Yes this is how money works
Yglesias applauding the money is fiction scam.
Liquidity is a conserved quantity, Yglesias was ill taught by a foul economists. Even the tried and true MMTers still think liquidity is conserved, Yglesias is the last of the hold outs. There is no psychological trick to money, no illusion. Money is an accounting system used to conserve liquidity. The reason we conserve liquidity to to avoid unnecessary trips to the store.
Conservation of liquidity is why deposits track loans. There is no fiction that gets us out of tha trap, we conserve liquidity, but I think I have said that.
Here is a sandboxer:
“We still live in a world where market structures are relatively weak,” Ivascyn said. “Liquidity - transactional liquidity - can deteriorate very quickly.”
Investment officer at PIMCO. Note that he gets the relationship between market structure and liquidity.
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