Question

Negative interest rates are much more commonplace than in years past. If your government can borrow money and not have to pay it all back, how can you say negative rates are bad?

Answer 1

If the interest rates are negative, then the government can borrow money from banks and make them pay interest. It is not that the government will not have to pay it back at all. It is just that the government gets interest from banks for holding their money.

Negative interest rates are not good for the economy. The banks will not have money to lend it to the businesses because the savers would not deposit money with the banks.

With no money to carryout business operations, they will have to lay off employees. This will hurt the economy. A positive interest rates encourages people to put money in banks and earn a small interest on that. The banks may lend it out to businesses and government and earn an even more interest on that. Businesses can use the borrowed money to create value for people.

This is a win-win situation for everyone in the country.