The View From 1776

The Daily Socialist - 7/20/10

Is there a case for Keynes’s “liquidity trap?”

Keynes believed, and apparently Paul Krugman agrees, that failure of individuals and businesses to spend all their cash during a recession is bad, that government must intervene with large-scale deficit spending.  Individuals’ and private businesses’ failure to spend is what Keynes damned as saving.  Oddly, he also identified government deficit spending as savings, or what Democrat/Socialists call investment.