t ▁of ▁the ▁government ▁and ▁the ▁private ▁sector . ▁In ▁their ▁view , ▁any ▁interest ▁rate ▁different ▁from ▁zero ▁along ▁the ▁yield ▁curve ▁is ▁a ▁sufficient ▁condition ▁to ▁eliminate ▁the ▁possibility ▁of ▁the ▁presence ▁of ▁a ▁liquid ity ▁trap . ▁ ▁In ▁recent ▁times , ▁when ▁the ▁Japanese ▁economy ▁fell ▁into ▁a ▁period ▁of ▁prolong ed ▁st agn ation , ▁despite ▁near - zero ▁interest ▁rates , ▁the ▁concept ▁of ▁a ▁liquid ity ▁trap ▁returned ▁to ▁prom in ence . ▁Ke yn es ' s ▁form ulation ▁of ▁a ▁liquid ity ▁trap ▁refers ▁to ▁the ▁existence ▁of ▁a ▁horizontal ▁demand - cur ve ▁for ▁money ▁at ▁some ▁positive ▁level ▁of ▁interest ▁rates ; ▁yet , ▁the ▁liquid ity ▁trap ▁invoked ▁in ▁the ▁ 1 9 9 0 s ▁referred ▁merely ▁to ▁the ▁presence ▁of ▁zero ▁or ▁near - zero ▁interest - r ates ▁policies ▁( Z IR P ), ▁the ▁assertion ▁being ▁that ▁interest ▁rates ▁could ▁not ▁fall ▁below ▁zero . ▁Some ▁econom ists , ▁such ▁as ▁Nicholas ▁C raft s , ▁have ▁suggested ▁a ▁policy ▁of ▁infl ation - target ing ▁( by ▁a ▁central ▁bank ▁that ▁is ▁independent ▁of ▁the ▁government ) ▁at ▁times ▁of ▁prolong ed , ▁very ▁low , ▁nom inal ▁interest - r ates , ▁in ▁order ▁to ▁avoid ▁a ▁liquid ity ▁trap ▁or ▁escape ▁from ▁it . ▁ ▁Some ▁Aust rian ▁School ▁econom ists , ▁such ▁as ▁those ▁of ▁the ▁Ludwig ▁von ▁M ises ▁Institute , ▁reject ▁Ke yn es ' ▁theory ▁of ▁liquid ity ▁preference ▁altogether