In the first place, if the general view as to what is a safe level of is unchanged, every fall in reduces the market rate relatively to the 'safe' rate and therefore increases the risk of illiquidity; and, in the second place, every fall in reduces the current earnings from illiquidity, which are available as a sort of insurance premium to offset the risk of loss on capital account, by an amount equal to the difference between the squares of the old rate of interest and the new.