Negative interest rates are a fascinating topic for professional economists as well as the investing public. Using conventional wisdom, one would think that interest rates earned on investments are never less than zero because investors could just stuff their money under their mattresses for free.
Why would anyone want to pay for the privilege of owing a government bond? Generally nominal rates are positive but negative rates come at times of extreme fear, uncertainty and turmoil, with investors fleeing risk assets to perceived safer assets. We saw this in 2008 when Treasury bill auctions tipped into negative yields. The Treasury market saw this again several times in the weak recovery and as recently as September 2014 with T-bills dropping slightly into the red.
