Negative Interest Rates

I am on record as asserting that there can never be negative nominal interest rates. Guess what? I was wrong.  German 3 and 6 month government bonds have been issued with negative yields. Folks, this is the height of irrationality, but there it is.

The reason that it is irrational to lend at a negative rate is that the prospective lender could just keep his or her money in his or her pocket and thus earn 0%.

This could be rational if the money is perishable, but money is not perishable in modern economies. If bananas were money, then if you put a banana in your pocket, you would have a rotten banana and a stinky, sticky pocket at the end of 3 or 6 months.