Janet Yellen And The Fed Caught In a Bear (Liquidity) Trap And Why Interest Rates Will Remain Low

Confounded Interest ^ | 11/24/2013 | Anthony B. Sanders

[1010RD]

I could see that too. It would be the perfect political cover will all the insiders getting advance notice.

[Chode]

yup, but it would kill the big drug cartels with rooms/houses full of cash so it'll prolly never happen...

[BfloGuy]

In other words, are Janet Yellen and The Fed caught in a bear (liquidity) trap?

There's no such thing as a "liquidity trap".

There is only the perfectly-rational entrepreneurial resistance against investment in a hostile economic and political climate. Keynes didn't think much, though, of rational individuals and had to come up with a mechanistic explanation for the failure of his "General Theory".

And the "liquidity trap" it was.

And, today, the bright lights at the Fed -- Keynesians all [well, there are some Monetarists but the differences between the two schools is negligible] -- still must fall back on the ol' trap theory instead of telling the President that no one's investing because they have no idea what next year will bring.

[Cooter]

bfl

[M-cubed]

If I remember correctly....Keynes admitted later that his theory would fail....”We’ll all be dead”...was his answer!!...and he was right!.. they all are! ...but we’re not....We get to pay!

[M-cubed]

Naah..They will get the word before the little guy...just like the officers did in Nam...

[Chode]

sad but true...

[PeterPrinciple]

It’s a mathematical principle. The longer the natural ebb and flow of events is manipulated, the worse the results are going to be. It happened with the mortgage meltdown.

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yep, recession was the CURE.

[grania]

yep, recession was the cure

I don't know if you're being sarcastic or not. One reason the recession was so bad when Obama took office was all of the manipulations of the economy by GWB to avoid one.

Example...that mortgage meltdown. It never would've been so awful without people being given mortgages they couldn't handle, in order to prop up the housing market.

[PeterPrinciple]

yep, recession was the cure
I don’t know if you’re being sarcastic or not.

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nope , not being sarcastic. Recession is the cure, still is but is going to be bigger now. Society and individuals have to experience the results of bad decisions in order to learn.

[grania]

We’re on the same page re: the recession that has to happen. Can’t imagine what’s going to happen when the puppet masters lose control this time.