[hajile]

That seems like a risky strategy. The gamble would be that the government loses loan "revenue" in the short-term and makes up with business taxes. Is that a good gamble in weak or service-oriented economies? What are all the risk factors there?

[onaraft]

To be clear, this is a central bank thing. The part of the government issuing debt doesn't technically have a say in it.

The Federal Reserve bank sets the Federal Funds rate. This is their "target rate" they will try to hit. They accomplish this by using their position as the central bank to "print" (not literally, it's a credit system, I'm hand-waving) money to bid on bonds. In the same way that lots of investors clamoring to lock-in rates on long bonds can bid their yield down, the federal reserve using their funny money to bid on treasuries also bids their yield down. And when the fed wants the rates below zero, they bid them to below zero. These are called "Open Market Operations".

[somebodythere]

> The part of the government issuing debt doesn't technically have a say in it.

To be fair, there is no economic law that says this has to be true. It is just true, today, in countries like the USA. It's very possible we reach a point where central banks work together with the government to directly purchase and monetize government debt. It seems absurd today, but so did negative interest rates 20 years ago.