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Pastimes : All Clowns Must Be Destroyed
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To: awi who wrote (7628)2/8/2000 9:24:00 AM
From: pater tenebrarum  Read Replies (2) of 42523
 
Anko, that's the point: in a liquidity trap, the CB drops rates to zero, and offers the banks as much money as they like. but since the banks refuse to lend any, the money is only used for unproductive endeavors, like the yen carry trade. it has no (or a negligible) effect on the money supply and the demand for goods and services. it's the nature of a liquidity trap that the CB is pushing on a string.
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