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To: Perspective who wrote (246766)	6/23/2003 11:10:05 AM
From: Mark Adams	Read Replies (2) \| Respond to of 436258

Nice effort. I'd comment that a stealth wealth transfer from creditors to debtors takes place anytime real interest rates go negative, and quite likely anytime real interest rates are 'unnaturally' depressed. There is/was a piece of work that suggests due to compounding, such 'relief' for debtors is required to maintain system stability. I don't recall this piece delving into the nature of of debt financed consumption vs debt financed investment and the resulting implications on ultimate debt service impacts. But then, sometimes distinguishing consumption and investment involves shades of grey, and vary depending on one's point of view. For example, BHP expends money to purchase fuel oil, to dig up diamonds in the artic north. Because of advertising which works to convince people of diamonds value as a status symbol. If we run low on fuel oil, are those diamonds going to feed us or keep us warm? Is the effort (on a macro scale) of collecting those diamonds investment or consumption?