liquidity trap

Will Hutton has a pretty good interview with Paul Krugman in the Guardian newspaper.  The exchange is quite long, so it gives you a fairly broad understanding of Krugman’s view on the global economy and specific country economies.  What I…

I am certainly of the view that a considerable worsening of the recession is baked in the cake for 2009. But will fiscal and monetary stimulus prevent worst case scenarios? I certainly hope so, as I have laid out in recent posts. But,…

The US and the global economy are at risk of a severe stag-deflation, a deadly combination of economic stagnation/recession and deflation. Only very aggressive and co-ordinated policy actions will ensure the global economy recovers in 2010…

As interest rates in the developed economies approach the zero bound, we must begin to ask ourselves how effective monetary policy can reasonably be in these circumstances. And if policy is to be effective, which policy tools will be most…

Japan’s policy makers generally procrastinated considerably in terms of implementing any kind of stimulative measures, as well as prematurely reversing the benign impact of policies which had some earlier success. In terms of monetary…

This newsletter from John Mauldin arrived in my inbox this morning. If you haven't read his newsletters they are very good, including those from Guest commentators like this one from James Montier. I will add the text in full. It is…

Caroline Baum was asking in her column today: "How can a 2 percent funds rate be appropriately calibrated to promote moderating inflation when inflation is currently rising at almost 4 percent?" The answer: it can't. The Fed is all about…

As the Fed Funds rate gets close to zero, pundits have been worrying about a pending liquidity trap. While I think these worries are well placed because the Fed is running out of bullets, I am more concerned about inflation right now.…