I argue in part that:
The concern over the liquidity trap is only as valid as the liquidity preference theory of interest. What we have already learned about the interest rate should be enough to make us question the soundness of this theory. We have seen that the interest rate is not merely a monetary phenomenon, but a time phenomenon. It is the price of present money in exchange for future money. Therefore, the interest rate is determined by people’s subjective time preferences, not the stock of and demand for money.