Krugman: there is a liquidity trap, we're in it

In the first of a three-night stint at the London School of Economics, Paul Krugman sounded the death knell for economists' faith in monetary policy as a means of avoiding depressions.

Krugman on Monday claimed that the current crisis, along with Japan's lost decade, made a mockery of faith in the "overwhelming effectiveness" of monetary policy in steering demand.

Noting that the trajectory of global trade and production over the first 12 months of the current global recession was worse than

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