On: Sweden Cuts Deposit Rate to Negative 0.25%

[tomjen]

Not really, as inflation is properly damaging more than this negative interest.

[Tuna-Fish → tomjen]

The very reason they did this is that inflation is currently negative -- that is, Sweden is suffering deflation. Money stuffed into a mattress appreciates in value as time passes.

[systems → tomjen]

to fight inflation you raise interest rates, so that citizens spend less and save more.

by cutting interesting rates they are encouraging spending, and increasing inflation!

they can of course just move their saving elsewhere (another country) where rates are better! Which is what I would do, at least in the short term!

[jacquesm → systems]

yes, like Iceland. Oh, wait...

[pmorici → tomjen]

Can you explain how that is possible? In my understanding, if the interest rate is negative then the bank is, in other words, charging you a fee to keep your money there plus you are still taking a hit from inflation so at least if you take all your money out of the bank you are only taking the hit from inflation and not having to pay the bank a monthly fee to do so.

[Retric → pmorici]

In a word: Deflation.

[pmorici → Retric]

Even then leaving your money in the bank at a negative interest rate would not be better than having it in a mattress discounting physical theft risks of course.