Dugger on Structural traps

Structural Traps, Politics and Monetary Policy

Since at least 2010, we have contended that the Liquidity Trap was an incorrect diagnosis of the post crisis US economic situation. Influenced by Dugger’s work above, we argued that a Structural trap was occurring. New credit was being devoted to old debts (public and private)and outdated and inefficient (autos a good example) industries. This “trap” is harder to escape as powerful political forces are entrenched in its continuing.
The main positive of infrastructure lending (the new AFF bond program perhaps) is its new project focus.

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