Beware of Obsession with Zero Interest Rates

Japan's ultra-low interest rate policy, also known as the zero interest rate policy, has been in place for over a decade. The underlying idea is that by keeping interest rates at virtually zero, housing and corporate investment will become more active, and companies will borrow at low rates to increase production and boost exports.
It might seem like a panacea, but as with all phenomena, nothing is entirely light or entirely shadow.
Where there is light, there is always shadow, and where there is shadow, there is always light. In the case of the zero interest rate policy, it is pure light for those who borrow money.

Banks also benefit immensely, as they can gather deposits at virtually no cost, making it pure light for them as well.
On the other hand, the shadow falls upon depositors (households, individuals). When savings yield no interest, it is only natural that personal consumption, which has the greatest impact on a nation's economy, does not increase. Despite maintaining ultra-low interest rates for such an extended period, the economy has shown no signs of improvement.
Knowing this fact alone should be sufficient. There is likely no need for further explanation.
The United States and other Western developed nations offer reasonable interest rates on deposits, including those on government bonds. Japan should at least follow suit and align its interest rate levels with those of other countries.

Recognize the More Fundamental Issue: Housing Overcapacity and Interest Rates

Regarding ultra-low interest rates, it is crucial to recognize that a more fundamental problem lies beneath the surface, beyond merely dampening consumption. Let me point out a clear example: let's focus on Japan's housing market, which suffers from chronic oversupply.

First, please commit the following figures to memory: 47 million households and 54 million housing units.
These numbers are from the Ministry of Internal Affairs and Communications' "Housing and Land Survey Report" (as of 2003).

What is even more concerning is the fact that approximately 7 million housing units, or 13% of the total national housing stock, are vacant 'akiya' (empty homes).
This means that 13 out of every 100 homes are vacant. Looking at the trends in housing units versus households from the Ministry of Internal Affairs and Communications' statistics, housing units had already exceeded the number of households by 2.62 million in 1978 (Showa 53). In other words, the market has been oversupplied for over 30 years.

According to the economic principle that excess supply leads to lower prices...

Indeed, nine out of ten thick flyers folded into newspapers are property listings for condominiums and detached houses. Every day, persistent phone calls urge homeowners to buy property, and the aggressive sales tactics from real estate agents even create a sense of desperation.
Amidst this oversupply, over 1 million new housing units are still being built annually.
Following the economic principle that excess supply leads to lower prices and shortages lead to higher prices, housing prices are unlikely to rise, except in very exceptional areas like central Tokyo. We should expect them to fall rather than rise.

Lowering interest rates will lead to economic recovery – a grave misconception.

Let's return to the main point. In short, clinging to the outdated notion that ultra-low interest rates will boost the economy is simply wrong.
It is time to realize this. No matter how low the interest rates are, people will not borrow money to buy something that is already in excess supply.
The housing situation in the United States also has a high number of vacant homes, similar to Japan. The reality is that a swift recovery cannot be expected.
While I have discussed the relationship between ultra-low interest rates and the oversupply of housing, I hope this opportunity will encourage you to develop a habit of calmly assessing the future.