The Japanese economy has been in the doldrums for about a decade and a half at this point. Back in 2012, Prime Minister Shinzo Abe rolled into office with a three-part plan of loose monetary policy, fiscal stimulus, and structural reform. But so far the results of "Abenomics" have been middling. So on Thursday, Japan's central bank decided to get unusually adventurous: They're gonna try negative interest rates.

To review: Interest rates are the price of lending and saving money. When interest rates throughout the economy are low, banks charge less for loans and individuals have less incentive to save; when they're high, lenders charge more and individuals save more. This is why central banks tighten interest rates when they're worried about inflation: Discouraging loans and encouraging individuals to sock their money away slows economic activity, which keeps inflation in check. Conversely, cutting interest rates in a recession encourages credit and consumption, which boosts job creation.

If interest rates could go negative — and banks started charging people for depositing their money — then this logic extends out: Not only would we be encouraging people to save less, we'd be actively penalizing them for saving rather than consuming. But the general assumption in economics has been that interest rates can't go below zero. Cash already has an implied interest rate of zero, so if banks started charging negative interest rates, people would just stuff paper cash in mattresses.

But in the last year and half, central banks throughout the advanced western world became desperate enough to start experimenting. In 2014, the European Central Bank (ECB) started charging eurozone banks a -0.2 percent interest rate. Central banks in Denmark and Switzerland set deposit rates at -0.75 percent, and Sweden set it at -1.1 percent. Last Thursday, the decision-makers at the Bank of Japan surprised international observers by getting in on the act as well: By a 5-to-4 vote, they decided to impose a -0.1 percent rate under certain circumstances.

Will it work? No one really knows, as the close vote indicates. But to even approximate an answer, we need to work through a few of the specifics of how central banks function.

As Scott Fullwiler, an economics professor at Wartburg College, explained to The Week, a central bank like the Bank of Japan is basically a bank for the rest of the banks in the economy. Those banks all hold reserves at their accounts at the central bank. They're constantly lending these reserves back and forth, and charge one another interest on those loans. That interest rate in turn filters out into the rest of the economy: A high interest rate between the banks means they'll charge higher interest rates throughout the rest of the economy, and vice versa.

Generally, central banks can change the interest rate on reserves by increasing or decreasing the total supply of reserves in the system: More supply means the interest rate goes down, less supply means it goes up. But at this point, like the U.S. Federal Reserve, the Bank of Japan has responded to economic downturns by flooding the system with reserves. "They've pushed the supply curve [for reserves] way beyond the demand curve," Fullwiler said. So interest rates on reserves hit zero. "But if you can charge people that are holding reserves? Well now the price is below zero."

So the Bank of Japan is applying a fiat charge of -0.1 percent to reserves, to drive the interest rate on them below the "market rate" of zero. But it will only apply to reserves that have been newly deposited at the Bank of Japan, and even then only on reserves that exceed certain limits. The Bank of Japan will also continue increasing the supply of reserves by buying up more government debt and other financial instruments as well.

One reason to think the Bank of Japan's gambit could help is that a lot of actors in the economy can't really "stuff money in the mattress" in practice. Big financial firms and corporations and the like are dealing with huge sums of money parked in all sorts of wild financial instruments. In many cases, turning those holdings into cash and thus escaping the bite of negative interest rates will just be prohibitively difficult and expensive. So they may well eat the cost of the negative interest rates, and respond to the incentive the way the Bank of Japan hopes they will. This may explain why the negative interest rates from the ECB and others haven't resulted in dysfunction.

But then, it's important to remember that banks are not passive lenders of capital, following orders from the central bank. Every individual bank makes pro-active, profit-driven decisions about when to create new loans and when not to.

"Banks make money on the spread between what they're receiving on their assets and what they're paying on their liabilities," Fullwiler continued. With a negative interest rate, "you've reduced the income they're receiving from their assets." So to maintain profitability, banks could cut interest rates on loans to attract new borrowers. But that still depends on how many opportunities for profitable investment there actually are. An economy in the doldrums — like Japan — is simply not going to provide too many attractive opportunities, so banks aren't going to invest much more. By lowering interest rates, a central bank gets out of the way if other banks want to issue new loans. But it can't make them want to.

But banks have other options to increase their income. "They can cut rates that they pay on their liabilities, like maybe a negative rate on their deposits," Fullwiler said. "Or they can find other sorts of fees to sneak in there, like increased fees on checking accounts and increased fees on ATMs and things like that." Those would discourage individuals from parking money at their banks, so they may spend more of it instead. That means more aggregate demand, which means more of the concrete economic activity and job creation banks do want to invest in.

The one problem is this relies on consumers who have money to save, i.e. more well-off ones. Poorer people in poorer communities can't be discouraged from saving money when they have no money to save. So fees and negative rates may boost demand in richer areas, but not in poorer ones. And Japan does have higher poverty rates and higher inequality than most western countries.

So, as Fullwiler concluded, changes in interest rates have very complicated effects on various parts of the economy. And -0.1 percent is pretty paltry if you're looking for negative rates to push the economy in one particular direction.

But all this also shows the more fundamental limitation of all central bank policy: It really can't help but be "trickle down." Fiscal policy is really the main tool that can move money into the economy from the bottom up. That means deficit spending by the central government. As big as Japan's deficits have been recently, and as bad as its demographic problem is, it still has tepid growth and rock-bottom inflation rates. Those two in combination are generally evidence that deficits aren't big enough.