We’re entering our problem here with a personal savings rate near zero. So when you combine that with the fact that the United States’ gross domestic product is made up of almost three-quarters consumption, then you have a serious issue. Because I think that consumers are going to actually, over the next two, three years, increase their personal savings rate maybe to as high as 8 to 10 percent. So the consumer in the United States is going the opposite direction than the consumer in Japan did.

Meanwhile, you have the same problem with banks that are overleveraged with too much debt. And the same problem with real estate, which over the past two years has declined about 20 percent. So that is what I call a perfect deflationary cocktail. And that’s what we’re facing now.

Cory Bortnicker: It’s interesting -- so are you essentially saying that the Japanese consumer, by spending more, helped lift Japan out of its deep recession?

Kevin Depew: Yeah, helped to cushion it. I mean, at that point, all policymakers were concerned with was avoiding a depression-like environment where you have massive unemployment, widespread social unrest that goes along with that massive unemployment. And they were able to do that by encouraging -- by disincentivizing savings, taking the -- taking short-term interest rates down to almost zero percent.

In some cases, the real return for savings was negative. So if you put your money in a bank, you were actually losing money. It was better to keep it under your mattress.

Cory Bortnicker: So what’s it going to take, or how long will it take, for the American consumer to start spending in such a way that could help alleviate our current crisis?

Kevin Depew: Well, I think it’s going to take, first of all, for the savings to be built up. And that’s going to be a very hard process. It’s going to actually exacerbate the economic environment that we go into. I mean, keep in mind that Japan’s deflationary debt unwind was largely concentrated -- the debt was largely concentrated in banks, so that it overleveraged in the excessive speculation in real estate. Well, that sounds familiar.

But even today -- even today, from the peak, Japanese real estate, which is only now stabilizing, is down 50 percent from its peak and is down at levels that were last seen 30 years ago.

Now, we’ve just seen a two-year, 20-percent decline in real estate and people are panicking, and we have this huge crisis that’s evolved from that mere two-year, 20-percent decline.

So, given the fact that we have that, and we have the banks that are overleveraged and unable to lend to each other because they don’t have the money, and debt elimination not only among corporations and banks but also growing among consumers -- remember, we’re going to see that personal savings rate go up and consumers pay down debt -- we’re going to have a long, long, painful process ahead of us.

Cory Bortnicker: Okay. One more question about Japan versus the U.S., before we move on. What are some of the similarities and/or differences between the Japanese government’s response to their crisis, comparatively, to America’s?

Kevin Depew: Well, the Japanese -- first of all, the criticism that has long been leveled against Japan's policymakers was that they waited too long to begin to try to force money into the economy.

The Federal Reserve has been more aggressive. They’ve, you know -- already, all the acronyms that have been created to inject money into the economy. But, you know, again, at the end of the day, our crisis is more severe, so they should be more aggressive.

And at the end of the day, the problem is that the money the Federal Reserve is injecting into the economy -- and if you look at the -- at measures of monetary growth, the expansion of credit, it’s by far the largest that we’ve ever seen. Even as recently as last week it’s at a level that’s unprecedented. But the problem is that that money is going to debt elimination. The banks aren’t lending to each other.