Paul Krugman comments on David Wessel:
Liquidity Traps in the WSJ: David Wessel has a pretty good summary. Two things worth noting.
Some of us did not come into this crisis cold: we’d been worrying about exactly this kind of situation since the 1990s, and it has played out very much the way those 1990s-vintage analyses said it would. That’s one reason it has been so frustrating to watch (a) policy makers totally flubbing it (b) economists who had no room for such a crisis in their philosophy making stuff up to rationalize events that should have made them rethink everything they thought they knew.
Lars Svensson’s solution for a liquidity trap — which actually involved devaluing first, then raising the inflation target — was clever. But it won’t work when most of the world is in a liquidity trap, because we can’t all devalue against each other.