According to Charles Schwab's Chief Investment Strategist

While diplomatic, she is warning of several things.

- debts to pay debts
- government bailouts
- huge deficits
- treasury bubble
- possible trade problems

One interesting thing I heard her talk about was the difference between nominal interest rates and "real interest rates."

She compared the early 80s to now. Despite inflation and high nominal rates, real interest rates were relatively low.

Right now, despite incredibly low nominal rates, "real interest rates" are high. The example she gave was would you pay 17% interest to buy something appreaciating at 11% a year? The real rate = 6%.

If you are paying 5% on an asset that is depreciating at 17% a year the real interest rate is 22%. (I actually though it would be 12%, but she clearly said 22%)

Seems to me thats the real danger of "deflation." You are paying back with more expensive dollars.