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<p>[QUOTE=&quot;Cloudsweeper99, post: 948467, member: 3011&quot;]Well, as I write this, the 10 year T-bond yields 2.94% and the 30 year yields 3.95%.&nbsp; After tax, the net is much less.&nbsp; As you state, the government understates real inflation, and it seems unlikely that the bonds do more than break even after tax, with substatial risk if inflation and/or interest rates increase.</p><p><br /></p><p>Deflation and mortage defaults will lower the price of houses, not raise them.&nbsp; I agree that deflation will hurt those heavily indebted, and the liquidation through default from the prior boom will go on for years.&nbsp; This isn&#039;t so much a condemnation of mild deflation as it is of carrying large amounts of debt and inflating in the first place.&nbsp; We are where we are because of inflation, not deflation.</p><p><br /></p><p>I don&#039;t see inflating the economy out of this to be possible.&nbsp; Too many mortgages are floating rate.&nbsp; The entire national balance sheet is over-inflated, and this won&#039;t be cured by more inflation.&nbsp; Destroying capital [which is what inflation does] is no way to save debtors.&nbsp; I&#039;ve had this discussion with a friend of mine for years.&nbsp; The only way to avoid serious trouble is to not get into it in the first place.&nbsp; But we are where we are and rapidly increasing public debt to try to bail out the private debt is not a solution in my opinion.&nbsp; I disagree with you that pursuing policies that ignore the needs of those trying to preserve a lifetime of wealth will help those trying to build wealth.&nbsp; Balance sheets are always a driver of economic activity since production is directly related to investment per employee, and investment comes from savings.&nbsp; What you are describing is a subsistance economy where the goal is to simply try to live.&nbsp; God help us if that is the best we can expect in America.[/QUOTE]</p><p><br /></p>

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