Economics and Hoarding
Since the Great Financial Crisis of 2008, there have been headlines such as Europe banks hoarding ECB cash, threatening credit crunch (2012), Banks across Europe are considering taking a drastic step to avoid negative rates (2016), and Bank of America Clients Hoard Cash at Highest Level in Two Decades (2022). This first became a problem in the US during the Dot.com Crash (2001) and the GFC – and then shifted to Europe. After all this time, we in America might have a more dispassionate view of the issue. But the third reference above shows the problem of hoarding money persists.
Where is economic theory about hoarding? Hoarding is nowhere to be seen in mainstream economics. Herein we discuss why.
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