Liquidity Constraint

You’re rich. You own an island in the Caribbean, a mansion in Paris, and a timeshare on the International Space Station. But you find yourself standing in front of an ice cream stand unable to purchase a dreamsicle, because you don’t have any cash in your pocket.

You are suffering from a liquidity constraint.

The term refers to the inability to purchase something due to a lack of cash. It can apply to microeconomic situations (you and your dreamsicle) and macroeconomic circumstances (an economy without enough money supply to keep the system running at optimal levels).