The Liquidity Puzzle
We increasingly hear that “the world is awash with liquidity,” and that this justifies expecting asset prices to continue rising. But there is little agreement ab out what such liquidity means, and even less reason to believe that it will sustain further increases in asset prices?
We increasingly hear that “the world is awash with liquidity,” and that this justifies expecting asset prices to continue rising. But what does such liquidity mean, and is there really reason to expect that it will sustain further increases in stock and real estate prices?