The first of two papers in which a systematic scheme for renormalizing the reduced density matrices of an initially inhomogeneous quantum fluid is introduced. In this paper, an expression for the perturbation Liouville expansion of the n-particle reduced density matrix is formulated in the momentum representation using the grand ensemble. A generating function for the reduced density matrices is introduced and the theory is formulated in such a way that the binary Liouville expansion may easily be introduced in place of the perturbation expansion.