Liquidity Trap!

If you've been reading Dr. Paul Krugman (New York Times) since the election, you know that he's been discussing our current economy along with the concept of a liquidity trap.  In his blog article (http://krugman.blogs.nytimes.com) from 12/1/12, he makes the statement that, " ... the whole case for fiscal stimulus and against austerity rests on the proposition that with interest rates up against the zero lower bound, the central bank can neither achieve full employment on its own nor offset the contractionary effect of spending cuts or tax hikes.".

It's always so great when economic theory matches real world events! For more information about liquidity traps, Keynesian theory, monetary policy, or the IS-LM curve, I would suggest googling the concepts, or better yet, finding a good economics text.