though inflation is not a worry now, economist jerry webman believes investors are worried it will become a problem in the next few years. >> you are taking an opinion here that it's worth giving up current income now for the possibility that inflation will cause the principal value to appreciate over time because the redemption value goes up, by law, with the rate of inflation. >> reporter: but that may not be the only reason demand for tips is strong these days, particularly among big institutions. economist julia coronodo believes some tips buyers are seeking protection from falling prices or deflation. >> tips have a floor at zero, so you don't actually lose principal if we actually have deflation... if inflation becomes negative. so, it does provide you some insurance against the downside and really insures the real value of your principal. >> reporter: she expects yields on tips will remain at exceptionally low levels until it's clear that inflation is a greater risk to the economy than deflation. the big question for individual investors is whether there's any reason to buy tips no

but economist jerry webman of oppenheimer funds says there are significant differences. >> we're a major commodity producer, unlike japan. our population is growing; it's not shrinking. we've been more active than japan on both... particularly on the monetary policy side, we've restructured our financial system more quickly. so we have all those things that set us apart from the japanese experience. >> reporter: the federal reserve has taken aggressive steps to keep the american economy from stalling. the bank of japan, observes david wyss of standard and poor's, did not. >> japanese took interest rates down to zero, like the fed has done. but they pretty much refused to engage in any further quantitative easing measures. and as a result, you didn't get much improvement in financial conditions. banks were still locked up. the federal reserve has been much more anxious, much more eager to go into quantitative easing to avoid that trap. >> reporter: the catch is that avoiding the trap means positive growth, not explosive growth. after a decade of boom, that is a difficult, although common,

economist jerry webman says that's because this time we are afraid of using credit to satisfy our pent-up demand. >> this time, consumers are, in the aggregate, trying to reduce the amount they owe, not increasing their borrowing. so, that means that it only increases at the rate of increase of income. and that's slow. it's not pushed by further leverage, by further borrowing. and so it is not the kind of recovery that we're used to over many decades. >> reporter: businesses do seem to be more optimistic and are buying equipment, especially if they believe it will help increase productivity. that helps them meet demand without hiring new workers, a fact certain to encourage more finger pointing in this election year. but economist dan greenhaus says there is no evidence a different outcome in the 2008 election would have led to a stronger economy. >> it's totally unfounded. would we be better in certain respects, sure. but we'd be worse in other respects. and in the larger sense, the economy would be more or less right were it is because, again, the unemployment rate is 20% in the constru