Britain may need 0% interest rate to avoid a depression, leading economist warns

James Chapman
UK Daily Mail
Monday, Oct 27, 2008

Interest rates may have to be slashed to zero as Britain battles to avoid a full-blown depression, one of the country’s leading economists warns today.

The extraordinary claim from Charles Goodhart, a founding member of the Bank of England’s Monetary Policy Committee, came as Gordon Brown signalled that he wants to see further, aggressive cuts in the cost of borrowing.

Mr Goodhart, professor emeritus of banking and finance at the London School of Economics and a member of the MPC between 1997 and 2000, tells Channel 4’s Dispatches programme: ‘Interest rates will go down from now, by how far and how fast nobody knows.

(Article continues below)

‘They could go to zero. They went to zero in Japan in the 1990s when the Japanese had a recession or depression which went on for a long time and was quite severe.’

Such a drastic move here would bring rates, currently 4.5 per cent, to their lowest level since the Bank of England was founded in 1694.

Despite the Bank’s independence in setting rates, Mr Brown said yesterday: ‘Inflation is coming down over the next few months and that will mean that it gives scope to the monetary authorities, including the Bank of England, round the world, to make a decision about interest rates.’

However, many experts warn that a rush to cut rates is ‘too little, too late’ because Britain is already in what is predicted to be a long recession.

Mr Brown will today insist he is right to try to borrow his way out of the downturn despite growing warnings from economists that he could bankrupt the country.

The Prime Minister will say he will allow public borrowing to spiral still further -
hinting that he may even seek to use the money for tax cuts for workers, businesses and homeowners.

Full article here

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6 Responses to “Britain may need 0% interest rate to avoid a depression, leading economist warns”

Peter Marshall Says:
October 27th, 2008 at 6:57 am
Wonderful. There’s already been a massive exodus out of sterling and this will be the final nail. The pound is NOW extremely vulnerable. The dollar will be O.K. for the moment as it’s considered one of the world’s two reserve currencies (for how much longer – no one knows for sure) but the pound doesn’t enjoy the same status -

Sterling is now in freefall – and where it ends up eventaully is anyone’s guess -
rich Says:
October 27th, 2008 at 8:21 am
I think it’s inevitable for a 0% rate, and I expect the USA to eventually follow suit !!!!!!!!

http://www.pyrabang.com/view.p.....st_id=4577

goldieshouse.piczo.com
Dr. Neckbone Says:
October 27th, 2008 at 9:08 am
God save the Queen and her sterling!!!!!!!!!!!!!!!!!!!!!We need um both.
mythicshadow Says:
October 27th, 2008 at 11:00 am
http://ca.youtube.com/watch?v=RUCdkBFUU6Y
Social Viability Says:
October 27th, 2008 at 4:44 pm
“Mr Brown will today insist he is right to try to borrow his way out of the downturn despite growing warnings from economists that he could bankrupt the country.”

Translation:
“Mr. Brown will read from the script that is written for him like a good little boy and do his best to act sincere as he tries to convince the people that he is not trying to bankrupt his country for the benefit of his masters.”

What a joke. They sure are getting desperate. They’re looting your standard of living and destroying the culture that your children and grandchildren will inherit.

If we do not start using an alternative currency and start building new social systems to replace the catastrophic mess that these politicians and bankers are creating, our generations will go down in history as being responsible for the advent of a new dark age.

Don’t fight the system:
Replace it
http://socialviability.com/boycott.html
Pete Says:
October 28th, 2008 at 2:19 am
The carbon credit will be fully monetized in the not too distant future, with all currency pegged to what will in essense be a license to put a certain amount of carbon into the atmosphere, probably 1 metric ton for the purpose of international trade, and broken down to the gram (one million grams = 1 metric ton or 1000 kilograms, approx. 1.1 ton in the English system). This will be the basis for the end times monetary system, which will at some point be all electronic, with the prophesied mark of the beast, probably some sort of encrypted biochip in your right hand or forehead, that will be used for secure ID authentication. Since putting CO2 into the atmosphere will be licensed, there will have to be some sort of legal basis, such as total UN control over the global commons, including the atmosphere. This will effectively convert your right to breathe into a privilege. Bartering outside of the official monetary system will be considered a high crime, nor will you be allowed to receive your chip unless you swear allegence to the world system including acknolwleging “mother earth” as the supreme goddess or some such rot.

If you think that you will escape by being self sufficient on your own land, think again, there is the issue of property tax, very very few people hold land via land patent, which may be ignored by the new system anyways.

Pete