17 Pages Posted: 25 Aug 2009 Last revised: 27 Mar 2022
Date Written: August 2009
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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