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Authored by Frank Shostak via The Mises Institute,

Some economists such as a Nobel Laureate Paul Krugman are of the view that if the US were to fall into a liquidity trap the US central bank should aggressively pump money and aggressively lower interest rates in order to lift the rate of inflation. This Krugman holds will pull the economy from the liquidity trap and will set the platform for an economic prosperity. In his New York Times article of January 11, 2012, he wrote,

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Something strange happened on July 24: on that day the Bank of Japan announced it would reduce the size of its purchases of five-to-ten year JGBs from Y500 billion to Y470 billion. However, instead of yields and the yen spiking, as some had expected would happen, they slumped. And, just as unexpectedly, 10Y JGB yields continued to slump over the next month, despite another reduction in the amount of JGB in the 5-10 year bucket that the BOJ would purchase on August when it further reduced the amount to Y440 billion.

Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

What follows are six questions and answers that were wedged between cocktails and a dinner hosted by Karl J. Feitelberg, Founder and Chairman of Sterling Resources Ltd. at the Castle Hill Inn, Newport, R.I. on July 24, 2017.

1. Question: What were the two greatest economic catastrophes in the U.S. of the last 100 years?

Historically the annual Jackson Hole symposium has been a major market-moving event as it has traditionally been the venue where central banks make critical announcements such as Bernanke's preview and hints of QE2 and QE3 in 2012, as well as Draghi's suggestion of the ECB's QE in 2014. As shown in the chart below, market reactions following these events have been material.