A liquidity trap is a situation, described in Keynesian economics, in which, "after the rate of interest has fallen to a certain level, liquidity preference may become virtually absolute in the sense that almost everyone prefers holding cash rather than holding a debt (financial instrument) which yields so low a rate of interest." Negative natural interest rates and a zero lower bound are necessary conditions of a liquidity trap. Temporary economic disruption (e.g.
A liquidity trap is a situation, described in Keynesian economics, in which, "after the rate of interest has fallen to a certain level, liquidity preference may become virtually absolute in the sense that almost everyone prefers holding cash rather than holding a debt (financial instrument) which yields so low a rate of interest." Negative natural interest rates and a zero lower bound are necessary conditions of a liquidity trap. Temporary economic disruption (e.g.
Source: Wikipedia "Liquidity trap" · CC BY-SA 4.0
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