This financial crisis we are living through is difficult to understand - especially for your average Joe. I am not about to offer the perfect explanation - or ask you to pay $19.95 for our latest financial news alert.
Velocity of Money has collapsed. We are facing the risk of a
liquidity trap ("Signature characteristics of a liquidity trap are short-term interest rates that are near zero and fluctuations in the monetary base
that fail to translate into fluctuations in general price levels") and
deflation. But worst of all - Europe and the United States are suffering from a leadership vacuum and a lack of concensus as to the direction and strategy needed to navigate the world economy. Unfortunately the markets will not wait.
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