Jim Grant on liquidity

Liquidity is a psychological construct, perhaps as much as an arithmetic one.  Without a minimum quotient of speculative hope, even objectively liquid markets can malfunction.  It's confidence - in the future, in the dollar, in "the authorities," in the earning power of a business, in something or other - that makes the waters run...  In the dollar world, the fount of liquidity is the Federal Reserve...  Of course, the Fed merely proposes.  It's the "markets" - people changing their minds about price and value and buying and selling, lending and borrowing, accordingly - that dispose.

~ Jim Grant, "Gale-force liquidity," Grant's Interest Rate Observer, February 7, 2020