Why money in a bank account is a bad idea

Money not safe on bank account

Nowhere in Europe is as much money on saving and bank accounts as in Germany – e.g. 2.4 Billion € in August 2019. Lately, it has become increasingly common to read that banks in Germany charge negative interest rates to their customers.

Negative interest rates refer to a scenario in which cash deposits incur a charge for storage at a bank, rather than receiving interest income. Instead of receiving money on deposits in the form of interest, depositors must pay regularly to keep their money with the bank. Just read that again.

They directly punish us, for lending them our money to use. It is disgusting.

Politics and banks are lying and cheating

Jean-Claude Juncker, a Luxembourg politician, has delivered two clear insights into this world of deception:

  1. We all know what we have to do, we just do not know how we should be re-elected afterwards.
  2. When things get serious, we have to lie.

These quotes are describing the problem pretty well: Politics has matured into a self-serving unit that acts only from one election to another and thus cannot be trusted. However, as described in the beginning, we can see politics real ugly and disgusting face from time to time and can try to learn from it.

Money on bank accounts is not safe and risk-free

Banks are extremely weak capitalized managers who promise us the release of our deposit when needed. The problem here is that this promise cannot be kept without the help of a solvent state.

If a state becomes insolvent…

… someone has to pay the bill. Words of politicians, that in the event of a crisis our money is “safe” in a bank account is a blatant lie.

In Germany, people still diligently bring their money to the banks. They are “investing” it in saving accounts at ridiculously low interest rates that for one will not even equalize the current inflation. In addition, to put insult to the injured, they now have to pay negative interest too. Saving accounts are basically causing the saver to lose money. Hence, they are neither safe or a good “investment”.

There is no vault that only we have the key for, when we bring our money to the bank!

The truth

Bad bank

By bringing money to the bank, we grant our bank a loan. We are a creditor of our bank. Now they are charging us for lending them our money to use. Furthermore, since private banks are companies, they can also become insolvent or go bankrupt. Just like any other company can go insolvent.

Now, if these bankrupt banks are not saved by the state, that is, by us, we lose all of our money. The official propagated and regulated security money per account, like in Germany 100.000€, will in this case never be paid either. The truth is, that this was mathematically never possible to begin with. It is obvious if you just look at each countries population.

In the end we are fucked…

… if we have foolishly trusted politics and banks. For this reason, I have no big cash reserves on my bank accounts anymore. I try to put any money, that is not needed on my bank account to pay ongoing debits, into assets.

Do not leave your well-earned money in bank accounts, because there it is food for negative interest rates or upcoming bank rescue operations. You will not be asked beforehand either and may end up as a beggar, if you have all your money in one account and the bank ends up insolvent!

Final Words

Invest in assets and use your bank account only for ongoing debits. If possible, always pay cash to reduce the use of credit too. The less you pay by credit, the less money you need to have on your account. Furthermore, never go into debt with credit, because then you have to pay even more.

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