Possible but highly unlikely; they could literally keep money in a sack under their bed and get better returns. Not much difference between a sack under the bed and a bank account if you don't tell anyone about the sack.
I'm guessing it probably either speculators buying bonds assuming that they can be onsold to a central bank, or people who are forced to buy for whatever reason (eg, maybe some savings schemes are forced to put x% into government bonds). I've bought bonds exactly once on the assumption that I could on-sell them for a profit when government lowered interest rates. People like me don't have any impact on the market, but if the incentives make sense at the small level maybe it works out the same on the large.
> Not much difference between a sack under the bed and a bank account if you don't tell anyone about the sack.
They could hardly be any more different. If one person beyond yourself knows about it, then you're in trouble. One fire or disaster and it's all gone. If it's a smaller sum, you're FDIC insured against loss in a bank account, which again makes the point about just how different the scenarios are. If I feel like it I can safely protect $1 million via four distinct accounts under the FDIC at no cost. The Fed will go back to zero rates at some point to stimulate the US economy. Even when that happens, I'm essentially paying a small insurance fee (inflation vs zero rates) per year to guarantee the safety of the $1 million. That is ultimately far safer than managing it under my mattress. And cheaper, if I need any guaranteed security for the mattress. It's also easier to move at low concern (whether that's to shift it into an investment account or move it to another bank). If it's under your mattress, every move is a high risk for exposure; every person you let deep into your life creates some risk of theft (eg non-malicious gossip).
> Not much difference between a sack under the bed and a bank account if you don't tell anyone about the sack.
Burglary isn't the only danger. Paper money can be eaten by moths, so you probably want to vacuum seal it. That still won't keep out rats. You could lose it all in a flood, landslide, tornado, fire, or earthquake.
The individual probabilities of all these events are quite low but multiplied with your all your liquid cash, the cost is unacceptably high for most people.
You're also likely to be charged for taking your money out in paper form and depositing it back later. Not much, especially if you're going to keep it under your matress for a long period, but everying adds up.
This assumes that cash or bank money has the same counyerparty risk as a government bond. That is not the case. Negative interest rates essentially signal that everybody is short on the future overall.
Depends on the currency. If you can get hold of €500 notes, you can fit quite a lot of money in a small space:
> Tests by the Serious Organised Crime Agency found it was possible to carry €25,000 in €500 notes in a cigarette packet, €300,000 in a cereal box – £1 million in banknotes weighed 50kg while its equivalent in €500 notes only 2kg.
Most (all?) of the Federal Reserve banks have a money museum attached to them, and they will generally have a few stacks of money in various denominations that total $1,000,000.
1 million $1 bills is really large. The $20 bills would fit in a suitcase. The $100 bills fit into a briefcase, which will have a clear plastic cover over it so you can take pictures of yourself holding a million dollars in a briefcase.
FYI: They also give away bags of shredded cash, which you can then use as baller confetti at your kids' birthday parties.
Kill the Messenger (1) has a bit about this where the CIA was funding the Contras by pushing cocaine through the US. One of Oscar Blandon's minions describes hotel rooms full of cash and they had to have people circulate the money from the top to the bottom to prevent mold.
I'm guessing it probably either speculators buying bonds assuming that they can be onsold to a central bank, or people who are forced to buy for whatever reason (eg, maybe some savings schemes are forced to put x% into government bonds). I've bought bonds exactly once on the assumption that I could on-sell them for a profit when government lowered interest rates. People like me don't have any impact on the market, but if the incentives make sense at the small level maybe it works out the same on the large.