"Negative rates are not a gift. They are a transfer of wealth from savers to debtors. But the inflation created to make negative rates possible will hurt wage earners too, plus the overall economy will be less productive and living standards will be lower as a result." Peter Schiff
This is so important to understand. Negative rates HURT AMERICANS - people like you and me. They are not a good policy recommendation.
>re a transfer of wealth from savers to debtors.
Negative rates allow central banks such as the Federal Reserve to loan money into existence because governments and banks are able to borrow money much cheaper than they would in a free market.
The increase to the supply of money and credit is inflation. The result is higher prices. We have witnessed this time and again with bubbles forming in asset prices primarily. Think about the housing bubble and now the bond bubble and stock market bubbles.
When prices increase, this hurts ordinary folks, particularly savers because their savings are worth less and less while they are not compensated with interest. In fact, because rates are negative, savers are forced to PAY for their savings which is a huge kick in the balls.
This policy directly benefits borrowers at the expense of savers and folks who earn a living with their labor.