When I hear complaints about less liquidity, remember there is such a thing as too much liquidity.
Interpretation
Excess liquidity can lead to economic problems, just as too little can.
Paul Volcker's quote highlights the importance of balance in the financial system, warning that while liquidity is necessary for economic activity, having too much of it can create risks such as inflation or asset bubbles. This statement serves as a reminder to policymakers and investors that moderation is key to maintaining economic stability.
In practice
In a financial conference discussing economic policies, one might use this quote to emphasize the need for careful regulation.
It is a sobering fact that the prominence of central banks in this century has coincided with a general tendency towards more inflation, not less. [I]f the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks, with currency boards, or even with 'free banking.' The truly unique power of a central bank, after all, is the power to create money, and ultimately the power to create is the power to destroy.
The only thing useful banks have invented in 20 years is the ATM.
What's the subject of life - to get rich? All of those fellows out there getting rich could be dancing around the real subject of life.
I have a saying: There are no brave old people in finance. Because if you're brave, you mostly get destroyed in your 30s and 40s. If you make it to your 50s and 60s and you're still prospering, you have a very good sense of how to avoid problems and when to be conservative or aggressive with your investments.
Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.
Banking is a very treacherous business because you don't realize it is risky until it is too late. It is like calm waters that deliver huge storms.
If you owe $50, you're a delinquent account. If you owe $50,000, you're a small businessmen. If you owe $50 million, you're a corporation. If you owe $50 billion, you're the government.
Credit is a system whereby a person who can not pay gets another person who can not pay to guarantee that he can pay.
A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.
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