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To: Timbo who wrote (33513)	5/7/1998 9:19:00 AM
From: VALUESPEC	Respond to of 41046

TMBO, do you think deflation would be good for our economy? The hallmark of depressions is deflation. If you have a mortgage, for instance, and we have Inflation, you can pay back that mortgage with inflated dollars as you pay rises but your mortgage stays the same (less taxes, etc.). That makes it easier to pay your debts. If you have Deflation, then you mortgage stays the same, but you might even take a pay cut (if it gets bad, you probably will take a pay cut, or at best get few or no raises). That makes it harder to pay your mortgage, or impossible. Also, many businesses have large debt loads. They could experience increased financial pressure by having less ability to raise prices, or they may be forced to cut prices. As long as interest rates are falling, everything tends to work out. However, as Japan has found out, when your interest rates are already as low as they can go (well, almost to zero), then what? Then you must resort to large government debt programs to jumpstart things (something Japan is reluctant to do). Of course, how large is large enough to jumpstart things? The US interest rates have been going down and down and down. No big deal yet, but it is something to keep and eye on, IMO. I'm personally more concerned about deflation than inflation, but who knows? Maybe I shouldn't be. VALUESPEC