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So anyone with a lot of money laying around knows they need to put it to work, so that it evaporates more slowly than it grows (due to investment returns).
And the best places to put your excess wealth are often constantly changing, so the money moves around following what everyone perceives to be the best places to put it to get the highest return.
This is actually one of the reasons central banks try to keep positive inflation, because it encourages people to put their money to work rather than just keepping it in a savings account providing no value.
When people are putting their money to work, human flourishing is increased. More jobs, more restaurants, more research, more activity, etc.
Does Excess liquidity "move" any different than normal liquidity?
My understanding is that the difference is that excess liquidity is excessive because it it is greater than available positive growth investments to lock it up.
Maybe you are right and the movement from sector to sector is simply herd mentality and trend following, but I would intuitively expect that process to reach equilibrium faster
As an example - consider the sale of an owned house, where the buyer takes out a mortgage. The owner who sold now has cash, and the buyer has a liability (mortgage), meaning he has need for cash in the future. This type of mismatch can create excess liquidity (now, at the sale point), and the cash keeps moving until someone who needs to pay off a loan acquires it (cash gets "destroyed" when paying off asset-backed loans from the bank). In the meantime, that cash can go towards bidding up financial assets (until it finds the marginal need to service debt obligations)
This comment is the best explanation: https://news.ycombinator.com/item?id=34858813
Also this article could be helpful: https://www.philosophicaleconomics.com/2013/08/the-great-rot...
The metaphor is supposed to conjure an image of liquid smashing into something, as the money does when there's too much of it and it all tries to go to the same place.
I think the focus should be on the volume not the motion.
Investment moving from place to place is natural. Too much is disruptive.
