The Corrections*

Or Minsky Moments when the music in musical chairs stops.

Liquidity, bubbles/ponzis/chain letters, and money by Nick Rowe

I might as well join in the fun. Along with Steve Williamson, Noah Smith, Karl Smith, Paul Krugman, David Glasner, and Steve again. [Update: and Brad DeLong and JP Koning. And David Andolfatto.] 

Some assets are more liquid than others (they have lower transactions costs of buying and selling). More liquid assets will have a lower desired rate of return than less liquid assets (that means people will be willing to own them even if they expect to earn a lower rate of return than less liquid assets).

Money (the good that is used as a medium of exchange) will be more liquid than other assets. (If some other asset were more liquid than money, people would switch to using that other asset as a medium of exchange instead of the existing money, and that other asset would become the new money).

I wonder if anyone wrote that the environment and climate change is a bubble in that it is unsustainable.

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*If anyone doesn't know, this was the title of a Jonathan Franzen novel.