Japanese interest rate, so small. American interest rate, so big.

Can I borrow $50 million? If you give me a percentage rate of -0.02%, I promise to pay back the $49,990,000 right away. Actually, why don't you make that $500 million.

Well if they'd tax bukkake they'd be knee deep in it.

eh, money that is.

I've never been interested in Japan.

Less then 0% intrest rate? What will those ingenious Japanese think of next?

Proof that the effects of a nuclear weapon can linger on for years - screw 'em, my electronics keep breking - God Bless The USA.

that's some serious leverage

Downstairs, taken to an extreme it is like this (according to the article)

You are a lucky Iraqi businessman. You have $10,000,000 in dinars. You think there may be a war tomorrow. So you say to your friendly French businessman. Take my $10,000,000 in dinars for a week and give me Francs. At the end of the week, pay me back $900,000 in dinars, and you can keep the rest.

That's according to the article. I think there's another reason for it, which is just that the Japanese central bank wants to get the money into the economy so people will spend it and use it.

I'm far from an economic expert, but I have taken quite a few courses. Keep in mind that the quoted interest rate is just the base rate. Charter banks usually tack on an extra amount. The zero rate would mostly be an issue with banks trading currency out of the country.

If this doesn't jumpstart the Japanese economy, then I don't know what. Maybe Godzilla?

Downstairs, buy reducing the rate, they in effect are forgiving part of existing loands in order to gather currency. At least that's my laymen's understanding of it. It's not gonna let you borrow a ton, then pay it back, less the negative rate.

By getting the money into use, it will have more benefits to the society (and the central bank) than the benefits of charging positive interest for the money.

In Japan, I gather, folks don't want to invest because the don't feel there is anything to invest in. So give them some play money.

When you go to Vegas, you can often get $50 free or so, to be used in the Casino.

Often times on CL, folks will offer free blowjobs.

Same stuff.

Paying less than the principal as payback for a loan? Cool! Where do I sign up?

::moves to Japan::

If you consider that the interest rate is simply the cost of borrowing money, then doesn't this mean that their government is paying them to borrow money? If htey have inflation, then it could be possible to pay back a loan over the weekend, and on monday the same amount that you borrowed would have less purchasing power, meaning that you effectively paid a negative interest rate for borrowing the money...

I get the feeling capitalism is dying....

Before you move to Japan to take out a loan, remember, the beer in Tokyo is $10 a glass.

If this happened during the business week, all unholy hell would break loose.

::Follows TheSelphie::

Gojirra steal out interest!!!!!

Correct me if I'm wrong.. but does this mean I can go borrow 1 billion, pay off the loan the same moment, and have 100,000 left to keep?

Damn. Bukakke and Gojira already covered...what does that
leave? Cosplay?

Proving once again that I don't understand economics, and never will. You want me to explain how the Factor V Leiden mutation leads to increased incidence of venous thrombosis, no problem. Want to discuss the pros and cons of genetically engineered foods? I'm your man.

But any economics more complicated than my 401(K) plan, and I'm lost.

I thought that meant less than zero pecent of the world population cared about Japan at first. But, well, no.

Hey, have I got a deal for you!
I'll trade you my Honda for your Audi for two weeks and when you give it back you can keep the steering wheel?

I blame it on those censored vagina.

This is a symptom of the trainwreck they've made of their monetary system thru (among other things) propping up failing banks by pretending their assets are still good. Luckily the U.S. didn't make this mistake with the S&L crisis some years back.

Anyway, they'll make it up in volume.

Wow, this is WAY better than skimming rich Nigerians!

This is the "nominal" interest rate, not the "real" interest rate. If you buy a 5% US Treasury bond and there is 2% inflation per year, you are actually getting a 3% per year return. Japan has negative inflation, so at a -.01% rate and -3% inflation you are getting a 2.99% return. Since their money is losing value, the longer you wait to repay the loan, the more money you need to repay it.

I dont think it matters, since property in Tokyo is EXTREMELY expensive, and when you buy an aprtment, you live in a prison cell.

Here's my theory of how you can do alright. If you lend money when it's exchange rate is very low, and you collect it when it is very high, you make money no matter what. And, if you're so worried about the bank you would normally put your money in, you might opt to lend it out overseas for security reasons.

The only way it works is with negative inflation, though.

Im sure they have terms like...You must have this loan for 20 years.

Of course, you now borrow tons of money, and spend that...which kickstarts the economy

Livewire, I would take an American prison cell over a Tokyo apartment any day. You get more room and more butt sex.

My interest in the Japanese hit zero when I found out about bukkake.

I bet allot of them are re-financing their bicycles!

Is it still true that you have to pay to keep your money in a bank in Japan and the concept of savings accounts is nonexistent.

STUPID JAPAN!

Now all the robbers are out of a job!

That would be the inter-bank overnight interest rate, not the common lending rate, for those wondering.

Zap_Rowsdower

I'm actually really interested in the pros and cons of genetically engineered food. Any websites you can refer me to as a start?

Bmr68
Are you being sarcastic? Of course you don't have to keep your money in a bank. And, what's worse, Japanese people save WAY more than Americans. I read an article last year that said in 2000, the average American saved something like -1% of their income, while the average Japanese person saved around 12%. LOTS of Japanese people in their 30's have over a hundred grand in their savings accounts. Damn, can anyone find that article for me. I could have sworn it was on fark.

China has a higher % of its GDP in bad loans than does Japan.

If China fell apart like Japan that would be scary indeed.

What Japan needs is a bit of inflation (2-4% range) for right now people are just hoarding/saving. Why spend now when it's just gonna be cheaper tomorrow?

Damn, what a great idea! Get Dumbya to lower the prime to zero or less! Better than a tax break, and a SURE FIRE WAY to get this ecomony going!

In Soviet Japan, bank pays you to loan money!

feh.

They should ask economics expert Janeane Garofalo for advice.

A negative interest rate is more efficient, like square watermellons

The First Pickrell Bank of Japan is now Open For Business.

Boo...they corrected it.