Post
Topic
Board Economics
Re: Is deflation truly that bad for an economy?
by
tee-rex
on 29/03/2015, 19:20:18 UTC
By the way, your "risk free interest rate" is actually below inflation. For example, inflation in the US was 1.6% for 2014, while 1 yr US treasury bonds yielded only about 0.25% the same year, so you are obviously dancing upon nothing...

This simply means that the real risk-less interest rate was negative. 

Thereby it cannot serve as a proof of what you are trying to prove. If you take a look at historical risk-free rates of short-term treasuries (or other short-term financial assets of the kind, for that matter), you will find plenty of periods where rates have been significantly below inflation in the same period.