[imtringued]

According to neoclassical economists this is impossible since you can easily and instantaneously scale infrastructure up and down continuously at no cost and the future is known so demand can be predicted reliably.

The problem with neoclassical economics is that it doesn't concern itself with the physical counterpart of liquidity. It is assumed that the physical world is just as liquid as the monetary world.

The "liquidity mismatch" between money and physical capital must be bridged through overprovisioning on the physical side. If you want the option to choose among n different products, but only choose m products, then the n - m unsold products must be priced into the m bought products. If you can repurpose the unsold products, then you make a profit or you can lower costs for the buyer of the m products.

I would even go as far as to say that the production of liquidity is probably the driving force of the economy, because it means we don't have to do complicated central planning and instead use simple regression models.

[jopsen]

> I would even go as far as to say that the production of liquidity is probably the driving force of the economy.

Isn't that all what high frequency traders would say? :)

Perhaps there is some limit at which additional liquidity doesn't offer much value?

[marcosdumay]

I think you completely misunderstood the GP.

There isn't much there about stocks markets.