As news continues to pour in that Fed Rates are likely to go near or at zero interest rate level, we think that Fed. should get out of its stunned posture and take more drastic measures like bringing the rates down to zero percent levels. These are indeed difficult times and magnanimity of problems require Fed. to take magnanimous steps. It should act fast and give the economy the much needed fiscal jolt. Unfortunately, Fed has a history of doing too little and too late.

After detailed analysis of issue and reading the material suggested below, we have come to conclusion that there was never before a time, so good ,for adopting zero interest rate policy. we put forth our set of 10 reasons why Fed. should go for it.

1. Zero interest rate will encourage investment throughout the economy.
2. Zero interest rate will make capital purchases financially more attractive.
3. Zero interest rates will encourage people to Invest rather than Lend.
4. It will create more jobs as people will make investments in securities or real plant and equipment.
5. Zero interest rates are expected to take gas out of Commodities and Gold.
6. Probably it is the best tool to get out of depression. (We used it in 1930′s)
7. Liquidity trap is just a theoretical construct, not an actual phenomenon.
8. Remove the burden on tax payers to bailout banks and stock markets.
9. Bank of Japan has successfully used this model for decades to support Its Fiscal System.
10. Fed can adopt “Non-Standard” fiscal measures to stimulate growth.

Further Reading and References(open in new window)

• http://en.wikipedia.org/wiki/Zero_interest_rate_policy
• http://economics.about.com/cs/interestrates/a/zero_interest.htm
• http://www.imf.org/external/pubs/cat/longres.cfm?sk=15474.0
• http://www.financialstandard.com.au/news/view/24185/
• http://www.mmhabits.com/what-if-the-fed-cuts-to-0-the-zero-interest-rate-policy/
• http://en.wikipedia.org/wiki/Liquidity_trap

Related Articles

• Federal Reserve Not Likely To Increase Interest Rates Soon
  According to a recent news story in Associated Press, It is highly unlikely that Federal Reserve Bank will change the key interest rates any time soon. Since the interest rates are currently at historic low for some time now and practically this is as low...
• Japan’s central bank cuts key interest rate to 0.1 percent
  Is the world heading toward a zero rate policy? This question is being asked by hundreds of economists and businessmen. As evidence of deep recession is unfolding, bankers and economists are predicting that UK interest rates can hit zero any time now. Th...
• Fed Cuts Rates by 50 Basis Points: Can It Go Below One Percent
  Moments Ago Fed Funds Rate was cut to down to 1.00% bringing it down 50 basis points. It was expected as 25 basis was too low and 75 basis points were thought as too high....
• What is a Bank?
  What is a bank? The bank is an institution that deals in money and provides other financial services. Banks are very important for a country’s economy....
• FED may avoid losses on Programs; says Kohn
  A proper plan is made by the US federal reserve. which is expected to work strongly. financial problems will be avoided in future....