by Mark Thornton
Mises.org
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Central banks have been engaging in nontraditional, radical, and unprecedented policies in recent years. Policies such as zero interest rates, quantitative easing, a war on cash, and even negative interest rates on bank deposits are now the norm. There has even been talk of helicopter money. This is not money falling out of the sky for you and me. It means central banks simply print money and give it to the government. The latest installment of monetary insanity comes from Japan where the new monetary policy will target the 10-year Japanese government bond at 0% interest rate.
The Bank of Japan, like the European Central Bank and the Federal Reserve, have all been buying government bonds in order to keep the cost of financing national debt low. They claim to be stimulating the economy, but that has not worked and is probably not their real intention. Thus far, it has worked to keep the interest rates on government bonds very low even in Italy, while pushing rates negative in Switzerland and Germany!
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