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To: Pete Dovgan

The system was broken in 2008. The draconian reaction of the government back then stopped the breakdown and put if off for a decade. Covid took some of the pressure off and pumped trillions into the markets.

We are far from a liquidity trap, which would cause a huge drop in asset prices.


16 posted on 11/03/2025 9:34:19 AM PST by Vermont Lt
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To: Vermont Lt

Here is the definition of a Liquidity Trap for those who wish to play along at home:

LIQUIDITY TRAP

“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 fail to stimulate economic growth. A liquidity trap is caused when people hoard cash because they expect an adverse event such as deflation, insufficient aggregate demand, or war. Signature characteristics of a liquidity trap are short-term interest rates that are near zero and fluctuations in the monetary base that fail to translate into fluctuations in general price levels.”


18 posted on 11/03/2025 9:35:02 AM PST by Vermont Lt
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