Nobody hoards large sums of cash. Cash is deposited into a bank, and the bank loans it out to someone who spends it. That's how banks make money, and why they are able to pay you interest on your deposit.
I'm curious where you think they put all that currency. You could argue they're hiding it from the tax authorities by putting it in a safe deposit box, but by definition nobody knows how much cash there actually is in those boxes, and of course raising taxes on such cash hoards isn't going to affect such.
> Banks stopped making most of their money from deposits a long time ago.
Banks make money from charging you for the privilege of using your own money.
Monthly account-maintenance fee. ATM fee. Fee if you don't have direct deposit. Fee for cashing checks. Fee for using a teller. Fee if they process debits before credits so as to push you into overdraft even though, by chronological transaction order, you never overdrafted.
They don't make money by accepting deposits and making loans; they make money by squeezing fees out of people who don't have much money.
Unlimited debit/atm/teller/billpay/cheque/dd/dw transactions, no minimum limit, no requirement for direct deposit (but if you use it, its free too), no monthly fee.
Congratulations, you've got a relatively customer-friendly bank. If you think you can generalize from that to banking in general, you need to read up on what banks in general do these days.
Key bank has free checking and free atm usage and free teller usage. Perhaps you should transfer your checking account there, especially since they're offering $200 for new accounts.
> they make money by squeezing fees out of people who don't have much money
They do make money from people who don't pay attention to their balance - regardless of whether they are poor or not.
> They don't make money by accepting deposits and making loans
That perplexes me since they constantly try to sell me loans.
first of all, you're arguing semantics, and you know very well that there are many fractional reserve bank accounts with lots of accumulated cash available for withdrawal at any time. that is a working, popular, valid definition of "hoarding cash".
second, do not underestimate the amount of cold, hard, paper (polymer?) cash hidden in safe deposit boxes distributed around the world. you can bet your bottom dollar (har har) that this cash isn't being lent out to commercial banking clients and mortgage buyers. it's sitting in boxes, unused. in a certain sense, it's an anti-inflationary savings mechanism.
that's not even counting the gold, platinum, pearls, diamonds, precious gems, and etc.
I understand fractional reserve banking. It's a percentage (I think around 10%) of the deposits the government requires a bank to keep on hand. The rest of the deposits are all loaned out back into the economy.
Note that the government requires this reserve because otherwise the bank will loan it out, i.e. the bank doesn't actually desire to keep cash on hand. Neither do rich people. Even drug lords don't want cash hoards, it's why they launder it.
It's not splitting hairs over semantics. People who have money in the bank do not have a cash hoard that they are withholding from the economy.
As far as people keeping assets in safety deposit boxes, nobody has any idea how much is in them, so it's rather pointless to talk about them. I do find it hard to believe that Apple's billions in "cash" is really a hoard in a safety deposit box that's withheld from the economy.
>that is a working, popular, valid definition of "hoarding cash".
Not in the sense we are discussing of it being withheld from the economy.
(For fun, watch Breaking Bad, where one of Heisenberg's biggest problems is trying to convert cubic feet of cash into something he can spend.)
