Zero interest rates?

This morning the BBC programme Toady wheeled out Vince Cable to talk about the cut in base rate this week. (I wonder why George Osborne misses out on these invites so often....?)

Cable said that rates must fall much further, and that a zero interest rate was a theoretical possibility. I can't believe that he was really serious. With a run on Sterling recently and the Government needing to borrow from abroad to balance its books, a zero or near zero rate does not seem likely. The lady interviewed with Cable pointed out that the Japanese government had attempted this in the last recession and has been in the doldrums ever since.

We do need some stimulus to encourage mortgage and other lenders to start lending, and consumers to spend, but the effect on savings would be disastrous. In real terms, that is allowing for inflation, depositors actually lose value. If base rate is lowered even further, this could become a real disincentive to save and a real incentive to buy on credit, and the banks will have to borrow from anywhere to provide a basis for their lending rather then relying on traditional depositors funds. Alternatively, the government could bail out the banks.

Just a minute! Wasn't this the cause of our troubles over the past few years? Is this what has left Japan marooned?