Monday, August 29, 2016

German Savers #Hoarding Cash

Germans, smart enough to recognize the growing risk of bank defaults originating within Europe, are stashing cash at homes rather than bank. Perhaps common sense, a recognition that storing cash at risky institutions that provide zero to negative returns and could easily confiscate 10% of their deposits, is stronger than public policy and patriotism.

Confidence is the key here. Confidence the driver of liquidity supports the financial system that greases the wheels of capitalism. German are beginning to hoard, because they recognize the early signs of confidence lost. This will worse after the first institution fails somewhere within Europe.

Headline: German Savers Lose Faith in Banks, Stash Cash at Home

HAMBURG—German savers are leaving the security of savings banks for what many now consider an even safer place to park their cash: home safes.

For years, Germans kept socking money away in savings accounts despite plunging interest rates. Savers deemed the accounts secure, and they still offered easy cash access. But recently, many have lost faith.



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