Nick Szabo  🔑

It doesn't cost any more to store bits or paper in Europe now than it did when interest rates were positive. The "storage costs" metaphor as a justification for negative interest rates is a whopping falsehood.

Dollars aren't bitcoin. It's not just bits on a bank's ledger. It's money the bank owes you, and the ability of the bank to pay you that money is constrained by the loans it can profitably make. If there's a limit to its profitable lending, there's a limit to what it can pay out.

In other words it is as I said, it doesn't have anything to do with the costs of storage, except that, to try to make deeper or longer NIRP work without squeezing banks, central banks need unprecedented laws to try to make the costs of holding physical alternatives higher.

I'm skeptical that it's laws which stand in the way to holding physical alternatives, as opposed to the fact that there's a limit to how much cash you'd be willing to hold in your home due to security and convenience,

People's attitudes & security measures about paper money vary widely & can change dramatically depending on trust in banks. They will also have stronger incentives to switch to cryptocurrency, which with multisig is far more secure to hold than paper money.

Sure, I get that, but what I'm saying is that it's not the law that's the major impediment. It's cost of security. Knowledge, training convenience and so forth.

People have been using coins & paper money for thousands of years, despite the robbers, highwaymen, and pirates. Effective weapons and big lawns help, one of the reasons deep or long NIRP would require much more draconian laws in the U.S. than they do at least so far in Europe.

Sure, and people still use that stuff, but I also think you can think of robbers, highwaymen and pirates as a form of negative rates. And if people started holding more cash, there would be more robbers, highwaymen and pirates, meaning deeper implied negative rates on cash.