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The negative interest rates discourages holding money and encourages spending (and investment), which drives inflation. I do not believe negative interest rates
by Litmus2336 7y ago
The negative interest rates discourages holding money and encourages spending (and investment), which drives inflation. I do not believe negative interest rates destroy money, but I am not an expert. I cannot find any literature to prove or dispute that.
- samsonradu 7y agoYou're right, it does encourage spending and investment. However a part of the money does eventually go into negative interest rate assets (due to regulations etc.) and I believe that shrinks the money supply. Not an expert either.