As an illustration, when you own a $100,000 debt instrument, you presume that you will be able to exchange it for $100,000 in cash and, in turn, exchange the cash for $100,000 worth of goods and services. However since the ratio of financial assets to money is high, when a large number of people rush to convert their financial assets into money and buy goods and services in bad times, the central bank either has to provide the liquidity that’s needed by printing more money or allow a lot of defaults.
