Negative interest rates – or QE?

In the Daily Telegraph Ambrose Evans-Pritchard (“AEP”) criticises the current government/central bank policy of pursuing negative interest rates as a response to the current monetary deflation and lack of GDP growth.

The world’s central banks should take a deep breath and step back from the calamitous misadventure of negative interest rates.
Whatever theoretical profit can be mined from this thin seam, it is entirely overwhelmed by the slow ruin of the banking system.
Huw Van Steenis, from Morgan Stanley, call negative interest rates (NIRP) a “dangerous experiment” that undermines the mechanism of quantitative easing rather than reinforcing it, and ultimately induces banks to shrink their loan books – the exact opposite of what is intended.

I’m not at all convinced that AEP’s alternative of more QE or “helicopter money” would be less of a disaster for the economy and ordinary taxpayers. Printing money to fund government deficits is nothing more than a massive hidden tax on the productive sector of the economy. A tax that supports a bloated government and financial system that has been responsible for driving a massive misallocation of resources that needs to be corrected before we can ever hope to return to a sustainable rate of growth that supports rising real living standards.
Charles Hugh Smith at of two describes NIRP thus:

The last hurrah of central banks is the negative interest rate policy–NIRP. The basic idea of NIRP is to punish savers so severely that households and businesses will be compelled to go blow whatever money they have on something–what the money is squandered on is of no importance to central banks.
All that matters is that people and enterprises are forced to spend whatever cash they have rather than “hoard” it, i.e. preserve and conserve their capital.
That this is certifiably insane is self-evident. If an economy depends on bringing future spending into the present by destroying savings, that economy is doomed regardless of NIRP, for eventually the cash runs out and spending declines anyway.”

Whatever policy mix is chosen between NIRP and QE it seems clear we can expect the “war on cash” and capital controls to increase as governments attempt to force “cash” into the banking system where it can be tracked, taxed and, if necessary, expropriated.
If governments do succeed in generating the inflation needed to reduce the (still growing) real value of government debt then the lesson from high inflation economies suggests that investment in high quality real businesses, stocks, property and tax avoidance offer some hope to the preservation of capital.