Catching up on a back issue (from late August) of The Spectator, I noticed this from Liam Halligan:

The European Central Bank went first in 2014, followed by Denmark, Sweden, Switzerland and, earlier this year, Japan. Private-sector banks in these countries must now pay the central bank to keep their money on reserve. Investors in government bonds are similarly paying the Japanese, German and Swiss governments for the privilege of lending to them — another example of topsy-turvy economics.
The idea is that, by penalising cash on deposit, negative rates will jolt spending and encourage banks to extend loans — thereby boosting growth. There’s little evidence that this outlandish policy works, though, and increasing concern that it could soon backfire. While encouraging lending in theory, negative rates squeeze banks’ profit margins, making them less willing to extend loans. If, conversely, banks try passing on negative rates, firms and households could withdraw money, stuffing it under the proverbial mattress and denying banks a crucial funding source….
Faced with negative government bond yields, pension funds and other institutional investors needing returns to meet their obligations pursue an intensive ‘search for yield’ — channelling money into risky assets and stoking up the chances of another boom/bust cycle. Far from mending our economy, then, QE and ultra-low rates could provoke another crash. Even more QE and negative rates make such dangers more acute still.

Central planning has consequences, rarely good.

And there is, to me at least, the feeling that there is just something not right about negative rates,not just in the way that it discourages thrift, but in the sheer counter-intuitiveness of it all: I pay you for the use of my money?

As I noted here the other day, James Grant, a man who knows a thing or two about interest rates, has had this to say:

Negative rates? You rub your eyes and search your memory. You can recall no precedent. And if you consult the latest edition of “A History of Interest Rates” (2005) by Sidney Homer and Richard Sylla, you will find none. A recent check with Mr. Sylla confirms the impression. Today’s negative bond yields, he says, are the first in at least 5,000 years.

Real interest rates have been negative countless times before, but nominal, that’s something else.

And Halligan thinks that this perception of, well, strangeness, is becoming part of the problem:

The biggest problem with negative rates, though, is that the policy is so weird and unnerving that it could actively discourage the very private-sector investment we need to get the big western economies back on track. Bemused by negative rates, many business bosses will be spooked completely if we venture even further down the monetary rabbit hole, and use so-called ‘helicopter money’ — with the authorities putting new money directly into every citizen’s bank account. Yet, incredibly, such measures are on the cards.

The road to hell is paved by those who think that they know better.