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Are You Holding More Bills Due To Low Interest Rates?

Tuesday, July 16, 2013 - 3:30 PM
Apparently, the currency in circulation has been soaring. One would think that the trend should be reverse due to credit cards, debit cards, online peer-to-peer payment systems, etc. Paul Krugman suggests the reason for this boom in paper currency is the low interest rates. According to Krugman, the "opportunity cost of holding cash has gone way down." This WaPo article makes the case that Krugman is wrong, and the main reason for the boom is inflation fears in other countries.

These articles had me wondering. Are you holding more cash in your home due to the low interest rates? Even if interest rates were zero, I would still hold the vast majorit of it in a checking or savings account for reasons of safety.
Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708
1. Tuesday, July 16, 2013 - 4:00 PM
Ordinarily I would agree with this but now that Shorebreak has introduced what may be going on in the banking system (FDIC-BOE Document) , I don't know how much longer it will be safe to keep a large amount of funds in the bank.
paoli2paoli21,406 posts since
Aug 10, 2011
Rep Points: 6,152
2. Tuesday, July 16, 2013 - 4:18 PM
I have no fear as yet. I have no cash at home or in my purse. I shop with cash back credit cards. I rarely write a check except for property taxes. I charge everything, gas, electric, food, Comcast bill, doctor bill. I have to cash a check for a tip when I get my hair done at the beauty school and even for gifts. All my cash is in CD's or reward checking accounts. 
Ally6770Ally6770942 posts since
Jan 16, 2010
Rep Points: 2,741
3. Tuesday, July 16, 2013 - 5:16 PM
I hold enough cash at home:

1. To enable my neighbor to come bail me out of the local hoosegow.

2. To purchase a couple of weeks worth of food and beverages.

3. Either item 1 or 2, but not concurrently.
ShorebreakShorebreak2,696 posts since
Apr 6, 2010
Rep Points: 14,620