It is a tax on deposits. You only have to pay if you have deposits. Basically, it means the saver has to pay to store value as currency. On the other hand, they also have to pay if they want to store other valueables, such as gold or the most ancient store of value of all, grain.
I don't think a negative real interest rate is inherantly unfair, any more than it was unfair to have 10% of grain go to waste 3000 years ago when storing for a bad year.
If you had 7 good years, and expect 7 bad years, the utility of the stored grain may be way higher in the bad years than the good years, even when accounting for the waste. The same goes for cash.
The same can be true with cash.
To demand that cash maintains its purchasing power, is the same as ancient farmers demanding to purchase grain from their neighbour (who did save) in a bad year as they themselves got paid for their grain during the good years.
In periods of growth, we may start to think that positive time preference is natural. But the fact is that throughout most of human history, we would switch to negative time preference in good times, since we expected bad times to come back. During good times, humans would store grain, dry meat, fish and fruit, build housing, tools or boats, all of which were investments into goods that were likely to gradually perish over time.
Even after people started to use coins, this was true. If you produced a surplus during one year, you could trade it for cold coin instead of storing it. But not only was there a risk that the coins would be stolen or otherwise vanish, it was also highly likely that at the time where you needed to spend that goal, prices would be higher.
One has to consider that the storage capacity of the economy isn't infinite. Charging money for storing something is a very straightforward business model. When your economy is growing the storage capacity appears endless as no storage is actually needed, you can just produce the good in the future with your expanded production capacity. Once the economy stops growing for even a single year, then you will effectively hit the storage capacity of the economy and must pay to store additional goods that are intended to be consumed in the future.
If there is a negative interest rate of 4% on cash, then the easiest way to avoid it would be to lend out your money at 0%. Since there is no growth dependence and excessive savings do not grow automatically anymore there is no need for inflation and the central bank can do price level targeting instead.
I don't think a negative real interest rate is inherantly unfair, any more than it was unfair to have 10% of grain go to waste 3000 years ago when storing for a bad year.
If you had 7 good years, and expect 7 bad years, the utility of the stored grain may be way higher in the bad years than the good years, even when accounting for the waste. The same goes for cash.
The same can be true with cash.
To demand that cash maintains its purchasing power, is the same as ancient farmers demanding to purchase grain from their neighbour (who did save) in a bad year as they themselves got paid for their grain during the good years.
In periods of growth, we may start to think that positive time preference is natural. But the fact is that throughout most of human history, we would switch to negative time preference in good times, since we expected bad times to come back. During good times, humans would store grain, dry meat, fish and fruit, build housing, tools or boats, all of which were investments into goods that were likely to gradually perish over time.
Even after people started to use coins, this was true. If you produced a surplus during one year, you could trade it for cold coin instead of storing it. But not only was there a risk that the coins would be stolen or otherwise vanish, it was also highly likely that at the time where you needed to spend that goal, prices would be higher.