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To: Mark Adams who wrote (128343)	10/9/2001 2:19:03 PM
From: TRINDY	Read Replies (3) \| Respond to of 436258

Mark, to get the real interest rate one subtracts the rate of inflation from the nominal rate. Thus, if Japan is truly experiencing deflation, the real interest rate is negative. Under conditions of deflation that have taken place in the US in its past history, borrowers have actually had to take creditors to court to demand their right to repay. Just wanted to clear up the thinking of any readers that might think you mean the real interest rate is positive. Cheers!

To: Mark Adams who wrote (128343)	10/10/2001 3:37:18 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 436258

that is correct - and i believe the US economy is on the cusp of entering outright deflation. the secular deflationary trend has become a global phenomenon. the trends in commodity prices and interest rates, as well as the inability of stock markets to react to the largest dose of monetary stimulus in the history of man continue to support my contention that a secular deflation phase is indeed underway. of course due to our modern monetary regime the deflation is unlikely to become as extreme as say that of '30-'32. but we'll have to wait and see on that. imo the fact that the US consumer is prone to overspending, or rather HAS been, is no saving grace. it means there are no savings to fall back on, and the recent rise in the savings rate is exactly what has happened in previous deep recessions...thrift is being re-discovered out of necessity. that process is far from having run its course imo.