But in the US the real interest rate has tended to be much lower than growth, perhaps reflecting the dollar's role as a reserve currency.More importantly, a distinction should be made between the natural real interest rate - the rate at which the returns to saving (or investment) and consumption are equal - and the neutral real rate of interest, that at which inflation is stabilised. For one reason, while the UK does appear to conform to economic theory, the US does not. The first chart above shows that over the past hundred or so years, the average real interest rate in the UK has been more or less equal to the average rate of growth in the economy. That is usually defined as the interest rate that would neither stimulate nor restrict inflation; the implication being that for any economy, there exists a rate of interest which will stabilise inflation at a desired level. In the US which has a stronger underlying rate of growth, it could imply a rate above 6 per cent.However, this may oversimplify the issue.

This rate is traditionally given by adding the desired inflation rate to the underlying or trend rate of growth in the economy.Hence in the UK that would imply a level of between 5 and 5.5 per cent, compared with the current rate of 4.75 per cent. But it was enough to send the bond market into a tailspin, pushing up interest rates across the world. In fact, in recent years, he and his colleagues at the Fed have become rather adept at nuancing their message in order to elicit a desired response from the bond market.At his biannual testimony to Congress on the state of the US economy last week, Mr Greenspan noted that despite six successive quarter-point increases, US interest rates remain "relatively low" That may not sound like much to get excited about. That not only fuels higher inflation but also inflates the already record trade deficit the US runs with the rest of the world.So how high will US interest rates have to go to stabilise inflation? The answer to this question depends crucially on the concept of a neutral interest rate. He is awaiting offers.This case gives a clue to what is really going on. Urban regeneration projects cannot get the support they need without the razzmatazz. The Olympic project will do many good things: regenerate the Lea Valley, create a 124 acre "Hyde Park of the East", and leave 3,600 apartments offering low-cost accommodation.It's just a pity we need the excuse of a good sporting knees-up to do all this.christopher.walker tiscali.co.uk.

Once upon a time, Alan Greenspan, the Federal Reserve chairman, revelled in his ability to leave his audience none the wiser as to what he had just said. He famously once told Congress: "I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said." Once upon a time, Alan Greenspan, the Federal Reserve chairman, revelled in his ability to leave his audience none the wiser as to what he had just said. New York is in a pickle over attempts to use the bid to regenerate run-down areas. The problem is that many of the proposed Olympic sites are not yet in public hands. One Brooklyn landlord, Menachem Friedfertig, owns a property where the Olympic scoreboard will be.