The Chimera of Macroeconomics

  For the sake of convenience, we copy from somewhere else. (Quote) Some macroeconomists claim that households preferably hoard money as a store of value when the interest rate, or the aggregate level of interest rates, is at the zero lower bound (ZLB). Fortunately, in the first place, throughout history all market rates have never at the same time been at or below ZLB, nominal or effective.            Now, let us think about plausibility of ZLB. When households are unusually wary about their incomes in the near future, they may keep all the incremental liquidity from, for instance, the fiscal helicopter drop ( ΔM 1 ). Fortunately in the second place, there is a silver lining: the fiscal or monetary authority would seldom bar the household from selling a part of their asset portfolio for still more liquidity ( ΔM 2 ) when the fiscal drop does not attenuate wariness to a satisfactory extent. As they act upon the unvaried prosp...