The whole subject of the liquidity trap has a sort of Alice-through-the-looking glass quality. Virtues like saving, or a central bank known to be strongly committed to price stability, become vices; to get out of the trap a country must loosen its belt, persuade its citizens to forget about the future, and convince the private sector that the government and central bank aren’t as serious and austere as they seem.

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Paul Krugman was a contemporary American economist. Paul Robin Krugman is an American economist who is the Distinguished Professor of Economics at the Graduate Center of the City University of New York. He was a columnist for The New York Times from 2000 to 2024. Read more on Wikipedia →

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