Challenged The Keynesian "Liquidity Trap"

When faces the interest rate policy could not produce actual function to the realeconomy, the majority people will think that the economy have fallen in the "liquiditytrap" and the monetary policy can not work because of it. In order to have moreunderstand in the theory of the ""liquidity trap", after Detailed explanation ofKeynes’s "liquidity trap" doctrine we prove it have not occured from prerequisites andhas only been an hypothesis.This paper begins with Keynes’s "liquidity trap" doctrine implied three importantprerequisites, the fisrt is that the economy is in the depression, the second is themonetary authorities have the continued ability of the money supply, the third is howis the income distributed in the currency and securities, and the last one is that marketwill have a public awareness of consistent, espicably low interest rates. Because thatpeople can have two choices between currency and securities in the short term ispossible, we will combine the depression hypothesis in the case, the paper focuses onthe latter two assumptions discussed. And then, Wherthe it is in the gold standard ornon-gold standard, there is no argument that the "liquidity trap" premise could notexist in the economy from the perspective of logical reasoning. In order todemonstrate those, we use the America in the Great Depression as the gold standard’sexample-which is he most tragic depression in the history, and make the years1973-2011the United States as the instance of non-gold standard. Both of the twodifferent monetary systems, there can be no prerequisites of the "liquidity trap", theanalysis proved further evidence of a "liquidity trap" is still a theoretical hypothesisup to now.