As I mentioned a couple of weeks ago now, in the course of "Money Week," one of Keynes' signature ideas is the liquidity trap: business slows to a crawl when everyone becomes a hoarder. No one wants to lend, or keep their money in the care of institutions that lend, and the interest rates cannot get low enough to correct this situation in supply/demand terms. Do we believe in this idea, dear reader? The standard free-marketer's response to talk of a liquidity trap is that it is nonsense. It is based on the idea that there can be a sharp increase in demand for money that is NOT an increase in the demand for goods. Everybody becomes a hoarder. But why? Because everybody becomes attached to the medium of exchange, at the expense of the actual exchange? That sounds like a personal pathology, unlikely to be common enough to have macroeconomic effects. Most people realize that money is a medium of exchange. It is valuable BECAUSE it buys goods and services. It is not v...