Finding a Prescription for the U.S.'s 'Liquidity Trap' - WSJ.com

THE PELOSI VIEW THAT HAS TO CHANGE AND WHY THE OFFERED PRESCRIPTIONS ARE DOOMED TO FAIL UNDER DEMOCRATIC LIBERALISM: Finding a Prescription for the U.S.'s 'Liquidity Trap' - WSJ.com

Aren't we missing something here?

In other words, take option 3 with a little inflation. It is true that in the 1970's lenders always felt rates wouldn't rise as much as they did (the look-back behavior pattern) and as such, inflation raced ahead of interest rates.

But, at the same time, the economy didn't get going - there was 'stagflation'.

This time the problem sits in the economic and fiscal policies coming out of Washington.

From a Fred Barnes article this past week:
"Ms. Pelosi was melodramatic in her attacks on the cuts in domestic spending that Republicans attached to the debt measure. Her comment that Democrats were trying "to save life on this planet as we know it" was widely reported."

The US isn't business friendly. The idea of being business friendly runs counter to the liberals view that they know better than markets and equality of outcome is equivalent to and more important than equality of opportunity.

One has to be blind to evidence that business-friendly, investor-friendly policies bring about growth and new jobs and opportunities; and, policies that try to protect every grandma and illiterate don't produce growth.

But, too many people support Pelosi and her views and these aren't the people who create jobs, they are the people who look to government to protect them and support them.

As such, until there is a balance between what is left the economic farmer to grow his next year's crop and what is taken from the farmer to support those not working, the problems with the money trap will persist.

The 1930s and 1970s both point to the oppressive level of government as a more serious cause of economic malaise than we want to confront as a society right now - except perhaps for the Tea Party.