There was probably no liquidity trap in the 1930s: when Congress forced the Fed into open market operations in early 1932 despite low rates, the monetary base and money supply rose with signs of recovery, but the Fed aborted the effort by summer 1932 and the economy slipped back—a natural experiment showing monetary expansion can help even amid deep deflation and slack.
factualpending
Speaker
Douglas IrwinEvidence Quote
“they were able to increase the money supply, increase the monetary base at least and there seemed to be signs of a recovery. But they aborted this effort to expand the money supply in the summer of 1932”
Created: 6/15/2026, 9:36:56 AM
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