Posted ByPaul Palmer on June 25, 2003 at 12:47:41:
This from the morning's financial news:
Japan's call rate falls into minus territory by Allen Wan
Japan's overnight call rate dipped to minus 0.001 percent Wednesday, the first time it has fallen below zero, Kyodo quoted the Bank of Japan as saying. A below-zero rate means that lenders are paying interest to borrowers. The call rate is the rate charged on overnight loans between commercial banks.
Next time somebody says interest rates can't go below zero, tell them this!
Also, it has come out of Fed meeting that Alan Greenspan thinks that home equity serves as most American's primary savings. He may be thinking that lowering the interest rate (assuming banks follow along) spurs home refinancing, spurring house price increases, making people feel that they have "saved" more since their home values are now up. If this satisfies people's need to net save, it stimulates demand.
Could there be a method to his madness?