Safes Sell Out In Japan, 1,000 Franc Note Demand Soars As NIRP Triggers Cash Hoarding

Tyler Durden's picture




 

Negative rates may not have found their way to bank deposits in most locales (yet), but that doesn’t mean the public isn’t starting to see the writing on the wall.

At first, NIRP was an anomaly. An obscure policy tool that most analysts and market watchers assumed would be implemented on a temporary basis in a kind of “let’s see if this is even possible” experiment with an idea that, from a common sense perspective, makes no sense.

But then a funny thing happened. Central banks from Denmark to Sweden to Switzerland went negative and stayed there. They even doubled down, taking rates even more negative and before you knew it, the public started to catch on.

When NIRP failed to resuscitate global growth and trade, the cash ban calls began. The thinking is simple (if crazy): if you do away with physical banknotes, the effective lower bound is thereby eliminated. You can make rates as negative as you like because the public has no recourse as people aren't able to push back by eschewing their bank accounts the mattress.

If that seems far-fetched, consider that the ECB is seriously considering pulling the €500 euro note and the calls are growing louder for the Fed to drop the $100 bill. Of course officials are pitching the big bill bans as an attempt to fight crime - because only a criminal would pay with a $100. But the underlying push is for a cashless society wherein monetary authorities can effectively force citizens to spend and thereby boost the economy by simply making interest rates deeply negative.

Now that the cash ban calls have gotten sufficiently loud to be heard by the generally clueless masses and now that the likes of Jose Canseco are shouting about negative rates, savers are beginning to pull their money out of the banks.

“Look no further than Japan’s hardware stores for a worrying new sign that consumers are hoarding cash--the opposite of what the Bank of Japan had hoped when it recently introduced negative interest rates,” WSJ wrote this morning. “Signs are emerging of higher demand for safes—a place where the interest rate on cash is always zero, no matter what the central bank does.”


“In response to negative interest rates, there are elderly people who’re thinking of keeping their money under a mattress,” one saleswoman at a Shimachu store in eastern Tokyo told The Journal, which also says at least one model costing $700 is sold out and won’t be available again for a month.

“According to the BOJ theory, they should have moved their funds into riskier but higher-earning assets. Instead, they moved into pure cash that earned nothing,” Richard Katz, author of The Oriental Economist newsletter wrote this month.

Meanwhile, in Switzerland, circulation of the 1,000 franc note soared 17% last year in the wake of the SNB’s move to NIRP.

“One consequence of the decision to cut the Swiss central bank’s deposit rate into negative territory in late 2014, and deepen the negative rate to -0.75% early last year, may have been to increase stockpiling,” WSJ reports. “Holding money in cash would protect it from the risk of Swiss banks at some point charging a broad range of customers to deposit money.”

The connection between the increasing circulation of the big Swiss bill and the central bank policy is obvious,” Karsten Junius, chief economist at Bank J. Safra Sarasin said.

Well yes, it is. Just as the connection between soaring safe sales in Japan and Haruhiko Kuroda’s NIRP push is readily apparent.

So once again, we see that when one experiments with policies that fly in the face of logic (like charging people to hold their money), there are very often unintended consqeuences and when you combine sluggish demand with NIRP in a monetary regime that still has physical banknotes, you get a run on cash. And on safes to store it in. 

One Japanese lawmaker brought up the soaring safe sales in parliament on Monday. "It suggests a vague sense of unease among the public," Katsumasa Suzuki remarked.

We're not sure "vague sense of unease" quite covers it. People are rushing to buy safes to hoard their money in because the head of the central bank has lost his mind...

Perhaps "palpable sense of panic," better describes the situation. 

In response to Suzuki Finance Minister Taro Aso could only muster the following: "There is money, but there is no demand. That is the biggest problem."

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Mon, 02/22/2016 - 10:16 | 7218776 Croesus
Croesus's picture

"Hide my Dorrah, buy safe now!"  

Mon, 02/22/2016 - 10:24 | 7218809 UndergroundPost
UndergroundPost's picture

No one could see this coming - what a shock! that those whose lives depend on actually working to make a living are protecting their hard earned cash from the most sophisticated & ideologically motivated thieves in world history. GLOBALIST BANKERS MUST BE SMASHED. PERMANENTLY.

Mon, 02/22/2016 - 10:28 | 7218838 StackShinyStuff
StackShinyStuff's picture

The road to hell is paved with good inten..., no wait...

Mon, 02/22/2016 - 10:30 | 7218853 jaap
jaap's picture

Think a lot of Swiss take their money out of the bank.

Especially Credit Suisse.

Mon, 02/22/2016 - 10:39 | 7218892 PT
PT's picture

Long mattresses.  And safes.

Mon, 02/22/2016 - 10:41 | 7218902 MillionDollarBonus_
MillionDollarBonus_'s picture

Even more benefits of a cashless society:

  1. Ensures that depositors' money is safe
  2. Makes 100% of depositors' money available for investment in the economy
  3. Allows governments to enact emergency bank levies in extreme cases without fear of a bank run
  4. Easier for consumers to track their spending and create more informed budgets
  5. Makes it easier for governments to enforce capital controls
  6. Ensures that foreign exchange transfers are carried out by a smaller group of financial institutions, allowing them to provide more favorable rates due to increased transaction volume

Let's admit it, a cashless society is coming whether we like it or not, so we might as well get ahead of the curve and become early adopters. What's the harm?

Mon, 02/22/2016 - 10:44 | 7218922 Okienomics
Okienomics's picture

7.  Value of Au and Ag explodes.  I'm with MDB, bring it on!

Mon, 02/22/2016 - 11:04 | 7219024 Soul Glow
Soul Glow's picture

The value of physical explodes.  Paper dies.  

Mon, 02/22/2016 - 11:33 | 7219138 Save_America1st
Save_America1st's picture

Stalone was right!  Once they force the cashless society they can tax and fine and charge fees to anybody for anything they want. 

Such as the Verbal Morality Statute from Demolition Man

https://www.youtube.com/watch?v=5rVQGT01Kzg

And we thought being debt slaves to the fiat system is bad?  Just see how bad it gets when they force everyone cashless. 

Mon, 02/22/2016 - 11:41 | 7219188 The Juggernaut
The Juggernaut's picture

Negative rates are manufacturing a bank run thus BEGGING you to buy gold.  Well not really.  They want you to actually purchase stupid shit and be a consumer but what a WISE ZHer does is to purchase gold.

Mon, 02/22/2016 - 12:10 | 7219287 847328_3527
847328_3527's picture

Not only will people hoard even more cash, crime rate will soar as these older folks get robbed. It's human nature.

 

The CBs combined with corrupt gubmints across the globe have destroyed the ecomony and their backbone---the middle class.

Just another reason why The Donald is so popular. People hate their present gubmints. It will be interesting to see who replaces the rapefugee-loving merkul.

Mon, 02/22/2016 - 12:47 | 7219556 DosZap
DosZap's picture

"In many situations, Japanese feel that gaijin are not to be trusted.


Hell why do you think they are most racist Xenophobic race on earth? they are smart.Most Gaijin cannot be trusted.

Mon, 02/22/2016 - 16:37 | 7220737 Squid-puppets a...
Squid-puppets a-go-go's picture

hey, um, 

im all for this cashless society thingy. Only, my area had several 8 hour+ power outages last year - you gonna fix that before you implement it?

only coz i dont want the states electrician to be unable to repair the grid for want of a $40 widget that he CANT FUCKING BUY WITH THE FUCKING POWER OUT

Mon, 02/22/2016 - 16:43 | 7220753 Durrmockracy
Durrmockracy's picture

There was once a great discussion on how many dancing Bitcoin you could put on a pin's head by some advanced physicists.  Clearly for portability reasons, Bitcoin has the edge on gold, silver and physical cash.

https://localbitcoins.com

Mon, 02/22/2016 - 17:13 | 7220918 Son of Loki
Son of Loki's picture

I'd love to move to Japan but I hear it's pretty expensive. Japan has one of the best cultures in the world imo and their xenophobia has been to their advantage. They'll still super competitive and very smart and creative despite zero diversity. Streets extremely safe and I have heard of any foreigners groping/attacking or raping the local girls [except maybe American soldiers who should not be there anymore anyway].

Japan is one of the best examples of why a nation does NOT need multiculturalism to excel or even survive.

Plus, Japan has some of the most beautiful if not THE most beautiful women in the world ... imho.

Mon, 02/22/2016 - 17:29 | 7220990 Bubba Rum Das
Bubba Rum Das's picture

"I'd love to move to Japan"

Ah, yes, smart move...Fukushima most safe, only dumping 300 ton's a day now of highly radioactive water into the Pacific ocean!

Mon, 02/22/2016 - 18:44 | 7221347 The Blank Stare
The Blank Stare's picture

No need for western foreigners to attack/grope the local girls, it's very easy to catch one unless you're a total freak job. A little charisma and you're in like Flint.

 

It is expensive, but survivable. Stay out of Tokyo, IMO.

 

And yes, total agreement, they are THE most beatiful women in the world, looks is one part, class and their lady like attitude completes the piciture.

Mon, 02/22/2016 - 19:01 | 7221415 847328_3527
847328_3527's picture

Fuki is over rated. It will kill you slowly but the streets of USA will get you killed much faster by thuggery from one of Barry's sons. I'll take the Fuki risk myself although the Japanese men aren't my type.

Mon, 02/22/2016 - 22:35 | 7222262 Supernova Born
Supernova Born's picture

Where do you get 1000 franc notes in 'murka?

Tue, 02/23/2016 - 11:46 | 7223857 Manthong
Manthong's picture

MDB  (another classic)   ”Makes 100% of depositors' money available for investment in the economy”

:-D

I don’t invest in derivatives often, but when I do I just deposit my money in a big bank.

Mon, 02/22/2016 - 19:06 | 7221432 the late idi armin
the late idi armin's picture

Get out of the cities on the southern coast and things get relatively cheap. however don't expect pretty women or many people for that matter. 

Mon, 02/22/2016 - 22:30 | 7222245 Handful of Dust
Handful of Dust's picture

'southern coast' meaning south of Kobe?

Tue, 02/23/2016 - 01:48 | 7222704 JamesBond
JamesBond's picture

He means Okinawa  :-)

Mon, 02/22/2016 - 19:12 | 7221455 TheAntiProgressive
TheAntiProgressive's picture

Yeah one EMP and poof there goes your bitcoin.

Mon, 02/22/2016 - 23:40 | 7222462 CrankItTo11
CrankItTo11's picture

Cashless society, meet Carrington Event.

Righteous.

Tue, 02/23/2016 - 11:52 | 7223886 Manthong
Manthong's picture

If I understand the distributed ledger model correctly, it actually will take an extinction event to wipe it out.

..and cold storage can defend against a big solar fart.

But at least we will all get to look like John Boehner.

 

Mon, 02/22/2016 - 22:36 | 7222264 FIAT CON
FIAT CON's picture

Store your wealth in GLD & SVR and use bitcoin to send payments.

 

Tue, 02/23/2016 - 11:56 | 7223918 Manthong
Manthong's picture

Hopefully, you did not mean the GLD and SLV ETF scam.

Rather, real Ag and Au ???

Mon, 02/22/2016 - 16:45 | 7220767 Durrmockracy
Durrmockracy's picture

Cashless society is teh way of teh future.  Teh only question you need to ask is whose cashless society? 

Now you either step up and fight for Satoshi honour, or you get chipped by teh state!

Mon, 02/22/2016 - 18:38 | 7221320 FrankieGoesToHo...
FrankieGoesToHollywood's picture

teh?

Mon, 02/22/2016 - 16:49 | 7220785 Durrmockracy
Durrmockracy's picture

Cash is trash!  Always has been and always will be!

Mon, 02/22/2016 - 16:50 | 7220792 Durrmockracy
Durrmockracy's picture

Cashless society + NIRP = MMMMM!  Crispy fried sheep!

Mon, 02/22/2016 - 16:51 | 7220796 Durrmockracy
Durrmockracy's picture

You know that Stalone doesn't just want gun control but also wants knife control right?

Tue, 02/23/2016 - 12:01 | 7223947 Manthong
Manthong's picture

Baseball bats and golf clubs...

Way more better than close-in knife stuff.

better yet..

https://www.youtube.com/watch?v=7YyBtMxZgQs

 

 

Mon, 02/22/2016 - 12:49 | 7219562 Countrybunkererd
Countrybunkererd's picture

And after paper dies, and metals are outlawed we will see the exact same issue when the eastern block countries in the EZ went into communism. People will just stop producing in abundance because what is the point?  I make 10 times more than i need and when I do they come and take the other 9 from me so i will just make what i need TO SURVIVE and no more.  Talk about a global collapse and they don't even see it coming or they would back off of these insane games.

Mon, 02/22/2016 - 12:52 | 7219573 Countrybunkererd
Countrybunkererd's picture

Even worse, having a potential president like Bernie, the people want these policies.  NOTHING IS FREE!!  Unfortunately, the USA will have to be driven off the cliff for most to realize that fact.  Forget the buckle up idea, we WILL need parachutes.

Mon, 02/22/2016 - 13:36 | 7219827 hannah
hannah's picture

you dont need a parachute to fall six feet into a grave...........

Mon, 02/22/2016 - 16:20 | 7220566 zeronetwork
zeronetwork's picture

Who says they didn't see it coming. They see it coming all the time. They have been seeing it coming for the last 2500 years. They just can't stop themselves. Because they think they are above human.

Mon, 02/22/2016 - 15:11 | 7220274 SgtMilstar
SgtMilstar's picture

Two things are free in life.  Bubble gum and Dick.  I am fresh out of Bubble Gum. 

Mon, 02/22/2016 - 15:49 | 7220485 Cruel Aid
Cruel Aid's picture

Yep, true and makes sense. talk about production crash.
https://en.wikipedia.org/wiki/The_Gulag_Archipelago

Tue, 02/23/2016 - 00:53 | 7222616 Cadavre
Cadavre's picture

The stock market, on the same low volume HFT bank and forth-s of the last 6 years, despite bad earnings, got goosed up 200 points. Bullshit is so ripe ya can smell it emanate from de computer when ya open a chart.

Was  shopping me-self, infact, for non bank, safe deposit box service, earlier today. Found a few. And, they won't close when the banks shut their doors.

The best bidness model I'd seen before sold that folded carboard, dash mounted, sun protector for the [front] windshield of a car. It was so obvious - everybody else missed it - bt some guy who knew beneficial simplicity sells, turned it into a cash cow.

x-ray glasses were a promise that never delivered - but the windsheld screens - and the zillion patents printed on em - so many ways to make a buck. Put a company's logo on it - you be there - and all from readily available technology - a piece of cardboard , scissors and something to assure the creases were true. Fucking genius!

I have invested as a founder in an instant water business looking for franchisees: Put our packet of instant water into a glass, fill with water, and viola, "INSTANT WATER". 

Captain Kangaroo and Mr Greenjeans schlepped a cool money maker. Mr GJ sauntered up to a table where the captain was selling tomatoes, and challenged the captain on his "ask" for the tomatoes. When GJ heard the Captain exclaim, "for this price I would buy all the tomatoes I could", GJ went off camera and came back with a stack of boxes filled with tomatoes and held his hand out.

Think simple. Believe in yourself and your neighbors - everything else is bull shit - keep head down and what ur 6.

Mon, 02/22/2016 - 10:45 | 7218929 SoilMyselfRotten
SoilMyselfRotten's picture

Adopt this!

Mon, 02/22/2016 - 10:56 | 7218987 Kayman
Kayman's picture

MDB

a) Easier for banks to control the people

b) Easier for government to steal your money

c) Easier to kill the real economy

d) Easier to get to the final destination- the end of Central Banking- a political concoction

designed to engorge the few, from the sweat of the many.

Mon, 02/22/2016 - 13:37 | 7219722 anonnn
anonnn's picture

"cashless" actually means, IMO, substituting electronic account
"notation" in place of physical paper notes.

Theree are only a small number of paper notes in circulation cpmpared to electronic "notation" [entry of imaginary numbers ito an account ledger].

The threat of mass withdrawal of paper cash from bank deposits [accounts] is very real, as almost immediately it will be discovered that the "bank will refuse to give you your money back" because it does not have any more paper notes.

Without paper notes, you can only spend the "money" [imaginary numbers] by using some means of electronic communication, either a plastic card or some other physical communication device that connects/links to the electronic bank account holding the [your] imaginary numbers..

This threat is so real right now, in present time, that the banking system in US and Europe is terrified they willl be found out as insolvent. Note that "insolvent" means has not the paper funds  to cover liabilities.

That is why banks are desperate to make legal  payout by simply putting just some imaginary "numbers" in your account, and have "it" accepted as full payment.

The control of tracking and surveillance is a big bonus, but not so immediately pressing as failure to pay out paper notes.

Mon, 02/22/2016 - 15:05 | 7220250 omniversling
omniversling's picture

The ultimate irony will be that if/when cash is outlawed, the actual notes and coins will have something like a 'real' value as everyone who wants to have unsurveilled transactions hoards the existing, known, Unit of Exchange. At street level, at least the authenticity of the known fake will be a better medium than trying to use say shells or beans.

This is unrolling way too fast, and many I know who have devoted their entire working lives to being 'sucessfull in the system', have realised the fraud, and are bailing out. Selling up and stopping contributing. Withdrawing their labour, creativity and productivity. There is now a growing class of ex-slaves locking in a cycle of diminishing returns for the parasites.

Occupy your own blood.

Mon, 02/22/2016 - 16:09 | 7220602 zeronetwork
zeronetwork's picture

Solution is to print $500. $1000. $5000. $10000 $50000 and $100000 notes. No bank run. Give them one $100000 notes if someone wants.

Mon, 02/22/2016 - 19:17 | 7221478 TheAntiProgressive
TheAntiProgressive's picture

That should jazz the hell out of assets of any kind from chainsaws to gold.  Physical trumps paper or a promise to pay at some time in the future.

Mon, 02/22/2016 - 22:39 | 7222275 FIAT CON
FIAT CON's picture

That's right without paper notes you can only spend your money, on Gold and Silver...

Do NOT follow this link or you will be banned from the site!