Most commonly cited immediate implication is even greater increase in current inflation - negative rates cause people to withdraw deposits and buy other assets. And sure this action will increase demand for stocks/gold etc. But I wonder if there is a case for deflationary impact given fractional reserve banking. If deposits go down, so will reserves and so will lending. So the whole banking system will begin to deflate, thus there will be less $$$ to go around and prices will experience deflationary pressure. Which of above forces is greater? To me it seems like deflationary: while 1$ withdrawn from bank and used to buy non cash assets will increase number of bids, same dollar, eventually may pull up to 10$ from the system (in extreme hypothetical case where all loans are called off) Side notes: * interesting case would be negative interest with GOV printing more money. My head can't get around this. * i also wonder how temporary deflation (regardless of negative interest rates) can be used as cover for more money printing, and if it can - then it sure would make sense for it to materialize What is your take on the implications??? Please share.