost certainly not in the States. Danes have the wages. They're paying off their mortgages.

The negative rates are not a cause of wealth. If I understand it right, they are wealthy *in spite of* those rates.