wrote in message
...
On Fri, 9 Jul 2010 11:43:34 -0700, "nom=de=plume"
wrote:

Ordinarily interest gained on savings beat inflation by a couple points.
And fixed income instruments are tied to interest rates.

Maybe

No. Mostly just untrue. Deflation is a threat that's greater in some
respects to inflation (not hyper-inflation of course).


There is no guarantee that investment interest beats inflation. In
fact over my lifetime I have lived through several periods when
inflation outraced investment by huge numbers. (Think Carter)

Not sure of your point. Yes, you're right. What's that got to do with
deflation?


The zero interest rate the fed has is just another debt.
It is simply a price we will be paying later when they can no longer
manipulate the interest rates because the people who buy our bonds
demand more return for their risk.

The Fed always manipulates rates... this ensures stability, which is why
they're around.



It works as long as people continue to buy our bonds at an interest
rate we can afford. The future of that is uncertain too.

Well, yeah, the future is uncertain. That's not going to change. You can
base your life around fear and live in a hole in the ground or you can plan
for the worst and expect better.