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What Comes After Negative Rates? Helicopter Money

Negative rates have pushed some to hold banknotes, with circulation of the Swiss 1,000-franc note...

When modern banking first emerged in medieval Italy, European mathematicians regarded negative numbers as absurd. Six hundred years on, the successors to the Medicis and Peruzzis face negative interest rates—and while negative numbers are now widely accepted, negative rates are not.

Negative rates invert the norms of banking. Borrowers are paid for taking money, while savers pay to hand over a deposit. High-level opposition from savers should be little surprise; this month has seen high-level opposition from two of their leading representatives, the head of the world’s biggest mutual-fund company, Blackrock, and the finance minister of Europe’s biggest net saver, Germany.

They would say that. But there are three serious worries about negative rates shared even by those who are implementing them: They might have perverse effects, they might work too well, or they might not work...