Abstract
Japan since 1990 and the US since 2008 have a zero interest (or \Liquidity Trap) environment. Bankers’ DNA contains: (1) Inability to charge money instead of paying interest for deposits, (2) double entry book-keeping, and (3) ination-aversion . I show that this DNA is responsible for the inability of monetary policy (QE1, QE2 or further real interest rate reductions into negative territory) and scal stimulus to promote American recovery and growth. As a unilateral remedy, the US should \print about $500 billion, without adding to debt or taxes. If single entry printing is impossible, I suggest a fresh \allocation of $500 billion in special drawing rights (SDR) to the US, Japan and the Euro-zone via an international agreement. I also indicate the taxing and spending discipline needed to avoid tripping market expectations. However, without it we run the risk of multiple dip recessions
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