lior

I have stumbled upon an interesting article by Paul Krugman, a Nobel laureate in economics; the article offers an explanation for the hike in gold in the last few years. Krugman, who considers himself a deflationista, i.e. a person who believes the U.S. is currently in a liquidity trap, thinks that the gains in the gold is another confirmation that we are at a liquidity trap: basically in a liquidity trap people and businesses "sit on their money" and even if the interest rates plunge to zero (and the U.S. interest rate has been at zero for the past couple of years), investors are still reluctant to invest their funds. It's hard to prove that we are in a liquidity trap because even if the rates are low and economy is slowing down, ...