Counter-cyclical asset: Safes

Here is the anecdote:

…sellers of safes said that business was up as customers confront new fears, be they losing money in failing banks or being robbed by desperate fellow New Yorkers. …”We’ve had customers come in who are putting half a million to a million dollars in cash in a safe in their home,” said Richard Krasilovsky, 58, of Empire Safe in Midtown…

and here is the data.  (Paul Krugman pointed out this data in a very good talk (slides) he gave at a symposium in CA on Friday (Larry Ball and myself also spoke).)



Alex, please explain why you think PK gave a very good talk. Looking at his slides I cannot even justify the title of his talk--it seems that the title should have been "Why MF&AS were wrong about the GD".

@E. Barandiaran I think the answer is in "Larry Ball and myself also spoke". It is natural to want to associate yourself with good (or 'very' good) things, even if in reality it falls far short.

I thought it was a very good talk for the following reasons.

1) He acknowledged how much his views have changed in a relatively short period of time.

2) He acknowledged that there is little solid empirical work on the effectiveness of fiscal policy.

3) As a general point he went through a lot of data and theory and it was frankly impressive.

All of this is not obvious from the slides so I didn't go into details.

Currency outstanding is now over $2,700 for every man, woman and child in the U.S. Wow.

I can understand the fear of losing money and wanting to store it. In the end though, if the larger portion of the population or everyone decided to do that, it would be shooting ourselves in the foot. Sure, keeping savings with banks seems unstable and the same thing with spending, but we have a system that is based on our consumption as well as our investments. Whethers its stocks, taxes, etc. While protecting money is understandable, what happens when money is drawn out from banks and markets and everything falls? The value of money goes along with it, as well as the economic system based on it. In the end hoarding money is in effect protecting assets that through that action decreases the worth of our currency. Doing this and continuing to do so does nothing more than ensure that loses will occur and that you will be stockpiling what would become useless paper.

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