Bernanke spoke recently of the Fed or the government or the tax payers creating liquidity in markets for assets that have closed down or locked up as prices have tumbled drastically. Another case is the interbank loan market that is drying up. Bernanke is not talking about simply hyping the money supply. That is not the liquidity being referred to. He’s talking about the volume and depth of trading in an asset market. Unfortunately, the Chairman’s knowledge of finance is abysmal. There is no way that the government or the Fed can create liquidity or jump start liquidity in a … Continue reading Can government create liquidity?