Financial Stability News

News about financial stability and central banking

Why Is There a “Zero Lower Bound” on Interest Rates? – Liberty Street Economics

Why Is There a “Zero Lower Bound” on Interest Rates? – Liberty Street Economics.

This article from NY Fed explains why the Fed and the BoE is reluctant to lower their rates to zero. Since money effectively carry zero rate of return, but is nominally fixed, it is hard to go negative. However, Irving Fisher recommended “stamped money” during the depression as a way to get people to spend more. Your currency was stamped, and if not used within the stamped date, it’s value fell to zero. Perhaps an idea if nobody else will spend their monies?

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