Isn't Japan stuck in what Keynes called a ‘liquidity trap'?

Isn’t Japan stuck in what Keynes called a “liquidity trap”?

This effectively means that conventional monetary policy does not work in a liquidity trap.

In this situation, lowering interest rates is unable to revive the economy, because it will create the problem of “liquidity trap” that is called in Keynesian economics.

In this situation, lowering interest rates is unable to revive the economy, because it will create the problem of “liquidity trap” that is called in Keynesian economics.

In this situation the economy would have fallen into the “liquidity trap.

This is exactly what we find with post-crisis “liquidity traps,” to use Keynesian terminology.

This relates to the situation of the 'liquidity trap' discussed by Keynes in the 1930s.

For Keynes, the liquidity trap occurred when frightened consumers attempted to save more and consume less.

For Keynes, the liquidity trap occurred when frightened consumers attempted to save more and consume less.

If this sounds crazy, well, liquidity-trap economics is like that — remember, World War II ended the Great Depression.

If this sounds crazy, well, liquidity-trap economics is like that -- remember, World War II ended the Great Depression.

If this sounds crazy, well, liquidity-trap economics is like that — remember, World War II ended the Great Depression."[9]

This is the – admittedly simplified – advice that John Maynard Keynes would give us, the great British economist who was among the first to discuss the liquidity trap.

Note that despite its activism, the US Federal Reserve has not so far managed to create such expectations and remains caught in the same kind of liquidity trap.