For the first time ever the Danish Central Bank cut its deposit rate (the amount of interest paid to people/companies and other entities who deposit money at the bank) to a NEGATIVE 0.2% !! In other words it costs money to put your money in the bank.
I know why they are doing it Their economy is strong and their currency is pegged to the Euro. Money has been flooding into their country from the Eurozone and it was getting harder to maintain the peg. This is very similar to the problems the Swiss are having.
The implications are more daunting to tease out of the financial mess the developed world has put themselves into. Here is a question to ask yourself” Why is Libor rate manipulation by banks fraudulent but interest rate manipulation by Central Banks is not?
It is highly likely that such a scenario could be used in America. This of course would further distort our financial market and the effects of our economy doing it versus the much smaller Danish economy lead to much larger ripples when you throw that rock into the pond of world financial markets.
In other news Central Banks from Kenya to China, England and the ECB have been cutting their rates to stimulate growth.