Is the US stuck in a liquidity trap?
With the news that the the Fed is continuing Operation Twist and buying long term bonds, will the monetary injections help to lower the interest rates at all? Or are we stuck in a liquidity trap where the injections serve almost no purpose at all with regards to lowering rates? Also, with QE3 not ruled out, is the Fed just sucking America deeper and deeper into the liquidity trap?
Yes, we are in a liquidity trap. It has played out exactly like the people warning about a liquidity trap long ago said it would.
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