You're mistakingly conflating negative interest rates and negative inflation (aka deflation). They are quite different; in fact, their correlation is quite strongly negative, i.e. increasing the interest rate tends to decrease the inflation rate.
On the topic of rescussitating the economy, funding public works projects would certainly have better long-term success than the current QE policy (i.e. the FED buying securities that never should have been legally issued in the first place).
Even better would be a modern debt jubilee, a la Steve Keen's suggestion, in which all citizens are given a cash infusion that automatically pays down any outstanding debt, if present, or becomes a liquid asset if the citizen is debt free. This would reset the monetary system back to a state in which further investment can be financed within the system. The amount would of course need to be controlled so as to not induce immediate inflation, and restrictions on banks (e.g. Glass-Steagall) would need to be reinstated and enforced so as to delay the inevitable return to record high private debt levels.
> increasing the interest rate tends to decrease the inflation rate.
But the problem is exactly that this correlation doesn't seem to apply in the opposite direction today: decreasing interest rates are not generating inflation across the board, quite the opposite. You can debate why that is the case, but that's what we see: central banks keep cutting rates expecting economic activity to get hot and generate inflation, but this is not happening. The Japanese experience would seem to indicate this is "the new normal", where monetary policy is simply a brake and not an engine; which means we have to find alternative engines.
You are looking at a car driving on a hilly road.
The car's engine is not powerful enough.
You observe that on the uphills, the driver is flooring the gas pedal and yet the speed of the car is decreasing.
Confusing correlation and causation leads to the faulty conclusion => the gas pedal must really be the brake pedal
Enabling (arbitrarily) negative rates is equivalent to lifting the power limit on the engine and would simply allow the driver to keep the car at constant speed on all hills (the brakes already have unlimited power)
Except this driver has a stake in petrol companies and he does not pay for his petrol, so he gets richer the more fuel is blown while standing still. By the time you've taken out any "power limit", he's just blocked the gearbox on neutral and revving, while shouting "it's not going anywhere! I need more power!"
Economists agree much more often than not. But that doesn't seem to matter, even when nearly 100% of economists agree on something, the public think it knows better...
Cutting interest rates has absolutely 0 effect on the bottom 90% of the population. The only way to increase their spending is by taxing the rich and transferring wealth back down the chain.
On the topic of rescussitating the economy, funding public works projects would certainly have better long-term success than the current QE policy (i.e. the FED buying securities that never should have been legally issued in the first place).
Even better would be a modern debt jubilee, a la Steve Keen's suggestion, in which all citizens are given a cash infusion that automatically pays down any outstanding debt, if present, or becomes a liquid asset if the citizen is debt free. This would reset the monetary system back to a state in which further investment can be financed within the system. The amount would of course need to be controlled so as to not induce immediate inflation, and restrictions on banks (e.g. Glass-Steagall) would need to be reinstated and enforced so as to delay the inevitable return to record high private debt levels.