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To: Oblomov who wrote (124493)9/21/2001 3:11:50 AM
From: clochard  Read Replies (1) | Respond to of 436258
 
<<Is it possible that the true market rate of interest is zero or negative?>>

When real inflation exceeds short term interest rates we have negative real interest rates. That's when stocks and bonds go down the toilet at the same time and its time for gold. We are entering this phase now.

The only thing that's slowing gold down is the existence of a new kind of 'fractional reserve' gold banking system caused by gold lending and gold investment in electronic form. The same gold can be sold many times keeping the price in check.



To: Oblomov who wrote (124493)9/21/2001 10:12:01 AM
From: pater tenebrarum  Respond to of 436258
 
well, the REAL interest rate on FF funds is definitely negative already. and as we can see in Japan, nominal rates for short term funds CAN fall to zero. but i can't imagine a situation where nominal rates fall below zero, except in the case of bonds and notes that trade in the secondary market. for instance, the nominal rates on Japanese 2 year notes actually went negative for a short time period in 1998. i.e., you had to pay for holding the notes.


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