+ young folks are flocking to the new finance operations such as N26, which offer good-quality, free mobile banking, but often do not include regular free cash withdrawals. This cohort will be more consumptive, if the premise of your as always lovely article is correct.
- Germans always find a way to abide to the cash king. Several supermarkets now offer cash payouts if you purchase at least €50, so no need for that ATM. But if you use a credit card to buy groceries and to get cash, then what in tarnation could the net effect on consumption turn out to be?
In the US banks do this by sending out pre-authorised credit cards to people, like giving a bowl of cookies to a child. I know people who got themselves in massive credit card debt this way, but boy does it boost consumption! Amazon has done this with the 1-click function - how much useless crap has been bought at 12.30am due to that one little button god only knows...
"some places in the countryside to this day will not accept card payments" I was quite amazed to not be able to pay with card to pay for my food at a major trainstation.
A great unspoken is that the prevalence of cash usage in Germany appears to be also driven by fears of having an electronic "paper trail" for the tax authorities should they ever decide to perform an individual audit. 1) Technically, all transfers to spouses and children count against Germany's notoriously low gift/inheritance tax limitations. If one just makes cash withdrawals from one's own account and palms off a few €500 "Bin Ladens" (known to exist, but rarely seen, much like Osama bin Laden was during his years in hiding, and associated with shady dealings) to family members, there's plausible deniability that one had spent it on one's self. 2) Some craftsmen and domestic help similarly encourage cash for discounted "off the books" jobs.
Personally, I strongly prefer to run everything "regular way" via bank transfers to track my finances properly, and the locals think I'm nuts ... but I don't want to run around peeling bills off a big wad of cabbage like a drug dealer or mafiaso.
I am familiar with the off the books payments to craftsmen. that exists in every country as far as I know. But I never heard of the paper trail thing with gifts to relatives. Maybe because I come from a household were gift taxes were like Bin Laden...
It's a real disincentive to sensible savings planning; perhaps the ultimate goal is to get it back into the economy as quickly as possible.
It's always struck me as odd that keeping a kid on "financial life support" into adulthood by giving them untraceable cash for expenses seems to be fine, but set up a savings account and transfer some cash (upon which one has already paid income tax) into it as a cushion/object lesson on the importance of savings, and it's then as a "gift-taxable event".
+ young folks are flocking to the new finance operations such as N26, which offer good-quality, free mobile banking, but often do not include regular free cash withdrawals. This cohort will be more consumptive, if the premise of your as always lovely article is correct.
- Germans always find a way to abide to the cash king. Several supermarkets now offer cash payouts if you purchase at least €50, so no need for that ATM. But if you use a credit card to buy groceries and to get cash, then what in tarnation could the net effect on consumption turn out to be?
In the US banks do this by sending out pre-authorised credit cards to people, like giving a bowl of cookies to a child. I know people who got themselves in massive credit card debt this way, but boy does it boost consumption! Amazon has done this with the 1-click function - how much useless crap has been bought at 12.30am due to that one little button god only knows...
Me: (holding stick of dynamite behind back)
Policeman: You are under arrest for plotting to cause an explosion
Me: No officer, I'm carrying out economic policy by boosting the aggregate demand level
If you say that to a German police officer, it may actually work 😂
"some places in the countryside to this day will not accept card payments" I was quite amazed to not be able to pay with card to pay for my food at a major trainstation.
A great unspoken is that the prevalence of cash usage in Germany appears to be also driven by fears of having an electronic "paper trail" for the tax authorities should they ever decide to perform an individual audit. 1) Technically, all transfers to spouses and children count against Germany's notoriously low gift/inheritance tax limitations. If one just makes cash withdrawals from one's own account and palms off a few €500 "Bin Ladens" (known to exist, but rarely seen, much like Osama bin Laden was during his years in hiding, and associated with shady dealings) to family members, there's plausible deniability that one had spent it on one's self. 2) Some craftsmen and domestic help similarly encourage cash for discounted "off the books" jobs.
Personally, I strongly prefer to run everything "regular way" via bank transfers to track my finances properly, and the locals think I'm nuts ... but I don't want to run around peeling bills off a big wad of cabbage like a drug dealer or mafiaso.
I am familiar with the off the books payments to craftsmen. that exists in every country as far as I know. But I never heard of the paper trail thing with gifts to relatives. Maybe because I come from a household were gift taxes were like Bin Laden...
It's a real disincentive to sensible savings planning; perhaps the ultimate goal is to get it back into the economy as quickly as possible.
It's always struck me as odd that keeping a kid on "financial life support" into adulthood by giving them untraceable cash for expenses seems to be fine, but set up a savings account and transfer some cash (upon which one has already paid income tax) into it as a cushion/object lesson on the importance of savings, and it's then as a "gift-taxable event".