On negative interest rates and hoarding

FT Alphaville

"The point here is that while the central bank represents a complete monopoly when it comes to money that can be used to settle tax liabilities — every citizen’s ultimate liability to the state — it is only a market participant when it comes to the store-of-value market.

The ideal store-of-value takes something that would otherwise be a zero-yielding asset and turns it into an asset whose returns compensate for any additional money that falls into circulation — in response to output growth — that would otherwise come to dilute the purchasing power of the store-of-value when liquidated. By and large the private markets decide these rates when they decide how much they are prepared to pay for any store-of-value that offers a compensating income flow."