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POSTED ON August 29, 2017  - POSTED IN Guest Commentaries

The following article by Frank Shostak was originally published at the Mises Wire.

Does it make sense that by means of more inflation the US economy could be pulled out of the liquidity trap?

Some economists such as a Nobel Laureate Paul Krugman are of the view that if the US were to fall into liquidity trap the US central bank should aggressively pump money and aggressively lower interest rates in order to lift the rate of inflation. This Krugman holds will pull the economy from the liquidity trap and will set the platform for an economic prosperity. In his New York Times article of January 11, 2012, he wrote:

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