- The Bank of Japan on Friday shocked financial markets by adopting negative interest rates to forestall risks that global market volatility could damage business confidence and revive a deflationary mindset.
Hm. If they want to boost confidence, maybe they shouldn't call them negative rates. It just sounds bad. Maybe widdershins rates? I have a very hard time believing that -0.01 is going to have an effect upon the deflationary mindset.
The Nikkei almost got really excited.
I agree. Negative interest rates get bad press, but are not bad per se, for two reasons that I can think of. 1. Nothing special happens at a zero rate of return. Keeping cash in the bank is likely to erode purchasing power over time whenever the interest rate is less than inflation. 2. Investors don't (or shouldn't) ask if an investment opportunity is "good" (perhaps by asking if it will result in more dollars later than now), they ask if an investment opportunity is better than their next best alternative. I like this!maybe they shouldn't call them negative rates. It just sounds bad.
Maybe widdershins rates?
They do have a cool buzzword for it: "Abenomics" instead of negative interest rates. At least as part of a larger fiscal/monetary policy. But either way, it's not supposed to feel positively. It's a penalty for banks to keep money with the central bank now. So instead they're forced to lend, which should create nice bubbles and repeat the 97 fiscal crisis in Korea, now with more Japan.