Liquidity

When people worry about a glut of liquidity, they are thinking of the first of these concepts. If money is too abundant or too cheap, inflationary pressure may build up or bubbles may appear in financial markets - until central banks tighten policy or market opinion suddenly changes. A slackening of economic activity or a drop in asset prices can leave households, businesses, and financial institutions in trouble if their balance sheets are not liquid enough (the second concept) or if they cannot find a buyer for assets .