Remember Scrooge McDuck?

The duck was famous for wallowing around in piles of money, evidently relieving himself of stress.  Yeglesias talks about this:

Policymakers can observe, however, that if economic actors’ level of uncertainty about the future increases that would manifest itself as an increased demand for money.

An increase in uncertainty makes us want to slow down and conserve inventory. We dilate the present. On the collapse of the yield curve on July 15, 2008 was a sudden slowdown in transaction rates along the inventory chain, the effect of which was a sudden decrease in sales to inventory ratio. Just prior to the crash the curve rates were high all along, signaling what? Signaling that inventories levels had better increase as the risk of shortages was looming.

All during the crash, the Fed was within a month off getting the curve into a smooth upward sloper. In other words, the Treasury curve was never that much out of whack, given that we were cashing. We did not see an aberrant love of liquidity, we saw a standard adjustment from the future to the present as part of a general contraction.

Keynes made the wrong assumption, assuming major crashes are aberrant. No, that is the way we do major change.