Liquidity preference, loanable funds, and Niall Ferguson (wonkish)

This article is very closely related to issues we have been discussing in class lately. It talks about supply and demand for loanable funds. First they show the basic model where savings is equal to investment. It then discusses how Keynes explained this model to be incomplete because it assumes that the economy is operating at full employment. The article then discusses the model for 2009 economy. This model assuming the economy was operating at full employment showed the interest rates at -5%. This would show that banks were actually discouraging people from saving money and that it would be better to hold money rather then save it. This is why the title says there would be a liquidity preference, because people and companies would want to hold money rather then save it in banks.