I looked at the Best Buy (BBY) Black Friday ads and compared them to last year's. The prices were about the same. One thing I thought was worth noting. Look how they stretched the interest free financing period:


 The folks at BBY know their business and they are good marketers. They understand that American consumers who see a chance to "borrow at no cost" just can't resist. For BBY to double the term of interest free financing to three years is just an effort to increase top line sales. I am sure that it will work.

BBY has a $17 b market cap and a good balance sheet so it can take advantage of the near zero cost money that is around today. For them to provide their customers with this free financing means a cost of 2% of sales. Given their gross margins, that is an easy price to pay.

This is an example of the "Carry Trade". We normally think of this in purely financial transactions. The Aussie Dollar carry trade is an example that comes to mind. However, the BBY example is just as much of a carry trade as anything one might do with the Australian dollar and the derivatives market.

When the cost and availability of debt capital are such that one can borrow money and simultaneously invest it and be assured an economic gain, then the conditions for a Carry Trade have been met. Of course we have not gotten to the point of alchemy, but we are getting close.

On ABC's "This Week" show there were some interesting thoughts from Paul Krugman. He remarked:
 


"The cost of the deficit is only 1.2% real rate of interest at the Federal level."


This is economic speak. What Mr.