A key misconception about US dollar liquidity needs to be corrected: don't just focus on the changes in the Fed's balance sheet figures, as that is only superficial. The true dollar liquidity, in essence, depends on whether financial institutions (especially global systemically important banks) are willing and able to expand their balance sheets under the current risk environment.

In other words, printing money by the Federal Reserve is a necessary condition, but not a sufficient one. The crucial factor is whether financial intermediaries are willing to take on the baton—their risk appetite, financing costs, regulatory constraints—all these factors determine whether liquidity can truly flow into the market. When these institutions tighten their balance sheets, even if the central bank is printing money wildly, the market may fall into a liquidity trap. The reverse is also true.