With Ben Bernanke's latest 50 basis point rate reduction it's official -- the U.S. is paying borrowers to take money off its hands. This is just what the Japanese government did during its long economic nuclear winter that began in 1989 when its combined real estate and stock market bubble burst.

Now it's our turn. How so? The real interest rate is equal to the Nominal rate minus the Inflation rate. After today's 50 basis point rate cut, the Nominal rate is 3%. And today's GDP report noted that the inflation rate -- as measured by Bernanke's favorite measure -- the change in Personal Consumption Expenditures (PCE) -- was 3.9% in 2007. The result is that the Fed is giving away money at the rate of -0.9%.

What does this mean? The Fed is so desperate to get us out of the economic slowdown that it is willing to pump up the inflation rate to do so. A bit less than 10 years ago, in November 1998, Japan did the same thing. Nine years after its economic slump began, according to CNNfn, Japanese banks were literally paying for banks to hold money for them thanks to their negative real interest rates.

The reason? A lack of trust in the solvency of its financial system. That sounds like just the thing we have here.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.