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Monetary policy


Negative interest rates are the ultimate Keynesian policy.

You want to stimulate demand, make it actually cost money to hold it. Banks will want to lend out money rather than hold it. Savers will stop or reduce saving and spend more.

This will create more economic activity. 

At least in the short term. But consider the inflation caused by this, the fact no-one is saving and consequentially investment will fall.

It is a terrible terrible nightmare, to rob savers, pensioners and the children's future as assets are frittered away for a bit of short term gain. Stimulating demand and stimulate debt. Its like cutting down an apple tree for to get the apples off the tree.



Note that real negative interest rates have the same effect but to a lesser extent.


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