Krugman: We're turning Japanese ...

Paul Krugman and Greg Mankiw are talking about the "liquidity trap," an era of zero interest rates that makes monetary policy ineffective.

Japan has struggled with this problem. The solution is unclear, but reinstating inflationary expectations may be in order. I.e, no more talk about price stability.

Says Krugman: "Seriously, we are in very deep trouble. Getting out of this will require a lot of creativity, and maybe some luck too."