And, due to rising consumer prices, the nominal interest rate will continue to rise.

The third task is to focus on real economic activity, end the recession, sustain growth, and, above all, reform the capitalist system to make it be less dependent on finance. Long term investments, not short term profits, and productive work, rather than paper gains, need to be supported.

Although the value of the bank s assets doesn t exceed its liabilities, depositors won t flee as long as the government backs the bank by guaranteeing its deposits.

This will be particularly true for Bulgarians and Rumanians, who are invited to join the EU in 2007. Currently their nominal wages are only about 7 of the West European average.

Currently their nominal wages are only about 7 of the West European average.

Over time, of course, negative nominal and real returns may lead savers to save less and spend more.

Even if real wages increase in some coastal cities, surplus labor could keep the national average flat.

A very low or even negative nominal interest rate could produce a positive real return for a saver, if prices fall sufficiently.

Nominal wages may increase, while real wages stagnate, owing to higher inflation.

Long term investments, not short term profits, and productive work, rather than paper gains, need to be supported.

With the introduction of the euro, and with falling inflation, nominal convergence and real convergence have grown similar, both making gradual progress since the mid 1990 s.

Moreover, if deflation were to become entrenched in the eurozone and other parts of the world, a negative nominal return could be associated with a positive real return.

The nominal rate of EDR is about 3 Mbit s, although the practical data transfer rate is 2.1 Mbit s.

The error is called the money illusion the belief that a nominal unit of currency is the best measure of value, even though its real value is unstable.

Oil rich Iraq's debts, with a face value amounting to many billions of dollars (deriving mainly from export credits for arms sales), are a rare exception.

The truth of the matter is that interest rates both nominal and real are too low in Europe, not too high.

Suppose that the bank has assets with long maturity and a face value of 1.2 billion but whose current economic value is only 1 billion.

From 2009 to 2013, German nominal wages increased by more than 14 , compared to 4 in Spain.

If the US experiences higher inflation than our trading partners, the dollar s nominal value must fall even further just to maintain the same real value.

The experience of Iceland and many emerging markets over the past 20 years shows that nominal depreciation and orderly restructuring and reduction of foreign debts can restore debt sustainability, competitiveness, and growth.

And if you consider the fees that many banks impose on these accounts, the effective nominal return was already negative even before central banks went for negative nominal rates.

Of course, this is true only so long as the nominal interest rate is not too negative otherwise, switching to cash despite the storage and safety costs starts to make more sense.

But that will happen only if the other countries wages are relatively more efficient (i.e., productivity there is ultimately higher than in China), and not just because Chinese nominal wages go up.

Today, average nominal wages in the eight post communist EU countries are about one fifth of the West European level and often only a quarter to a half of Western levels of social assistance.

When you hold a checking or current account in your bank at a zero interest rate as most people do in advanced economies the real return is negative (the nominal zero return minus inflation) a year from now, your cash balances buy you less goods than they do today.