German Banks Told To Horde Cash

You cannot fully understand the events to come, without grasping dopamine, amygdala, and the idea of r/K Selection producing environmentally triggered, psychological modes:

Europe, of course, has been battling with negative interest rates for quite some time.

What this means is that commercial banks are being charged interest for holding wholesale deposits at the European Central Bank.

In order to generate artificial economic growth, the ECB wants banks to make as many loans as possible, no matter how stupid or idiotic.

They believe that economic growth is simply a function of loans. The more money that’s loaned out, the more the economy will grow…

It creates bubbles (like the housing bubble from 10 years ago), and ultimately, financial panics (like the banking crisis from 8 years ago).

We know the word “bubble” has all sorts of dangerous connotations, but rabbits cant fathom it. They want bubbles. Rabbits are trying to create r-selection. They don’t care where the resources come from, they don’t have the ability to foresee future danger – they just want free resources made available by any means right now. The desire is so strong they won’t brook any dissent over any facts that would indicate a more measured dispersal of resources would create a longer term stability. Free resources will grow the economy, and that is that.

Their new recommendation is for all member banks to ditch the ECB and instead start keeping their excess reserves in physical cash, stored in their own bank vaults…

(What’s even more amazing is that this concept of traditional banking– holding physical cash in a bank vault– is now considered revolutionary and radical.)

The population is beginning to go K, and you are beginning to see signs of competitiveness, risk-aversion, and resource protectionism, as above. Coming from a period of r-selected rabbitism, it seems revolutionary and radical to not loan out all your cash to people who can’t possibly pay you back.

Unfortunately, the shift back toward K, produced itself by the beginning of resource restriction, amplifies the effects of the restriction:

Total bank deposits exceed trillions of euros. Physical cash constitutes just a small percentage of that sum.

So if German banks do start hoarding physical currency, there won’t be any left in the financial system.

While the population is in the throes of r, it is like an addict in the midst of addiction. It will act irrationally to free up resources, and the resources freed will be drawn at the expense of the future. The more resources that are freed by the increasingly r-population, the more resources the r-population wants freed, and so on as r expands exponentially.

Once the resource physically can’t be freed up, even slightly, the K-psychology starts to set in. Then, not only do people stop seeking to free up resources to create r-selection, they begin to horde resources that might otherwise be available, exacerbating the shortage.

In it’s initial stages, just the most minor shortage triggered the K-shift to begin with. As hording begins, the increased shortage triggers increased K, which triggers even more hording and shortage. Clearly, this sets up a mechanism where the shortage feeds the K, which then feeds the shortage, as the society slips into a vastly more competitive, aggressive, protectionist mindset.

Obviously we are beginning to see this play out in Europe, from increasingly conservative policies on migrants and borders, to more conservative economic behavior. Some day in the future, citizens of Europe won’t understand why their nations didn’t have borders with those aggressive, competitive people “over there,” with whom they feel no allegiance, and who they just know are looking to exploit them. With that, will go “tolerance” and openness to all the strangeness and societal degradation we have seen of late.

It won’t necessarily be nicer in many ways, but it will make more sense, and that in itself will put a lot of K-strategists at ease.