Moreover, the dismay and uncertainty as to the future which accompanies a collapse in the marginal efficiency of capital naturally precipitates a sharp increase in liquidity preference.
Combined with a very high marginal propensity to spend these low wages, increased monies spend go back into sales and production etc., avoiding liquidity preference.
They argue that a lack of domestic investment during periods of low interest rates is the result of previous malinvestment and time preference rather than liquidity preference.
