Liquidity holes & Liquidity black holes

“liquidity holes,” Described by Nassim Taleb in the ’90s. Textbook definition

A liquidity hole or a black hole is a temporary event in the market that suspends the regular mechanics of equilibrium attainment. It is an informational glitch in the mechanism of free markets, one that can cause considerable damage to firms. In practice, it can be seen when prices bring accelerated supply and higher prices accelerated demand.

Okay, that’s a vague description, but let’s try to find an example or figure out what he means and connect the dots.

WHAT EVEN IS LIQUIDITY?

I know what liquidity is, but I assumed that my definition of liquidity is not entirely correct or that the definition is more complex than I thought.

So. before understanding what a liquidity hole is, I wanted to ensure that my definition of liquidity is correct or that there’s more to it.

After some research, I concluded there’s no simple answer to this question, as liquidity can mean different things in different contexts.

However, broadly speaking, liquidity refers to the availability of cash or other assets easily converted into cash.

That can be important for individuals, businesses, or even entire economies.