Quote: Originally Posted by
gonegolfin 
Indeed. Conventional monetary policy ceases to work in a liquidity trap because when interest rates are zero or near zero, cash and treasury debt are perfect substitutes for one another. Thus, liquidity injections implemented by Central Bank purchases of treasuries do not have the normal intended effect. They simply pile up as bank reserves and in vaults. This is exactly what happened to Japan in the lost decade.
Brian
And this is why I think all the gimmicks to help housing will fail. Unless the excess inventory goes away, prices will continue to fall. Perhaps not as much if the gimmicks weren't there, but they will fall nonetheless.
I'm hoping to get a condo on the beach for 60% less than the peak a few years ago!