Sometimes there's a benefit to being a smaller community, but here's an instance where there's a benefit to Reddit being bigger; it's less likely to get held captive by agreeable narratives.
What is "liquidity" any more than "reputation"? Why do banks get loaned short term paper when nobody trusts them? Does the Serious Sam Android App get a bailout while they shore up their credibility? Nobody is buying their product because of a "reputation" problem. Where is their $400bn in short term paper? I'm sure they can get buy on the interest from that while they recover.
Apparently only banks are allowed to loan money that they don't have, and when they lose their reputation, we just loan them short term money until either a) everybody forgets or b) its clear that no banks will be allowed to fail.
I'm not objecting to fractional reserve lending provided we have one simple rule: when the rich people in charge fuck it up so badly then they get wiped out.
TL;DR: basically it is mostly short term paper, and each "loan" is being counted multiple times to get the high number. For instance, suppose I loan you $1, to be repaid tomorrow. Tomorrow you say "OK, I'm ready to pay you back!", and I say "Go ahead and keep it another day!". We do this 200 times. By the logic of the article, I've loaned you $200, even though I only had $1 in play at any given time.