Elaine Supkis

Liberating the Indebted States of America

All depressions run the same way: savers won't lend. They save but won't put it in banks because the banks don't have a good return. In Japan, savers are being savaged by 2.6% inflation and savings get a mere .5% interest. Talk about a spread! So they send their savings overseas!

So lending in Japan has stalled out badly and those who need to borrow such as young families, can't. This leads to a drop in the birthrate.

The solution here is very easy: realistic interest rates that attract savings and discourage EXCESS lending. Instead, the Fed is trying to have stupid lending by dropping rates well below inflation. We certainly have inflation far higher than 2% right now.

Yet no one suggests this sane solution except maybe Volcker.