Is the United States in a liquidity trap?

posted by
January 25, 2012
Ludwig von Mises Institute
by Frank Shostak  
Posted in Commentary

"Recessions, according to Keynes, are a response to the fact that consumers -- for some psychological reasons -- have decided to cut down on their expenditure and raise their savings. For instance, if for some reason people have become less confident about the future, they will cut back on their outlays and hoard more money. So, once an individual spends less, this worsens the situation of some other individual, who in turn also cuts his spending. Consequently, a vicious circle sets in ..." (01/25/12)  


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