So I’ve been reading an article on AP about negative interest rates and it really didn’t seem so bad. There were a bunch of quotes in it that basically sounded like “NEGATIVE RATE BAD!! SCARY!!” but without actually having any content pertaining to the possible risks.
It seems totally intuitive to me that you would do this if you wanted to punish people for huddling up avoiding investment and keeping every cent in the bank instead of stimulating the economy. It also seems like an efficient tool for battling capital strikes.
What is the massive risk that people are afraid of there?
In: Economics
With negative interest rates there are no incentives for banks to lend money since there is no return this unless is is government funded. But if it is not banks will lend no money at all and there will be less consumption/investment in the economy worsening economic growth and unemployment etc.
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