Shots Across the Bow

A Reality Based Blog


We’ve Seen This Before

If I recall correctly, in the 80s and 90s, the Japanese economy went into a recession. Their bank cut interest rates down to near zero to stimulate the economy, and it worked for a short time, a couple of years or so. The banks began raising interest rates, but never got back to a normal level because a sudden collapse in the real estate market leveled the economy. The banks lowered interest rates to zero, but there wasn't enough leverage to spur the economy,and they went through a very serious recession.

Does any of this sound familiar?

By the way, the fed cut interest rates to zero yesterday. How many foreign governments are going to want to invest their dollars in T bills that pay zero?
Posted by Rich
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