Japan following suit of developed economies by heading towards negative interest rates

In an unprecedented move the Bank of Japan announced the decision to drop interest rates to below zero for the first time in an effort to curb low inflation and encourage spending amongst consumers as it battles to fuel a lagged economy which has thus far failed to deliver on expectations to produce the goods in terms of economic growth.

BOJ's governor Haruhiko Kuroda said this latest move signals the bank's commitment to lift demand in the economy and if need be was prepared to continue decreasing interest rates until such time that it feels comfortable that it is meeting its policy objectives. This sent markets surging in Asia as market participants hurried back in to find greater returns as there will no longer be shelter in bank accounts offering interest to depositors.

The greatest dilemma being presented to the developed world economies is an over reliance on central bankers to provide the stimulus to buffer these economies through prolonged periods of low inflation and lack of growth. The real issue is more a structural one that requires active policy making decisions by government in dealing with a segment of the economy that is seemingly having adverse impacts on the nature of progression.

We're entering a new era of economic thought where the scope of thinking will turn towards venturing along new terrain never experienced before but will definitely draw the attention of many academics who will try to understand,explain and possibly present a solution to the pressing problems that is being encountered.

Bank of Japan stuns markets with move to negative interest rates https://t.co/HUzOU3MPhf pic.twitter.com/0slWw22kvM

— BDlive (@BDliveSA) January 29, 2016

Japan has long suffered from the ills of deflation and a deep rooted culture of saving en masse that has plagued the economy to such an extent that its sent policymakers scattering in all directions for an answer. This is certainly not the only problems the Asian nation is grappling to contain with an aging crises threatening to create fiscal calamity of mammoth proportions.

As much as the Japanese nation has prided itself on technological innovation that has led not only to a dramatic decrease in fuel usage by cars but also the capabilities of computerware able to perform the tasks of millions of people who offer the same skill set but at a premium to that of machinery, we should not forget the negative impacts these strides have on a nation as a whole.

Although machines might be faster, they don't have the propensity to spend money. Instead the profits accumulated from switching on these marvellous contraptions feeds it's way into the pockets of the rich and remain there for intergenerations.

Japan has been shielded from much of the inequality created by this phenomenon by the fact that their education levels remain amongst the highest in the world which has aided it by matching these individuals to high skilled jobs that pay well. However we've seen a number of Asian nations gearing up their own industrial sector at a fraction of the cost meaning Japan has priced itself out the market due to higher labour costs.

This translates into less trade of goods between Japan and foreigners, a segment that once benefited it hugely in growing its economy to the size it has. As a result it has slipped down the ranks and conceded its place as number two biggest economy to its rival China.  In fairness the Chinese have over 10 times more population to that of Japan but it still doesn't excuse the dismal affair of a stagnate economy.

It's clear that the argument that central bankers don't have the appropriate measures to aid the reformation process of the economy hold quite strongly amongst critics. The actions taken by them may provide short term relief but not necessarily an elimination of the chronic ills being faced by its citizens.