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With the demand curve for money horizontal further increases in the money supply do little to lower interest rates, or as in the current situation where the interest rates in the US are virtually at zero so that further increases in the money supply do little to stimulate the economy. As unemployment is growing and the financial sector weak, Bernanke and the Fed see other ways in which quantitative easing helps a recovery. Here Chritopher Woods compares today's situation in America to that of postbubble Japan. He says America is already in a liquidity trap. And the regulatory forbearance to cleanup the banking mess is similiar to that in postbubble Japan when it took the government years to get up the will and strength to straighten out the mess including breaking up the banks that are too big to fail.
Grouped Articles
Is the U.S. Economy Turning Japanese?
Wall Street Journal 10.27.2009
Economist 10.15.2009
Economist 12.30.2009
Fed’s Bullard Raises Policy Concerns
Wall Street Journal 07.29.2010
Opinions Are Split on Fed Policy Move
Wall Street Journal 11.01.2010
Ben S. Bernanke - What the Fed did and why: supporting the recovery and sustaining price stability
Washington Post 11.04.2010
Japan Shows Trials of Escaping a Post-Bubble Funk
Wall Street Journal 12.23.2010
Yes, We're in a Liquidity Trap
New York Times 06.10.2011
How close are we to a liquidity trap?
New York Times 03.17.2008
U.S. Economy Braces for Soft Target
Wall Street Journal 06.11.2011
Tom Keene Talks to Morgan Stanley's Stephen Roach
BusinessWeek 06.09.2011
Fed Darkens Its Outlook but Plans No Changes
Wall Street Journal 06.23.2011
Finding a Prescription for the U.S.'s Money Trap
Wall Street Journal 08.06.2011
QE2-Inspired Stock Rally May Soon Disappear
Wall Street Journal 08.08.2011
Global crisis calls for G-20 growth pact - The Washington Post
Washington Post 08.11.2011
The Folly of Economic Short-Termism
Wall Street Journal 08.11.2011
This Time, Maybe the U.S. Is Japan
Wall Street Journal 08.13.2011
Economist 09.03.2011
Stimulus and the Depression: The Untold Story
Wall Street Journal 09.26.2011
Five myths about Ron Paul - The Washington Post
Washington Post 12.10.2011
Greenspan image tarnished by newly released documents - The Washington Post
Washington Post 01.13.2012
Inside the Fed in 2006: A Coming Crisis, and Banter
New York Times 01.12.2012
Little Alarm Shown at Fed At Dawn of Housing Bust
Wall Street Journal 01.13.2012
Wall Street Journal 01.27.2012
Persistently Low Rates Carry Risk of Negative Side Effect
Wall Street Journal 01.30.2012
Demand for U.S. Debt Is Not Limitless
Wall Street Journal 03.28.2012
The Dangers of an Interventionist Fed
Wall Street Journal 03.29.2012
How Huge Banks Threaten the Economy
Wall Street Journal 04.05.2012
Big Banks Need More Transparency, Fed Ex-Governor Says
New York Times 04.28.2012
Chairman Bernanke Should Listen to Professor Bernanke
New York Times 04.24.2012
Warren Stephens: How Big Banks Threaten Our Economy
Wall Street Journal 04.29.2012
J.P. Morgan's Loss: Lessons From a Fiasco
Wall Street Journal 05.15.2012
John B. Taylor: Monetary Policy and the Next Crisis
Wall Street Journal 07.04.2012
Fed chief Bernanke urges better financial regulation to prevent crises
Washington Post 01.04.2010
Japan Central Bank Chief Wades Into Politics
Wall Street Journal 11.21.2012
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