# Liquidity trap

- Canonical URL: https://www.gerhardmerk.de/liquidity-trap
- Post ID: 593282
- Modified: 2023-07-25T21:02:04+00:00
- Language: en

## Definition

The central bank provides liquidity very cheaply, but the money is not in demand because households and companies - expect price cuts and are therefore reluctant to spend and borrow, - investing in asset securities at prevailing interest rates is not desirable and hardly ever covers the cost of the investment, or - others, political prospects, such as the expiration of a government's term of office (the present government's term of office expires and a new legislation relevant to business [and particularly important to external trade] is expected). - See attentism, bear, bubble, speculative, carry trades, crash, domino effect, financial investment, graveyard market, money utility, cost of capital effect, liquidity preference, low interest rate policy, quantitative easing, sell-plus order, Wicksell effect. Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

## Machine-readable

- Generator: Merk Knowledge 1.1.1