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Liquid and Liquidity


Some thoughts on an evolving theory of history and sovereignty.

1) Human existence depends on the right amount of water. Ideally, not too much would fall from the skies, and not too little -- humans prefer the temperate condition between drowning and desertification. 

2) Even in temperate zones, though, the right amount of rain, water from God's hand, cannot be relied upon - so aqueducts, irrigation, dams, water storage, and other risk management exercises regarding water become a necessary force.  There develops an authority for this situation,  large and powerful enough to maintain wide horizons both geographical and chronological.

3) We may for convenience call this water management institution The State or sovereign and we may for simple pragmatic reasons consider it a legitimate institution, though taxes (gasp!) and some degree of central planning are necessary. 

4) Here we start developing the metaphor. In the commercial world, the ease or difficulty of turning assets into cash is known as their "liquidity". Cash itself is perfectly liquid, by definition. It already IS itself so there is zero difficulty in cashing out the cash! Real estate or auction-worthy works of art are very illiquid. It takes work and time to make the conversion. 

5) The metaphor is of great vintage and shows up everywhere. Cash is "pouring in" to a desired investment. It is "drying up," alas, in another. Accountants portray the "cash flow" both in and out. Investors "pool" their resources.  

6) Some degree of central banking is publicly valuable in much the same way as aqueducts, dams, and water management are publicly valuable.  The crucial neither-too-much-nor-too-little of liquid and liquidity is at stake.  

7) This is why Hamilton is a Broadway star. 

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