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An increasing number of savers are hoarding cash at home because they have lost confidence in the banking system, it emerged yesterday.

The Bank of England said the total value of its notes in circulation has soared while their use in transactions is falling. There are 40m more £50 notes alone in circulation than two years ago.

Bosses say this is evidence of a loss of faith in financial institutions and the greater 'comfort' many Britons feel from possessing their money in physical form.

With the majority of savings accounts offering interest rates as low as 0.05%, the public also lose almost nothing by stuffing their nest egg under the mattress.

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Now where did I leave my jemmy?

Lost confidence on the banking system, physical form? If the banking systems fails, what use is a bit a paper with some fancy ink on it?

On Friday last week there was a piece on PM about the North Korean's revaluing their currency. Knocking off two zeros! Bad news for savers etc.

They where joking about the mad North Koreans and how something like that could never happen here. Hmmm...

out of curiosity how do they know the money is being hoarded? might it not be an increase in the black economy, or people having to cut up credit cards?

SILVERHARP2 wrote:out of curiosity how do they know the money is being hoarded? might it not be an increase in the black economy, or people having to cut up credit cards?

Because the BoE know exactly how much they've got stashed in their "wage protection if Labour get re-elected" store?


Peter.

Indeed, how does the BoE tell the difference between hoarding and the black economy? Our economy is officially around a trillion quid a year? If just 0.5% of that moved to the black market, that would account for a missing £5bn in currency wouldn't it?

The 40m extra fifties mentioned above is only 2bn in cash.

Wiki suggest the UK shadow economy is significant, over 10%. So any increase over the last couple of years could easily explain the extra demand for cash, why assume hoarding?
http://en.wikipedia.org/wiki/Underground_economy

I've started doing it myself , we had a few jobs done on the house and once I qet the quote I retort with "what's your best cash price?" It's between the contractor and his God what he does with the money.

Or are you not putting temptation in the builder's way, inciting a crime? That must be between you and your God.

Wiki suggest the UK shadow economy is significant, over 10%.

The global shadow economy is nearer 1/3rd i.e. 1 in 3 dollars/pounds is in offshore accounts.

It is AMAZING what offshore financial services exist. Imagine those glossy Barclays etc brochures ... but rewritten & printed on beter paper to describe their offshore facilities .. all totally confidential of course.

It's a parallel universe ... all the well known bank names ... but a completely different range of products & services.

You can get offshore bank accounts, debit/credit cards, pensions ... all sorts.

The plastic cards work in UK ATMs so you can get cash out here, with no paperwork as such.

Bank statements can be posted to alternate addresses, not posted at all .. or you can collect them from any branch you like.

You also have special branches onshore if you have an offshore account.

I have seen one in Kensington: tucked away on a first floor... all marble, lackeys and free coffee.

It's another world if you are rich!

biffvernon wrote:Or are you not putting temptation in the builder's way, inciting a crime? That must be between you and your God.

I don’t think so, in a depression cash is king, it wouldn’t be unusual for a business to factor their debtors at a discount so paying someone in cash allows them to pay off creditors , credit card bills etc so there is value in paying in cash. Also by asking for a cash discount I am politely saying I want to pay less (because I know they are not busy) while not backing the contractor into a corner.

Since moving to the countryside, I've been constantly amazed at how all-pervasive the black economy is. It's considered totally normal to do work "off the books". I assume people have to do some transactions legitimately, otherwise the HMRC would get suspicious, but it does seem to be very common.

caspian wrote:Since moving to the countryside, I've been constantly amazed at how all-pervasive the black economy is. It's considered totally normal to do work "off the books". I assume people have to do some transactions legitimately, otherwise the HMRC would get suspicious, but it does seem to be very common.

I'm in 2 minds about it, on the one hand its not fair to someone who wants to play by the rules , but if it acts as a break on increasing taxes they might actually be performing a "public service".

SILVERHARP2 wrote: I'm in 2 minds about it, on the one hand its not fair to someone who wants to play by the rules , but if it acts as a break on increasing taxes they might actually be performing a "public service".

?? It's thanks to taxes that we HAVE public services.

Like it or not, if society is going to keep going in the depression, taxes are going to have to increase. Of course those can afford private education for their children and private medical care are not likely to care about society holding together, but that's a different matter.

Ludwig wrote:

SILVERHARP2 wrote: I'm in 2 minds about it, on the one hand its not fair to someone who wants to play by the rules , but if it acts as a break on increasing taxes they might actually be performing a "public service".

?? It's thanks to taxes that we HAVE public services.

Like it or not, if society is going to keep going in the depression, taxes are going to have to increase. Of course those can afford private education for their children and private medical care are not likely to care about society holding together, but that's a different matter.

Its part of a bigger battle , we are living in a time when various freedoms are being rolled back and "your" taxes peoples taxes are increasingly being used to fund out of control government and illegal/unjust wars. I'd be more annoyed with people if they let themselves be used as a quick fix instead of reforming the role of government in society.

SILVERHARP2 wrote:peoples taxes are increasingly being used to fund out of control government and illegal/unjust wars.

Numbers please? I think the proportion of tax revenue spent of 'defence' is now at historically rather low levels. And what fraction of defence spending is being spent on illegal/unjust wars must be rather less than that.

Of course everybody hates taxes but the alternative looks far worse. Amongst the western industrial nations UK taxes are nearly the lowest.

Those who have the ability to avoid and/or evade taxes perhaps because they are a global multinational counting their costs within the UK but their profits in the Turks and Cacos Islands or whether they are involved in a cash only undeclared transaction, are making the honest taxpayer bear an unfair burden.

The out-of-control government I take he means the bail-outs.