Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Jake's explanation is interesting, but there's the Wikipedia:

From Wikipedia: "A liquidity trap is a situation described in Keynesian economics in which injections of cash into the private banking system by a central bank fail to lower interest rates and hence to stimulate economic growth.

Private sector is loaned up. No more (credible) debt takers.

A liquidity trap is caused when people hoard cash because they expect..

The confidence fairy?

..an adverse event such as deflation,

Rotschilds were very handy creating deflation (according to the movie "Money Masters").

by kjr63 on Sun Mar 18th, 2012 at 02:18:11 PM EST
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