Political economy

In the sense of liquidating barness of fixed assets

In the political economy, more exactly in the the quality of a Wirtschaftsobjekts is regarded to convert its active ones into money. Depending upon the ease of a transformation of a plant property in money, one speaks of different liquidating barness. It is to be e.g. noted that also liquidation costs can result. In the long run this view reflects the above mentioned economical with the different degrees of the liquidity, whereby now however all active one, thus also on a long-term basis bound financial assets is judged.

Thus for example a property possesses a relatively high stability of value, however the costs of its transformation are relatively high into liquid means. To consider is with it also that the depreciation on invested values are the larger, the more specific the investment is. For instance if a steel kiln must be sold, which was built before five years for 20 millions, because the steel plant is closed, because due to changed basic conditions the steel production is no longer profitable, then the furnace highest has still another scrap value, whereby this by the abort costs can be still exceeded. An old beautiful factory building would be if necessary less specific, as also an alternative use would be possible. It could be converted e.g. in LOFT, i.e. opened for living purposes.

From it the also economical relevant statement results that the value from tangible assets is usually substantially higher to continuation values than to smashing values. During an assessment of company value there are therefore here two different evaluation beginnings.

Liquidity in the sense of free capital traffic

The meaning of this view of liquidity becomes clear with the Argentina crisis: If many humans maintain high liquidity in the form of central bank money or daily inserts with credit institutes, which can be transferred fast into other currencies, then the free liquidity balance of the business banks is high. These can use thereby to a large extent uninfluenced by the central bank their domestic economic credit creation clearance or transfer the liquidity into a strange currency, which harms the national currency with free Konvertierbarkeit. Therefore the central bank and/or the legislator will be endeavored to limit the Konvertierbarkeit of the currency to a large extent in order to reduce the liquidity to the normal measure and to keep thus the external value of the currency as stable as possible.

Liquidity in the sense of the money supply

Macro-economically liquidity designates the existing money supply, whereby M1, M2 or M3 can be meant. The money supply is affected by the economic situation in particular the Geldumlaufgeschwingkeit and the monetary policy of the central bank. (Parameter L: Liquidity in the IS-LM-model)

In the sense of liquidity of a market

Market liquidity designates the possibility in a market for certain market goods or capital contracts a buyer or a salesman to find at any time, without affecting the market price substantially.

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