The issue regarding speculation and leverage isn’t so much about interest rates as capital requirements for institutions to lend money. If the capital requirements are tighter, then there will be less opportunities for leverage as those institutions would have to hold more in reserve.
Of course, that doesn’t really help the Fed as they are also concerned about the money supply and velocity also.
Another consequence to savers of deflation is negative interest rates. The Swiss are now asking for -1.25% for 3 month Libors.
