When safe assets return less than nothing, people evidently turn to safes.
According to Deutsche Bank economist Torsten Sløk, since the implementation of negative interest rates in Japan, the sale of safes has spiked.
In a note to clients, Sløk highlighted the massive jump in safe sales since the implementation of negative interest-rate policies. Essentially, these policies force savers to pay the bank in order to keep money in a savings account. Thus, it is cheaper to pull money from the bank and store it in a safe.
Luke Hickmore, portfolio manager at Aberdeen Asset Management, also highlighted the trend in Europe during a conversation with Business Insider in May.
“Safe sales have shot up through the roof in Europe,” said Hickmore. “People are taking cash out, and even with security costs, it’s better returns than your negative rates. It’s crazy, crazy behavior.”
This spike supports the argument that negative interest rates compel people to protect their money rather than go out and spend it, as the policy intends.
Well, better in a safe than under a mattress.
- Deutsche Bank