Interest Rate Manipulation is Income Redistribution
[courtesy Google Images]
On February 9th
, Business Insider Australia
published “CARNAGE IN JAPAN: Nikkei’s largest fall in years, yen spikes, government bond yields below 0%” which said in part:
“On Monday [February 8th], the benchmark Nikkei 225 index lost more than 900 points, closing the session at 16,085.44. The 5.4% one-day decline was the largest since June 13, 2013 . . . . Since January 29th, the day the Bank of Japan adopted a negative-interest-rate policy, the Nikkei index has lost more than 10%.”
Since mid-December, when the U.S. Federal Reserve increased the U.S. interest rate by 0.25%, the U.S. stock market has also suffered a significant decline.
Japan lowered its interest rates to zero—and then to a negative interest rate—their stock markets fell.
The U.S. raised interests from 0.25% to 0.50%, and the US stock markets fell.
The world’s stock market indices are falling. Judging by the US and Japanese recent experiences with raising—and lowering—interest rates, interest rate manipulation is insufficient to overcome whatever forces are causing the market declines.
This implies that neither the Bank of Japan nor the Federal Reserve has any viable tools–including interest rate manipulation–that can reliably stimulate the economy and withstand the forces of economic depression.
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