Matt Levine’s Money Stuff: Worries About Private Liquidity

Liquidity illusions (1)

This is a newsletter about funding models now. We talked yesterday about banks, and how their funding model — raising money from depositors who might want their money back at any time — influences what sorts of assets they should buy. But the same questions — how should I fund the assets I own, and what assets should I own given my funding model? — arise everywhere. Here is a simple story of private markets:

1. There are public markets where anyone can buy stocks and bonds, and where the stocks and bonds trade freely.
2. Therefore, people can and do buy ...