It's only mind-boggling if, in the reserve banking world of today, you think money is anything but a social accounting ledger, rather than something concrete like a potato. As others have said, real rates can already be arbitrarily negative. It is only in the false belief that the numbers mean something intrinsically that you have such attachment to their not decreasing nominally.
People will get used to anything. Airline miles expire. Fruits rot. Buildings decay. It's not such a leap to see money exponentially "expire", too.
The thing is, people generally do view currency as something concrete, and its value is largely based on faith in that concreteness. Once they stop having faith in that, it seems likely that they’ll stop valuing it.
I'm not saying it should be completely unhinged, but something like a -1% interest rate, is that so much more shocking than a +1% interest rate? I don't think so. People can deal with airline miles, hotel points, credit card rewards rationally; heck some are even paid in stocks or options which are much more volatile and uncertain. They seem to do fine.
There is a huge psychological difference between 1% and -1% interest. People do not react logically to loss (https://en.wikipedia.org/wiki/Loss_aversion). Even though regular bank accounts have provided negative real interest for years, once they actually switch to explicitly "paying" negative interest, accounts will empty fast.
Except no one in a stable developed economy equates those loyalty programs and how those systems operate with how their nation’s currency operates, or should operate. Are you not annoyed at all the random games those companies play with those point systems? I don’t value those points highly at all because of the frequent devaluations they go through. I would not want the same fate for my currency. Are you willing to subject everything you’ve ever worked for to that kind of thing?
And one of the key reasons for maintaining a positive interest rate on lending is to encourage sound investment decisions by the capitalists borrowing it. Low interest rates beget more and more speculative investments, and more and more of those will go bad. And then you get a debt crisis.
People will get used to anything. Airline miles expire. Fruits rot. Buildings decay. It's not such a leap to see money exponentially "expire", too.