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  1. 01-02-2009, 09:08 PM #1
    AirborneSapper7
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    Bove: U.S. Enters Perfect Liquidity Trap

    Bove: U.S. Enters Perfect Liquidity Trap

    Friday, January 2, 2009 10:54 AM

    By: Ellen Chang

    The U.S. has created the perfect liquidity trap, said Ladenburg Thalmann banking analyst Richard Bove said in a research report.

    When nominal interest rates are nearly zero, a liquidity trap is developed, he said. The theory was invented by John Maynard Keynes and a great proponent of it is Nobel Prize winner Paul Krugman.

    “The problem arises because holders of funds refuse to use them preferring to hoard instead,â€
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  2. 01-02-2009, 10:25 PM #2
    vortex
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    If the monetary base is expanding at a huge rate, it means nothing more than printing more money, devaluing the dollars existing, especially in this economic downturn.
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