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Drowning in a Liquidity Trap?; by Frank Shostak on May 24, 2013: CMI Gold and Silver - Articles of interest, May 26, 2013-

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Drowning in a Liquidity Trap? Frank Shostak May 24, 2013 www.mises.org __ Bruce Bartlett recently lamented in The New York Times that given the current state of economic affairs we need more Keynesian medicine to fix the US economy. According to Bartlett, the core insight of Keynesian economics is that there are very special economic circumstances in which the general rules of economics don’t apply and are in fact counterproductive. This happens when interest rates and inflation rates are so low that monetary policy becomes impotent; an increase in the money supply has no boosting effect because it does not lead to additional spending by consumers or businesses. Keynes called this situation a “liquidity trap.” Keynes wrote, There is the possibility ... that, after the rate of interest has fallen to a certain level, liquidity-preference may become virtually absolute in the sense that almost everyone prefers cash to holding a debt which yields so low a

California Faces a New Quandary, Too Much Money: The New York Times Today's Headlines, May 26, 2013.

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Today's Headlines Sunday, May 26, 2013 Top News California Faces a New Quandary, Too Much Money By ADAM NAGOURNEY After years of grueling battles over state budget deficits and spending cuts, California has a new challenge on its hand: too much money. U.S. Shift Poses Risk to Pakistan By DECLAN WALSH An American withdrawal from Afghanistan and the curtailment of the drone campaign could plunge Pakistan's hotbed tribal areas into further chaos. Last Inspection: Precise Ritual of Dressing Nation's War Dead By JAMES DAO At the Dover Port Mortuary, where the bodies of service members are brought to be prepared for funeral, no detail is too small, whether the coffin is closed or the body slated for cremation.  Politics Leak Inquiries Show How Wide a Net U.S. Cast By ETHAN BRONNER, CHARLIE SAVAGE and SCOTT SHANE Details of investigations into government leaks of classified materials also