Why One Bank Isn’t Buying The ‘Liquidity Scare’ Bear Case

The relative importance of liquidity versus fundamentals as determinants of risk assets is everywhere and always a "me or your lyin' eyes" kind of dynamic. It's difficult to establish mathematically, but certainly not conceptually. Harley Bassman captured it well: "Clever quants will say a statistically significant mathematical correlation doesn't exist between money creation and financial asset prices, but who are you going to believe?" The implication is clear enough. The problem isn't so mu