What Is a Monetary Theory?

Keynesian currency theory includes the following:

Keynesian Monetary Theory

The motivation for demand for money has the following three points:

the first,

"Keynes Trap" or "Liquid Preference Trap": refers to the preference of people to hold money. Because currency is the most liquid or flexible asset, currency can be used for trading at any time, can meet unexpected needs, and can be used for speculation. Therefore, people's preference for currency is called liquidity preference. When the interest rate is extremely low, no matter how much money people add, they will no longer buy securities and will stay in their hands, so liquidity preferences tend to be infinite; at this time, even if banks increase their money supply, they will Make interest rates fall.