SLP153 Philipp Bagus - What Most People Get Wrong About Deflation
Stephan Livera Podcast
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Is the Economy in a Liquidity Trap?
Economy is in a quodnqu liquidity trap. This meansat that makes the interest rate the to fol because the deflationary expectations are prised into the interest rate. And there's the zero bound that interust rates cannot be at least this was the argument before, the interest rate cannot be lower below zero. That means, when we are in the liquidity trap, then the centre bank loses its power to stimulate the economy by increasing the money supply ande decreasing interest racs. I say, so in that way, it's like a confiscatory tax, almost, but just through another means.
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