Liquidity is as important to you as water [see photo]. However, unlike water, the presence of economic liquidity in mundane life is much misunderstood by the average punter [including me]. The reason is that economic liquidity is a very complex element in the life of most individuals, groups, companies, communities, etc.
At the individual level economic liquidity comes from the income derived from the sale of labour, ideas, invention, etc. This is what the individual relies upon to provide himself or herself food, shelter, and comfort. But because individuals form tribes, clans, cliques, communities, etc there is always an underlying resentment of any signs of unequal income distribution. He or she has more than me is the cry and so someone must do something about it. This demand for more equality has led to a raft of inventive mechanism used to channel part [large and small] from you to them.
At the company level income is a vague notion because accountants play with it [on paper] in ways that creates a stream of virtual liquidity [Enron] embedded into earnings along with low tax liabilities on tangible cashflow. Therefore economic liquidity in the books of a modern corporate entity can be both real and virtual. Real cashflow is earned income whereas virtual cashflow is an illusion formed by innovative use of investment funds [Bitcoin].
At the communal level economic liquidity is expressed as the flow of taxes into the treasury. When these flows lag behind spending then creative forms of borrowings are used to sustain the status quo even though at this point the government is technically in default or bankrupt. As we all know there are many forms of taxes which are levied on land, labour, capital improvements [houses], roads [tolls], etc. And, in prospect, there are more to come as information is increasingly being treated as an asset which is fluid and thus can be taxed in similar ways to how we treated income in the past. Also the new communal fear of climate change is likely to prompt a bevy of new taxes on energy, human behaviours, household consumption, etc. Clearly we are now locked into a process of redefining our notions of economic liquidity.
As a minimalist I understand that economic liquidity is the essence of life and so I treat it with the respect it deserves. I use it sparingly. I depend upon it to a minimum. I care nothing for the excesses of it that others have. And I do not hold myself responsible or accountable for the fact that many global entities [individuals and coalitions] are far from economic liquidity rich. Finally, collectives are very often poor managers of economic liquidity and therefore tend to be wasteful, inefficient, corrupt, etc.
Richard.
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