67

Liquidity is about how easily something can be converted to cash not how much of it is circulating. So dollars (or other plausible currencies) are by definition the most liquid possible asset. There are plenty of relatively illiquid assets whose total value exceeds the amount of physical dollars in circulation. The total value of all real estate in the ...


35

Most "billionaires" have their wealth in companies that they grew into multi-billion dollar entities that they own a significant portion of. If the government then says "you own too much - you must give us 6% of what you own", then they likely don't have enough liquid assets (cash) to pay that bill, so they will be forced to sell shares of that company (or ...


5

The "net" in "net worth" is your worth after subtracting off all debt. So, no, you can't count available unused credit in your net worth — liquid or otherwise.


3

The "illusion" is the assumption that these vicious cycles can't happen, that liquidity is guaranteed by the large number and sophistication of market participants. They are warning people who focus on the current high level of liquidity that it could disappear suddenly if conditions change.


3

This is complementary to @Justin Cave answer to explain why US Treasury bonds are bought by many countries. Cash is a convenient medium of trade for the local economy, but it is a bad trade medium for a large amount of international trade. Just take the $100 billions value of oil example, if an oil export country takes the $100 billions US dollar home, ...


2

Burry's point of view is that passive investing has eliminated price discovery as ETFs must buy all of the stocks in the underlying index. As massive amounts of money flows into ETFs, it also flows into illiquid stocks. He compares this to the inflow into subprime mortgage CDOs leading up to the 2008 GFC where the capital flow was the driving force not ...


1

I like to follow the mantra of "give some, spend some, save some". It helps one decide no matter how much extra there is, or if this is extra being made over time or a lump sum. In your case, you are citing a range of 30K, which could buy a pretty nice new car. So I would give some, and lean towards 10%. This can be spread across several charities or one ...


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