Quote from: tee-rex on April 18, 2015, 12:05:11 PM

Stop speaking for us. Personally, I saw that you got confused between your own ideas. In deflation (or whatever) no one will charge negative interest rate for loans, whether real or nominal. You may build any theories, but this simple fact will leave no stone of them in practice.

When I use "we" I mean often "I".

I'm terribly sorry that the mathematics was beyond you

The negative nominal interest resulted from YOUR artificially demanded example.
The very first example I gave was perfectly OK. Then you insisted on me applying the same rules to examples of which YOU specified the (impossible) conditions.

Of course nominal interest cannot get negative. It won't. That doesn't mean that the real interest doesn't exist, and that there is no compensation for deflation or inflation.

As I explained to you:

Let us define growth G, real interest R, nominal interest N, deflation D, and inflation I.

1) real interest will be of the order of economic growth (plus risk) at least

R ~ or > G

2) nominal interest is real interest, corrected for inflation (added) or deflation (subtracted)

N = R + I in the case of inflation, or N = R - D in the case of deflation.

3) under sound money (fixed supply), deflation is equal to economic growth (and hence of the order of real interest).

D ~ G

As such, under sound money, nominal interest will not be negative:

N = R - D which leads to N > or ~ G - D and because D ~ G, we have that N > or ~ 0.

QED.