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What Is the Meaning of Liquid Cash?

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What Is the Meaning of Liquid Cash? Empty What Is the Meaning of Liquid Cash?

Post by Ponee Mon Feb 09, 2015 11:55 am

Okay, to diagnose these two articles. Let me ask you a question?

If you're a cash poor society already. Which means the people have gotten used to there not being enough Dinar to use out on the street, and you have to use USD for most everyday transactions, yet your government has issued a standing order to use the Dinar only in all transactions, (if you can find enough) and then your government is complaining about a huge budget deficit and has not even approved the budget yet. How are they going to increase liquidity?  According to the below, Iraq can only increase liquidity by RV'ing their Dinar because they have no private market as in manufacturing, industry, agriculture
etc.                                                             


The definition of liquidity is this!

DEFINITION of 'Liquidity'

1. The degree to which an asset or security can be bought or sold in the market without affecting the asset's price. Liquidity is characterized by a high level of trading activity. Assets that can be easily bought or sold are known as liquid assets.
2. The ability to convert an asset to cash quickly. Also known as "marketability."
There is no specific liquidity formula; however, liquidity is often calculated by using liquidity ratios.

INVESTOPEDIA EXPLAINS 'Liquidity'

1. It is safer to invest in liquid assets than illiquid ones because it is easier for an investor to get his/her money out of the investment.

2. Examples of assets that are easily converted into cash include blue chip and money market securities.
http://www.investopedia.com/terms/l/liquidity.asp

What Is the Meaning of Liquid Cash?

By Kirk Thomason, eHow Contributor
What Is the Meaning of Liquid Cash?

Cash is a primary asset in business. It is easily exchangeable for other goods and often is the medium most companies require for completing business transactions. A term associated with this medium is liquid cash. Companies and financial institutions use this term to describe the ease with which companies can move cash among transactions.                                                                                                                                    
Defined:  Liquid cash represents the most fluid asset a company can own. These items can include cash, demand deposits, time and savings deposits, and short-term saving accounts easily converted to cash.

Cash Equivalents:  A company also may own items called cash equivalents. These items are not cash but easily can be converted to cash in a short time period. Common cash equivalents include Treasury bonds and money market funds through financial institutions.
Purpose:  Companies retain cash or cash equivalents to pay bills whenever necessary. Rather than keeping copious cash amounts on hand, however, making small short-term investments allows a company to earn additional cash through interest. The money remains liquid while adding benefits to the company.

Reporting:  The balance sheet contains all assets in a company. Cash and cash equivalents are often first in the current asset section. Current assets typically last less than 12 months in a company’s operations. Companies usually will list current assets in order of liquidity, hence the placement of cash and cash equivalents.

BY http://www.easyenglish4u.com/central-bank-related-1

Read more : http://www.ehow.com/info_8246949_meaning-liquid-cash.html

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What Is the Meaning of Liquid Cash? Empty Re: What Is the Meaning of Liquid Cash?

Post by Kevind53 Mon Feb 09, 2015 4:21 pm

As I understand it, all cash is, by definition, liquid. The very definition of liquidity requires that, "The ability to convert an asset to cash quickly." Since it is already cash .... I think that this is probably an incorrect application of the term. However, they do have a strong reserve, 150% as I recall, and that IMO is promising.

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What Is the Meaning of Liquid Cash? Empty Re: What Is the Meaning of Liquid Cash?

Post by FS4Enthusiast Tue Feb 17, 2015 12:35 pm

Article Quote wrote:According to the below, Iraq can only increase liquidity by RV'ing their Dinar because they have no private market as in manufacturing, industry, agriculture
etc.                                                             


Why can't they just print more dinar (or pump some of what they've already printed into circulation, last I checked the CBIs financials they had a decent store of notes that weren't in circulation).

99.9% of the Iraqi articles I've seen that talk about liquidity are referring to one of two things:

1. The government being essentially broke.  The government lacking in liquidity (i.e. cash), which is no surprise due to current oil prices.

2. The banking industry.  Which is a little bit trickier to understand, because liquidity for banks can be both good and bad.  We probably all remember the articles talking about removing 74% (or whatever) of excess liquidity, and all the gurus (erroneously) told everyone this meant they were pulling all the 3 zero notes in.  What it actually meant is that the banks took their excess liquidity and got it out there via investments or loans or whatever so that it wasn't just sitting around gathering dust.

If a bank has zero percent liquidity, they're in big big trouble.  They have zero cash when someone comes in and wants to withdraw their money.

If a bank has 100% liquidity, they're also in big big trouble, because they're paying interest to all their depositors and if they have 100% liquidity it means that all their money is just sitting there doing nothing and not earning any money.  If they're not earning any money, they can't afford to pay the (quite high in Iraq due to instability and mistrust) interest to their depositors.

Every liquidity article I've ever seen for Iraq is either a red herring (like the banks removing excess liquidity, it really had nothing to do with the dinars value), or bad news (like the government having cash flow issues).

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