From ZIRP to NIRP: the last throw of the dice
The recent announcement of the Bank of Japan (BoJ) that it would introduce a negative interest rate (NIRP) for commercial banks holding cash reserves is the final admission that monetary policy supported by mainstream economics and implemented by central banks globally has failed.
The main economic policy weapon used since the global financial crash and the ensuing Great Recession to avoid another Great Depression of the 1930s has been zero interest rates (ZIRP), then ‘unconventional’ monetary measures or ‘quantitative easing (QE)’ (increasing the quantity of money supply to banks), all fixed to inflation targets of 2% a year or so. ZIRP and a virtually unlimited supply of cash (QE) were supposed to kick-start the global economy into action, so that eventually capitalism and market forces would take over and achieve ‘normal’ and sustained economic growth and fuller employment.
But QE and ZIRP have failed to achieve their inflation (and growth)…
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