Luca, it’s clear you never studied economics in the first place, or if you did you just missed economics 101, or Money & Banking or a number of disciplines were you were teach some fundamentals.



In Nouriel’s piece, liquidity in monetary liquidity, hence money supply. Money supply determines the level of prices (in normal economic conditions, i.e. constant money velocity) and not the other way round.



Amazes me that even after reading the definition of liquidity " The degree to which an asset or security can be bought or sold in the market without affecting the asset's price", you cannot admit you were wrong and try to spin it.



Regarding QE, I understand that you being an Economics illiterate have no clue of what a Minsky interest rate is (BB article was about that) or what a liquidity trap is, but is common knowledge that Central Banks can only change short term interest rates, long term rates are determined by economic conditions.



Regarding your empiric observation that stock markets are high hence risk aversion must be low, well you didn’t think before you wrote that, or while you were writing did you? Because if you are what you say you are and are not completely ignorant about finance, you know that there is a close relation between returns and risk, so if we are living in a world of high returns it means that we are either making risky investments (which is not the case since the betas of the assets haven’t changed much) or that the price of risk has changed.



You see, if you think a little bit about stuff you realize that instead of calling people stupid you can come to the same conclusions once you have a tiny bit of understanding on how things work. Liquidity trap conditions are caused by a fundamental change in the perception and pricing of risk, so it’s normal, in this conditions for low interest rates or bond yelds, and high returns on stocks.





