Paul Volcker misunderstands liquidity trap



"Nobody nts to lend even with low ra rates."

Obvious That's because you have already lent too much to too many people. The growth/consumption simply isn't enough for all of them to succeed. In other words, you're in a bubble. I mean, Austrian Business Cycle Theory is a thing. Either you stay put (or hike rates) to burst that bubble, or you end up too far into the negative territory. That's where you're going to have a liquidity crisis as explained here.


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