Negative interest rate?

I was reading about a comment made by Harvard economist Gregory Mankiw in which he stated that a negative interest rate might be what is needed to avert a recession. I do not understand how that would avert a recession because it would destroy all incentive to save money and cause lending to businesses to stop completely since the negative rate would mean that you would lose the principle as a result of lending under the best terms.

What is more likely to happen is that massive inflation hits when the economy recovers, due to the printing presses being in high gear the past two years, and the Fed will be forced to raise interest rates. I would appreciate that since my I bonds have a negative real rate and CD's are getting 2% interest. At those rates, I would get better returns filling up a container of gas and then reselling it to a neighbor in a couple of months.

Another day, another rate cut

Today the Fed lowered interest rates yet again. Your money just got a little more worthless. What else is there to say?

Bush and Paulson Laughing At The Value of the Dollar and the Price of Oil

Economics Lesson, Supply and Demand for Money

What does this mean?

It means that the higher interest rates are, the lower the amound of money needed in the market at that time, which results in either the money supply shrinking(deflation) or interest rates(IR falling) to allow borrowing of money at the level the market demands. Conversely, in a situation where the IR is dropped below the efficient level(E), the quantity demanded is greater than the supply of money, so either the money supply increases(inflation) or IR rises to get closer to equilibrium. Guess which one is the current situation and which one was the situation in the 1970s...