Editing Liquidity trap (section)

===COVID-19 recession===
Modest inflation during the [[COVID-19]] crisis in 2020, despite unprecedented monetary stimulus and expansion, was similarly ascribed to hoarding of cash.

Post-Keynesians respond<ref name=pilk2013/> that the confusion by "mainstream economists" between conditions of a liquidity trap, as defined by Keynes and in the Post-Keynesian framework, and conditions of near-zero or zero interest rates, is intentional and ideologically motivated in ostensibly attempting to support monetary over fiscal policies. They argue that, [[quantitative easing]] programs in the United States, and elsewhere, caused the prices of financial assets to rise across the board and [[interest rate]]s to fall; yet, a liquidity trap cannot exist, according to the Keynesian definition, unless the prices on imperfectly safe financial assets are falling and their interest rates are rising.<ref name=nothing>[[Bill Mitchell (economist)|Mitchell, William]] (2012) "[http://bilbo.economicoutlook.net/blog/?p=20011 The on-going crisis has nothing to do with a supposed liquidity trap]", 28 June 2012</ref> The rise in the monetary base did not affect interest rates or commodity prices.<ref>[[L. Randall Wray|Wray, L. Randall]] (2013) "[http://archive.economonitor.com/lrwray/2013/05/01/reconciling-the-liquidity-trap-with-mmt-can-delong-and-krugman-do-the-full-monty-with-deficit-owls/ Reconciling the Liquidity Trap With MMT: Can DeLong and Krugman Do the Full Monty With Deficit Owls?]", ''Economonitor'', 1 May 2013</ref>

Taking the precedent of the [[2008 financial crisis]], critics<ref>Roche, Cullen (2014) "[https://www.pragcap.com/would-keynes-have-called-this-a-liquidity-trap/ Would Keynes Have Called this a “Liquidity Trap”?]", ''Pragmatic Capitalism'' website, 23 March 2014</ref> of the mainstream definition of a liquidity trap point out that the central bank of the United States never, effectively, lost control of the interest rate. Whereas the United States did experience a liquidity trap in the period 2009/10, i.e. in "the immediate aftermath" of the crisis,<ref group=note>During approximately 2009/10, the interest rates on risky financial assets failed to respond to [[Federal Reserve system|Fed]]  intervention, as demonstrated by the [[TED spread]] history. See [https://fred.stlouisfed.org/series/TEDRATE TED rate] for the period 2007/16</ref> the critics of the mainstream definition claim<ref name=pilk2013>[[Philip Pilkington|Pilkington, Philip]] (2013) "[http://fixingtheeconomists.wordpress.com/2013/07/04/what-is-a-liquidity-trap/ What is a Liquidity Trap?]", ''Fixing the economists'' website, 4 July 2013</ref> that, after that period, there is no more of any kind of a liquidity trap since government and private-sector bonds are "very much in demand".<ref name=pilk2014/> This goes against Keynes' point as Keynes stated that "almost everyone prefers cash to holding a debt."<ref name=keynes1/> However, modern finance has the concept of [[cash and cash equivalents]]; [[United States Treasury security|Treasuries]] may in some cases be treated as cash equivalents and not "debt" for liquidity purposes.<ref>{{cite journal | title = Treasury safety, liquidity, and money premium dynamics: Evidence from recent debt limit impasses | first1 = David | last1 = Cashin | first2= Erin E. Syron | last2 = Ferris | first3 = Elizabeth | last3 = Klee | journal = Finance and Economics Discussion Series 2020-008 | year = 2020 | volume = 2020 | issue = 8 | location = Washington | publisher = Board of Governors of the Federal Reserve System | doi = 10.17016/FEDS.2020.008 | s2cid = 212969994 | url = https://www.federalreserve.gov/econres/feds/files/2020008pap.pdf }}</ref>