18 Pages Posted: 11 Aug 2009 Last revised: 17 May 2010
Date Written: May 12, 2010
When 'confidence' is lost, 'liquidity dries up.' We investigate the meaning of 'confidence' and 'liquidity' in the context of the current financial crisis. The financial crisis is a manifestation of an age-old problem with private money creation, banking panics. We explain this and provide some evidence with respect to the current crisis.
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