Under certain circumstances such as high national indebtedness, fear of bad economic times or when interest rates approach zero, monetary policy becomes ineffective in enticing consumers into spending more money.  Economists refer to this as "Pushing on a String" because if the basic demand doesn't exist to induce people to spend money, it can't be forced through monetary policy. Prime examples of this are during the Great Depression in the United States and in Japan since the 1990s. And as Lacy Hunt explains we are once again facing this problem in the United States since 2008. ~Tim McMahon, editor Federal Reserve Policy Failures Are Mounting By Lacy H. Hunt, Ph.D., Economist The Fed's … [Read more...]