▁with ▁respect ▁to ▁variations ▁in ▁the ▁interest ▁rate … ▁The ▁liquid ity ▁trap ▁pres umably ▁domin ates ▁in ▁the ▁immediate ▁after math ▁of ▁a ▁great ▁de pression ▁or ▁financial ▁crisis . ▁ ▁Deb ate ▁ ▁In ▁the ▁w ake ▁of ▁the ▁Ke yn esian ▁revolution ▁in ▁the ▁ 1 9 3 0 s ▁and ▁ 1 9 4 0 s , ▁various ▁ne oc lass ical ▁econom ists ▁sought ▁to ▁minim ize ▁the ▁effect ▁ ▁of ▁liquid ity - t rap ▁conditions . ▁Don ▁Pat ink in ▁and ▁Lloyd ▁Met z ler ▁invoked ▁the ▁existence ▁of ▁the ▁so - called ▁" P ig ou ▁effect ", ▁in ▁which ▁the ▁stock ▁of ▁real ▁money ▁bal ances ▁is ▁ost ens ibly ▁an ▁argument ▁of ▁the ▁aggregate ▁demand ▁function ▁for ▁goods , ▁so ▁that ▁the ▁money ▁stock ▁would ▁directly ▁affect ▁the ▁" in vest ment ▁saving " ▁curve ▁in ▁IS / LM ▁analysis . ▁Mon et ary ▁policy ▁would ▁thus ▁be ▁able ▁to ▁stim ulate ▁the ▁economy ▁even ▁when ▁there ▁is ▁a ▁liquid ity ▁trap . ▁ ▁Mon et ar ists , ▁most ▁not ably ▁Mil ton ▁Fried man , ▁Anna ▁Schw art z , ▁Karl ▁Brun ner , ▁All an ▁M elt zer ▁and ▁others , ▁strongly ▁condem ned ▁any ▁notion ▁of ▁a ▁ ▁" t rap " ▁that ▁did ▁not ▁feature ▁an ▁environment ▁of ▁a ▁zero , ▁or ▁near - zero , ▁interest ▁rate ▁across ▁the ▁whole ▁spectrum ▁of ▁interest ▁rates , ▁i . e . ▁both ▁short - ▁and ▁long - term ▁deb