Category: Liquidity

There are a host of “financial products” in addition to shares of stock whose justification is risk management for investors and the generation of information about what investors expect to happen.  In reality they often serve only to permit speculation about price fluctuations in financial markets.  Even mainstream economists no longer hesitate to use the…

To understand how a “credit crunch” or “liquidity trap” can threaten an entire economy and how a bank can be “too big to fail,” it is necessary to have a better understanding of what the “products” are in financial markets. Financial markets theoretically exist for two reasons: to provide liquidity for investments and to facilitate…