Negative interest rates deployed by Bank of Japan

Negative interest ratesBank of Japan introduces negative interest rates to boost economy

In a bid to shake the economy out of its stalemate, the Bank of Japan has introduced negative interest rates. In theory, the 0.1% rate should encourage lending and begin to turn the tide of deflation. In practice, because banks and other lenders will, in effect, be charged for hoarding deposits, they ought to be more inclined to lend to businesses and consumers and, in turn, promote spending and business investment. It’s the latest in a raft of initiatives designed to boost commercial confidence and support Japan’s plans to move inflation towards its 2% target. Read more…

US vs Japan Continued

August 10 I wrote the topic of Japan has died down in the media of late: http://www.cardiffassetmanagement.com/blog/2011/08/10/japan-part-deux/.  It’s back with a vengeance.  Here’s a good article about structural issues faced by the Japanese economy relative to the US economy:  http://the-diplomat.com/2011/08/17/no-the-us-isn’t-japan/.  Please ignore all rhetoric on US financial regulation.