Why I Don’t Believe in Liquidity Traps
November 26, 2010 at 11:54 AM EST
I’ve been asked to summarize my views on liquidity traps in one place, so brace yourself for a long post. (Longtime readers will definitely want to skip this one.) For simplicity, I’ll define the term ‘liquidity trap’ as a situation where a fiat money central bank with a freely floating currency is unable to boost nominal [...]