The Liquidity Trap

Paul Krugman


Brad DeLong has a nice piece for Bloomberg about the nature of the trap we’re in — and I’m only partly saying that because he gives me credit for warning about this very trap back in the 1990s.But I’d emphasise something a bit different from what Brad does. His piece is set up as a mea culpa — he should have seen the possibility of this kind of trap, but didn’t. I’d say that’s a very pardonable error compared to the many people who are still denying the nature of the trap we’ve been in for more than 2 1/2 years.

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