Re: RE: Re: RE: Re: P.S.

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

Jim and Sabri, negative real interest rates seem to have existed in Japan.
Here is one of the earliest references.
Wudunn, Sheryl. 1998. "Zen Banking: Some Interest Rates in Japan Drop
Below Zero." New York Times (7 November).

"The slide below zero shows how some investors have become so downbeat
about the Japanese economy that they are willing to invest only in
Government bonds, the safest bets in the country.  It also means that
there are so many yen around that some banks, mostly foreign banks, are
willing to pay someone to take them off their hands for a time."

It is risky to hold cash because theft is easier, so corps. with tons of
money, in effect, pay the gov't to hold their money in return for bonds.
Sort of like the negative interest rates that goldsmiths were said to
charge for holding $$$.
 --
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx