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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.

This actually suggests that we don't have a liquidity trap. Central bank has lowered interest rates. Mortgages are cheaper than ever. They just can't go below zero.

Also this suggests that lower interest rate to private sector necessary stimulates economic growth. It does not, if the private sector is over-indebted already.

by kjr63 on Sun Mar 18th, 2012 at 02:44:41 PM EST
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