Paul Krugman

@paulkrugman ↗

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Last Checked Oct. 27, 2022

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Mon Oct 10 13:25:17 +0000 2022

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Paul Krugman @paulkrugman

The idea is that people want liquidity — ready access to their wealth if needed — but that productive investment requires tying up a lot of wealth in illiquid assets that can't be quickly converted into cash 3/ — PolitiTweet.org

Posted Oct. 10, 2022

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Paul Krugman @paulkrugman

If you're a normal human being, the paper might not look simple or even comprehensible. But trust me: they wrote down more or less the simplest possible model of what banking does, why it serves a useful purpose, but why it's vulnerable to self-fulfilling panics 2/ — PolitiTweet.org

Posted Oct. 10, 2022

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Paul Krugman @paulkrugman

Banks square this circle by offering people deposits that can be withdrawn at will, but investing most of the funds in illiquid loans to businesses etc. This normally works because not everyone needs cash at the same time 4/ — PolitiTweet.org

Posted Oct. 10, 2022