Liquidity and Debt Structures | The Twilight of Gold Series | Episode 7 (WiM158)
The "What is Money?" Show
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Is the Bank's Liquidity a Prescription for a Depression?
Banks would not suffer from panicky fear of the i nor could they be forced into major liquidation. So long as the credit they granted has been of genuinely short term character, their automatic repayment would not be in danger. This deflationary process would be very mild compared to the usual one in a crisis because it does not involve the necessity of forced s on any scale similar to that experienced under conditions of illiquidity. An ill liquid structure leads to a crash, which a liquid one not only avoids for itself, but may actually soften for the rest of the community by being able to come to the rescue. You might still have government inflation if they can convince you to use a different
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