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| User Info | Why we will experience deflation; entered at 2007-12-02 05:29:31 | |||
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Shrpblnd Posts: 1202 Registered: 2007-08-06 Los Angeles, CA 
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Stop focusing on nominal interest rates and think what real interest rates you will be paying in a deflation. Yes, your nominal rate is 0%, but if we are deflating at 10% per year (God help us), then your real interest rate is 10% per year, on your credit card. Is that a good loan? Depends on how well your business is doing. We are obviously not anywhere close to that point currently, but it is important to remember than any debt with fixed nominal interest rate becomes a much higher burden in a deflationary environment as real interest rates are increasing. 2007-12-02 05:29:31
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