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Are you suggesting that goods that retain value are intrinsically illiquid? Certainly, liquidity is not important for investment targets, but I don't think that

by sesqu 15y ago

Are you suggesting that goods that retain value are intrinsically illiquid? Certainly, liquidity is not important for investment targets, but I don't think that relationship necessarily goes the other way. Yes, currency is used (where available) for transfer of value because it is highly liquid, but I would not say that liquidity alone disqualifies a potential good from consideration as value storage. Quite to the contrary. And since currency circulates rather than being reformed as tissue paper at the end of every transfer, it effectively stores a constant amount of value until such a time as it is retired.

tptacek 15y ago
You are using these words but putting them together in an order I don't understand. Liquidity isn't important for investments? "Quite the contrary" that liquidity doesn't "disqualify" a good as a store of value? Are you saying suitability as a store of value varies inversely with liquidity? Do you park your money in antiques and artwork? Currency "stores a constant amount of value"? It doesn't inflate and deflate?
- sesqu 15y ago
  Okay. I'm a poor communicator, so let's see if I can explain those better. No, liquidity isn't important for investments. Liquidity is important for trade, and investment is not trade. It's perfectly acceptable for the transfer of long-term investments to take minutes, days, even months. msbarnett suggested that currency is liquid partly because it cannot store value. I asserted that value stores do not need to be liquid, but it's a nice property for them to have. This is not strictly contrary to non-storing implying liquidity, so that was poor wording. By currency storing a constant amount of value, I was referring to the fact that the money base is a concrete amount. It comes into existence in exchange for some value, and represents a debt equal to that value. Money is, in very real terms, a store of that predetermined value (convolved with the plausibility of collecting that debt), same as any debt marker.

by sesqu 15y ago

tptacek 15y ago

You are using these words but putting them together in an order I don't understand. Liquidity isn't important for investments? "Quite the contrary" that liquidity doesn't "disqualify" a good as a store of value? Are you saying suitability as a store of value varies inversely with liquidity? Do you park your money in antiques and artwork? Currency "stores a constant amount of value"? It doesn't inflate and deflate?

sesqu 15y ago
Okay. I'm a poor communicator, so let's see if I can explain those better. No, liquidity isn't important for investments. Liquidity is important for trade, and investment is not trade. It's perfectly acceptable for the transfer of long-term investments to take minutes, days, even months. msbarnett suggested that currency is liquid partly because it cannot store value. I asserted that value stores do not need to be liquid, but it's a nice property for them to have. This is not strictly contrary to non-storing implying liquidity, so that was poor wording. By currency storing a constant amount of value, I was referring to the fact that the money base is a concrete amount. It comes into existence in exchange for some value, and represents a debt equal to that value. Money is, in very real terms, a store of that predetermined value (convolved with the plausibility of collecting that debt), same as any debt marker.