Originally Posted by Gearhead Jim
Have we ever had a time when the government has so aggressively forced interest rates down so much for so long?
That kind of manipulation might set the stage for a much larger and quicker rise in rates, eventually, than we would otherwise expect.
No predicting, just questioning...
Yep, right after WWII into the 1950s to pay off the war bonds.
It was two generations ago and six decades of inflation make those amounts look puny by today's standards, but American interest rates were very low compared to what the rest of the world was experiencing.
Originally Posted by Koolau
Hasn't Japan done that? Not an expert here, so YMMV.
I think Japan's residents have slammed shut their wallets and forced Japan into prolonged deflation, so whatever the government is doing is apparently not enough to make a difference.
Japan has significant corruption, govt subsidies, and political gridlock that make our issues also look puny. (I bet the average Japanese resident finds our hue & cry over American bank rescues to seem pretty silly.) Everything I've read on the theme of "Could Japan's problems happen here?!?" has generally boiled down to "No."
Demographics are another issue. Business Week reported recently that last year in Japan, adult diapers outsold baby diapers.