Are we in a liquidity trap yet?

Paul Krugman writes:

Key interest rates

Bernanke’s problem, and ours. This picture shows the target Fed funds rate, the usual tool of monetary policy; the 10-year Treasury rate; and two rates that actually matter to the private sector, the mortgage rate and the rate on Baa-rated corporate bonds. The Fed has had no success in reducing mortgage rates, and corporate borrowing costs have gone up, not down. Add in falling expectations of inflation, and in real terms monetary policy has gotten tighter, not easier.

* * * * *

This entry was posted in Clippings, Economics. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *