Word of the Day
July 31, 2025
Liquidity
The state of having assets that can be easily converted to cash; in economics, the availability of liquid assets to a market or company, enabling smooth transactions and economic activity.
From Latin 'liquidus' meaning fluid or flowing, derived from 'liquere' meaning to be fluid. First used in English in the 1610s to describe the quality of being liquid, with the financial meaning of easily convertible assets emerging in the early 20th century.
Usage Examples
- The Federal Reserve claimed quantitative easing would provide needed liquidity to the economy during the 2008 crisis.
- Excess liquidity in the money supply leads directly to dollar devaluation and inflation.
- Community banks must maintain sufficient liquidity to meet customer withdrawal demands while supporting local businesses.
From the Show
The concept of liquidity dominated Jay Davidson’s July 31st analysis of Federal Reserve policy, as he explained how excessive money supply injected to provide economic liquidity instead devalued every existing dollar.