There is a concept in economics first put forward by Keynes...

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    There is a concept in economics first put forward by Keynes during the late 30s that explains what has been happening. It it called liquidity trap and in its modern version it means that when interest rates are at zero or near MONEY becomes a perfect substitute for BONDS. That is, an almost unlimited of the demand for money is made of people's wish to store increasingly large amounts of their wealth in cash.

    U.S. Federal Reserve economists assert that the liquidity trap can explain low inflation in periods of vastly increased central bank money supply. Based on experience $3.5 trillion of quantitative easing from 2009–2013, the hypothesis is that investors hoard and do not spend the increased money because the opportunity cost of holding cash (namely the interest forgone) is zero when the nominal interest rate is zero.[21] This hoarding effect is purported to have reduced consequential inflation to half of what would be expected directly from the increase in the money supply, based on statistics from the expansive years. They further assert that the liquidity trap is possible only when the economy is in deep recession. The M1 money supply rapidly increased from $4 trillion to $20 trillion during 2020–2021, consistent with the cash hoarding theorized in a liquidity trap arising from the unprecedented fiscal stimulus and monetary expansion of the COVID-19 crisisModest inflation during the COVID-19 crisis in 2020, despite unprecedented monetary stimulus and expansion, was similarly ascribed to hoarding of cash. The M1 money supply (currency and demand deposits and other checkable deposits which pay negligible interest) exploded from $4 trillion to $20 trillion during this period, consistent with the theorized hoarding of a liquidity trap.[22]

    https://en.wikipedia.org/wiki/Liquidity_trap

    I have post quite a lot of times references to this phenomenon but apparently without any success as not a single poster came back with any question, request for clarification or comment.

    I think that you should also have a look at the IS-LM model and try to understand it, even if that involves a lot of work.

    Speculative demand for money: this is the willingness to hold cash instead of securities as an asset for investment purposes. Speculative demand is inversely related to the interest rate. As the interest rate rises, the opportunity cost of holding money rather than investing in securities increases. So, as interest rates rise, speculative demand for money falls.

    https://www.masterclass.com/articles/what-is-the-is-lm-model-in-economics#how-the-fed-impacts-islm









 
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