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To: Mark Adams who wrote (62465)	1/29/2001 5:31:52 AM
From: Oblomov	Read Replies (1) \| Respond to of 436258

I agree. As an inveterate saver, I too hope that the attempt to reflate fails. At the same time, I do not hope for a recession or depression. I believe that a period of deflation without a protracted 30s-style slump is indeed possible. Nonetheless, a deflationary period would certainly feel like a recession to some households and corporations (particularly the indebted). Given the record current account deficits that the U.S. has been running, reflation may be a short-term goal of the Fed. However, a strong dollar and non-negative private savings rate are long-term necessities. These ends would be accomplished only through a deflationary environment. I'm not convinced that the Fed (through coupon passes) is trying to do anything but prevent deflation from becoming too severe. Because severe deflation encourages cash hoarding, it obviates the possibility of an economic recovery. A more mild form of deflation could co-exist with healthy growth in real spending and real investment, as it did throughout much of the 19th century. BTW, the minimum nominal interest paid to holders of TIPS and I-Bonds is 0%.