Well, that's the natural conclusion to draw from Christine Lagarde's recommendation that the BoE cut interest rates another 50 basis points to a big fat 0. After all, what could go wrong? You'll note the sterling (badoom tish) success that zero interest rates have been in Japan and the USA -- well, the Fed funds target is 0-0.25 but that's close enough for Government work.
Why should we do this?
Christine Lagarde has said that the move will be good for UK homeowners and businessesWell, great! Of course, everyone else in the country will get it in the shorts. But hey, more fool them for not sinking themselves deep into debt in a housing market bubble. It's at times like this I'm tempted to believe the esteemed Mr. Wadsworth's position that the economy is run for the near-exclusive benefit of home owners.
Her intervention raises the prospect of the first zero per cent interest rate since the Bank of England was founded in 1694. Japan cut rates to zero in the 1990s when it suffered a decade-long depression....which it is still in. Well, that sounds good to me!
Dear Christine, my reply is in three parts:
- Hell, no.
- Please explain why we want our economy to function with the same dynamism as Japan's. Really. I'm curious.