Central Banks, Liquidity and the Banking Crisis

Of the maxims of orthodox finance none, surely, is more anti-social than the fetish of liquidity, the doctrine that it is a positive virtue on the part of investment institutions to concentrate their resources upon the holding of 'liquid' securities. It forgets that there is no such thing as liquidity of investment for the community as a whole … Capital markets provide liquidity to make investments which are 'fixed' for the community more 'liquid' for the individual.