The Godfather of Liquidity: Monetary Inflation Is Here, GOLD Rally I Michael Howell
Summary
Market Outlook: The podcast discusses the current state of an "everything bubble" where all asset classes, including gold, silver, stocks, bonds, and the dollar, are experiencing significant price increases due to rising liquidity and monetary inflation.
Monetary Inflation: Michael Howell emphasizes that the current economic environment is characterized by monetary inflation, where increased liquidity is driving asset price inflation rather than traditional high street inflation.
Gold and Precious Metals: The discussion highlights the significant rise in gold prices, driven by central bank policies, geopolitical factors, and increased demand for monetary inflation hedges like gold and silver.
China's Economic Strategy: China's role in the global economy is examined, particularly its efforts to devalue the yuan against real assets like gold and its impact on global gold prices.
Debt and Liquidity Dynamics: The podcast explores the relationship between debt and liquidity, emphasizing the importance of liquidity in refinancing debt and the potential for financial tensions if liquidity contracts.
Investment Opportunities: Howell suggests that investors should focus on real assets and monetary inflation hedges due to the ongoing shift from a financial asset boom to a real asset boom.
Future Gold Prices: Projections for gold prices are discussed, with expectations of significant increases in the coming decades as governments continue to devalue their currencies.
US and China Monetary Policies: The podcast examines the monetary policies of the US and China, highlighting the shift towards Treasury QE in the US and China's liquidity injections, both of which support real asset markets.
Transcript
We are in the middle of an everything bubble, everything rally. You choose the definition, you choose the term, but everything is going up as we speak. Gold over $4,000. Silver over $51. The S&P 500 as we record up 1.2% in the futures market. The dollar is doing better. The Dixie at over 99 points. And the bonds bond yields are dropping as well. What is going on in the world? What is happening? I've invited the godfather of liquidity onto the program. His name is Michael How. He's the brain behind Crossber Capital and I'm excited to welcome him back in a few short seconds. But before I switch over to my guest, hit that like and subscribe button. It helps us out tremendously and we much much appreciate it. Now, Michael, the godfather of liquidity, it's great to welcome you back. It's good to see you again. Well, hi Kai. It's great to be here and exciting times. Lots going on and lots of peaks occurring. Absolutely. The question is like where are we in this cycle? Why are we in the like what I I actually don't even know how to ask the question, Michael. What is happening? Um maybe we'll start at the top and then we'll work our way down. Uh let's start there. Okay. Well, I think the first thing to say is that um liquidity uh has been uh rising strongly as we know pretty much since the low point in October of 2022. Um it's in a strong uptrend, but it's also seeing a sharp cyclical rise. And I think one's got to understand liquidity by differentiating uh the cycle from the trend. The trend is going uh very strongly and that trend is with us uh well over the medium term. I mean we're in an era that I describe as monetary inflation where basically the only way to get out of the huge debt that we've got in the world economy is to monetize it. And that basically means creating lots of liquidity. The trend is definitively going up. But on top of that, we're seeing a cycle and that cycle is a cycle which is uh driven by central bank policy among other things. Uh it's in uh related to the real economy. It's related to the speed of debt refinancing etc. And that may well be coming closer to a peak. So I think you've got to uh take these two things separately. The trend is unambiguously strong and rising. But on top of the trend there is a cycle. And at the moment the trend is going up. the cycle is going up, but be ready for some cyclical turn, some inflection, you know, over the next 6 to 12 months. And that's really what we're we're trying to anticipate. Yeah. Well, we'll we'll get to that part um in in in a second because we'll look at some charts and you brought us a presentation that we'll go through here in a second as well. But are you concerned or I don't want to use the word confused because you obviously know what you're talking about, but maybe I'm a bit confused because everything is going up right now. All the asset classes, I mentioned it in the intro. It doesn't matter if it's stocks, bonds, the dollar, the currencies, gold, silver. Why is that? Why is liquidity flooding all the markets, all the asset classes? Because because pure and simple, it's a monetary inflation. There's a lot of liquidity being created. And the vent is financial assets uh or the first event is financial assets. And that's why everything is rising. We're in an everything bubble. Uh and we've been in that period for some time, but it's now accelerating. people are starting to realize that they're losing out. Uh there is a fear of missing out going on for sure. Uh but basically everybody needs to protect their wealth. Uh it's not that we've got high street inflation, certainly not yet, but we've got monetary inflation and the first uh dimension of monetary inflation is really reflected in asset price inflation and that's pretty much what we've got. So if you're printing money, um this is where it's going. It's going into financial markets and uh and other assets. Plain plain as that. It's straightforward. Maybe if you phrase it as financial markets, it makes sense. But it used to be not not too long ago, like 6 months ago. Maybe only the S&P 500 went up. Everything else sort of moved sideways. Gold only started moving in March really. Um or the market the mining market started moving in March. Like why is it everything now? The money used to be very selective. Now it's everything. Like what has changed there? Why is it not as selective anymore? Yeah, because I think that what what people are beginning to realize is that uh this is not just a cyclical change, it's a trend change. And you know, if you look at for example the slides I I sent you, if you look at the first slide, what you can see there is a chart which basically looks at gold uh gold bullion in in US dollar terms against real interest rates. Now traditionally uh everyone has understood the fact that the gold price the orange line there has been related inversely to real interest rates. So the black line is US TIPS uh Treasury inflation protected security yields inverted and up until that period that we've circled in early 2022 uh there was a very neat relationship where whenever real interest rates went up in other words the black line on the chart goes down uh the gold price fell and whenever interest rates uh came down real interest rates came down so the black line going up then you'd expect the gold price to move upwards. What you saw very clearly in that period that we identify as the break is that real interest rates started to go up but the gold price really soared and the point is that that break which some people ascribe to the Ukrainian invasion I think it's a lot lot more than that that's the mark I think was when you started to see central banks and government become a lot more proflegate uh and running very uh uh imprudent monetary policies there was a lot more monetization this was a period in particular where I describe yelomics came on where you basically saw the treasury issuing lots and lots of treasury bills in other words funding the deficit through the short end of the market uh that is reckless in monetary terms and I think investors worldwide started to realize what was going on now the associated Ukraine invasion didn't help them the situation uh where Russian assets being sequestrated uh basically persuaded a lot of governments to say look what we've got to do here is to but uh uh shifting more and more towards assets which are uh goldbacked and that's exactly what we've been uh been seeing. So uh effectively uh there's a restriction in supply to the free to the free world if you like or to free markets the private sector which is the orange line uh shooting up uh on that basis and then on top of that you've got monetary uh a monetary explosion as liquidity has been created which has pushed the orange line up even faster. So, it's a combination of increased demand uh as that liquidity gets pushed in combined with a restriction in supply as central banks start to hoover up uh more free supply. Is it fair to lump gold and silver uh in particular into into the same asset classes, the S&P 500, as the bond market, even the dollar right now? Is is it fair to lump it together or is are those separate asset classes and we should should look at them from a different point of view perhaps because different factors at play perhaps? Well, I think you've got to put the bond market to one side because I think that is that is different dynamics. But I think if you look at the other factors, uh if you look at gold, you look at silver, you look at crypto from a demand point of view, it is exactly the same story and that is just that's responding to monetary inflation. So all these mon traditional monetary inflation hedges are basically going up. Uh and you might extend that although I think the equation has changed a tad here. uh for prime residential real estate. That's another monetary inflation hedge. But generally the prime hedges which you would say are gold um and probably large cap equities um they're really benefiting significantly. Uh and silver is catching up. Silver's clearly got industrial uses too, but uh you know just note the fact that silver uh platinum, palladium, gold, they're all moving significantly in an upwards direction. When when I look at this chart, it feels like there was a massive lag though between gold moving and all the factors that we've discussed. Um why is it now like so parabolic? Like why does it feel like it's such a violent move while instead it could have just gone up slowly and steadily ever since 2000 uh 2022 as you mentioned. It feels like just the last few months ever since pretty much March gold is on a tear. Before it was almost negligible that move. Well, I I would say that what you're seeing is that, you know, you you're seeing a cyclical move in liquidity. I mean, that's what I've been I've been arguing uh for the last three years, but it's now it's it's accelerating because we're coming towards the top of the cycle. And there's a a great sort of FOMO, a fear of missing out by investors who realize that gold has gone up and uh they need some sort of monetary inflation hedge. they realize what's going on more and more uh across governments and they're seeing the you know the stark fact that we're not just necessarily in a high street inflation. I think you need to make this distinction. It's not necessarily high street inflation but it is monetary inflation. So it's the devaluation of paper money and that is being purposeful and it's deliberate and it's occurring really across the west and you start to look at the broken finances in a lot of countries you start to realize that this is actually a real real threat uh to investors worldwide. So they're scrambling on this bandwagon. So I think that that's going on. Now I think if you add to that and you say well okay you know is this purely geopolitics? Is it the fact that uh uh Russian assets were sequestrated and central banks uh outside of the west uh scrambling for gold? I think it's more than that because if you talk to scrap metal dealers, what they tell you is that normally in a big move like this for gold and precious metals, they would start to see new supply being given to them. In other words, people are trading in their gold uh and swapping it because prices are high. But that's just not happening. So what you're getting is uh a real supply shortage coming on uh given the demand that's out there and I think these are significant changes. Now that's not to say that uh you know markets go up in straight lines because they don't but I think one's got to start thinking about uh you know the difference between the cycle and the trend and if you look at um uh maybe a a slide further on from the one that you just had we can see you know how this starts to evolve. Now, maybe we skip this next one because this is a US deficit. But look at this one. This is a really interesting one. Now, this data, I'm going to have to explain what's going on here. But what you've got is the orange line, which is basically showing what I call the structural deficit in the US. That structural deficit uh consists of effectively four things. It consists of Medicare spending. Uh it consists of social security. It consists of interest payments on the debt. and it consists of defense spending. Now, these numbers come from the Congressional Budget Office. So, it's a sort of it's a bipartisan but semiofficial uh source in the US goes right up to 2050. The only difference that I've made in that in their calculations is I've assumed that defense spending in the US hits the NATO target of 5% of GDP. So, that's the only difference. Otherwise, it's the same figures. The other thing that you've got to take into account in the CBO projections is they never uh project a recession. So these figures are likely to be conservative because the budget deficit blows out in recessions. We know that this is showing you how much that budget deficit that structural budget deficit goes up. Okay, so this is excluding discretionary spending items. It's the underlying it's the core of the budget. That is an unbelievable increase. And what you can see alongside is the is the broken line, the black broken line which is effectively looking at debt to GDP, the consequences for debt to GDP. That skyrockets up to 250% of GDP uh by 2050. Now these are eyewatering numbers. Okay, this means that you've got a real problem in terms of financing the deficit. Now does it mean that the deficit won't be funded? No way. Because governments always find a way to fund. They either do it through debt issuance at the longer end, forcing interest rates up, or what they do is they print money. Now, spoiler alert is what's going on right now is they're issuing at the front end. They're doing a lot of bill issuance and shortdated debt issuance, which the banks hoover up because they love that stuff. And that is pure monetization of the deficit. Now, what does that mean? It means that basically monetary inflation hedges go up medium-term. If you go to the next chart, what we've done here is to basically say, well, okay, let's look at that that rise in debt to GDP that is being caused by this structural deficit and let's say okay, let's hold the debt constant in gold terms. Okay, that stock of debt. What would the gold price need to be? Because you can't create gold. You've only got a you've got a constant stock by definition. What happens if you start to see that uh that the gold price going up to match that increase in debt and that exponential curve there which you can read off pretty much tells you what's going to happen and what that is saying is you know you start to look through these numbers you're looking at skyhigh levels for the gold price going forward I mean easily 10,000 $15,000 per ounce in the 2030s and then you get right up to 25,000 or uh by 2050. I mean these are eye watering numbers but they seem unrealistic. But hey, listen to this story. In year 2000 uh what was US federal government debt? Uh it was about uh you know it was a figure which is about a tenth of where we are today. So you've got 28 trillion of debt today. Uh that's gone up 10 times since year 2000. Okay. In 25 years. How much has the S&P gone up in that time? answer less than five times. How much has gold the gold price gone up? 13 times. Now what that's telling us is that gold matches or more than matches the increase in federal government debt. But it is not just about the federal government. This is about Western governments. It's about all governments. In fact, everybody needs to devalue their debt. And there are big debt burdens out there. Now what I'd like to do is to shift on to the other side of this story which no one really talks about and that is what's happening to China. So I'm going to ask you to flip on in the presentation Kai and go to some slides right towards the end. Uh we can get back to the middle bit but that's looking at the cycle and I'm going to go right towards the end which is looking at China and uh maybe a couple more a few more but we're we're getting towards that point. Um next one. That's it. this one. Now, this is looking at the debt to GDP ratio of Japan shown there in black and China shown there in orange. Now, the point that we make is that it's not debt to GDP that really matters so much when it comes to refinancing debt. It's debt to liquidity because in other words, debt has to be rolled over and you need liquidity to do the role. debt to GDP doesn't really, you know, tell us very much in that regard. Debt to liquidity does. You need liquidity to roll the debt over. Now, Japan's problem was that it had this huge bubble in debt and it had refinancing problems because at the same time as debt was going up, it was tightening liquidity. vis the very strong yen exchange rate and it was trying to if you like uh you know go into some sort of purgatory after the uh debt the uh the asset bubble in the 1980s. So Japan basically led its debt to liquidity ratio sore. That created huge economic problems and what they've been doing for the last 10 years uh you know under initially abonomics but you know continuing that theme they've tried to devalue the debt by printing money and letting the yen be trashed and that black line has basically started to go down and arguably it's got to go down lower to lower levels. Okay. If you look at the orange line, that is the equivalent China uh Chinese debt to liquidity ratio. It's about 10 to 15 years behind what we saw in Japan. So, what you've got to expect is the same thing going on that the Chinese are trying to equally print money and they're trying to uh devalue uh the yuan exchange rate. Now if you look at the next slide, what it shows there um is PBOC, that's the People's Bank of China's liquidity injections. And just this is a six-month change, but just look at what happened at the beginning of of 2025. There was a huge increase in Chinese liquidity injections. Now, evidence what's happened to the Shanghai stock market, it's soared. evidence what's happened to the Chinese bond markets. Yields have started to rise significantly and what you're seeing is this blowoff. Equally, what you're seeing is the Chinese yuan has begun to devalue very sharply. And if you look at the next slide, what you can see um hopefully is the Chinese exchange rate. Now, what I have not done here is to look at the yuan against the US dollar. What I've looked at is the yuan against gold because this is what the Chinese are focused on. They think they they need to devalue their paper unit, the yuan, against real assets. Gold is a real asset. So what's going on here is that in my view, China is ultimately driving the gold price. It's not just the Americans, it's not just the West, it's not just bad fiscal economics across advanced economies, it's also what's happening in China. And China's a big economy with a huge footprint and it matters hugely not least because they are the big buyers of physical gold and the Shanghai exchange really dominates in that regard and I would say if you want to know who's setting the gold price it's China and China is monetizing. Now why is it doing it right now? I think we can make conjectures, but my view is that what China is basically realizing is that stable coin in the US are a whopping great threat to the integrity of the Chinese financial system and hence the Chinese Communist Party. And what they need to do is to somehow stabilize the system. Why are stable coins so important uh as a threat? Simply because if you're a Chinese exporter, where are you going to hold your wealth? Okay. Are you going to hold it in a western banking system where it can be sequestrated? No. Are you going to hold it domestically in uh in a Chinese central government digital currency where they can take it away if you don't behave? No. Why not put it in stable coin? It's the obvious thing to do. So, I think what the Chinese are trying to do here is two things. One is to devalue debt uh in their financial economy. In other words, to reconstitute and to uh if you like strengthen make more robust the Chinese financial system. And secondly, what they're trying to do is to put gold behind that financial system and in some form doesn't necessarily mean going to a full gold standard, but it may mean that gold forms some part of the yuan. So this is the dynamic that I think is really important to understand over the medium term. You want these monetary inflation hedges because governments are cheating wholesale. Lot lots of brilliant information in there. I just want to share something real quick before I forget it, Michael. Um, and that's what something that's happened also late last week. BHP bulletin shifts uh to REMI iron or settlement with China cuz the Chinese said, "Well, if we buy your iron ore, we're going to pay you at least 30% in remi." Um, that's been big news here in the mining community and overall as well. What do you make of that, Michael? Well, I think this is just another step down the road that I was describing. I mean, this is trying to get the Chinese yuan as a trading currency, and that's going to occur more and more the more that it is backed uh by um, you know, gold or or other precious metals. Uh, you you've got that, you know, underlying uh, value there in the currency. uh it's not purely a paper unit. Now the the next slide I think is one just to maybe to pause on which is saying this is an index of Chinese liquidity injections which is the orange line. the two black lines, one is including energy and the other excludes energy, but it shows industrial commodity prices. And that's saying if China is going through with this full-scale monetization and that's what the dotted line is trying to project, then you're looking at stronger commodity markets generally and that is where you've got to start looking. I think the world is shifting from um a financially a financial asset boom towards a real asset boom. And I think China is part of that. And I think stable coin and what I've labeled as Treasury QE in the US is also part of that whole equation. My head is spinning, Michael. A lot lot really really good content in there because I got a couple follow-up questions. Of course, a can you be a bit more granular on what that means? Like a Chinese back or sorry, a goldbacked yuan or how what could that look like? We've been trying to make sense of this for the last couple of years. Do you have any inkling of what that could be like? what that could look what it could be. I think I think it's hard to conjecture exactly what they what they're thinking of, but I think that you know the more that um I think you can maybe go down two roads. You can think about it in two in two terms. One is to say that if China is accumulating gold against the yuan um either formally or informally as some sort of backing, it's going to make the yuan a much more attractive currency uh to hold and maybe settle in. So I think that's that's one thought. The full scale thought is to say uh well okay why don't they go onto a gold standard full gold standard. I think that's impractical and I'm not saying that's going to be bullish for the gold price going forward because clearly if they're fixing the gold price uh and they're targeting it u that is a rather different thing but I think the you know the process of traveling from A to B if A is where we are now and B is a full sale gold standard they simply couldn't do it at the current exchange rate they'd have to let the paper yuan devalue dramatically uh first and if the paper yuan devalued, then all paper units worldwide, I think, would tend to follow that. So, you'd be looking at a massive monetary inflation going on before we hit a full gold standard. Now, I'm skeptical about whether we'd actually do a full gold standard, but I think what we could do is do some sort of halfway house or some uh some fudge in the middle, but I still think the fact is that China is building up this gold pool u as backing. And if you're a commodity uh you know commodity supplier to China uh and you're supplying iron ore or you're supplying oil for example uh and you're getting yuan which are semibacked by gold that may give you some comfort uh particularly if you've got the ability to exchange that into gold uh through uh through some settlement mechanism which I believe the Chinese are already thinking creating. Let's hypothetically speaking, Michael, if if China were to back the yuan with with gold, wouldn't that automatically make it the world next world reserve currency? Because who would own who who in their mind would own dollars if there's something goldbacked available based on all the discussions we've had on this channel with all the guests before believing that fiat is dying and the dollar is just a worthless piece of paper. Um, wouldn't that automatically create a new world reserve currency? Uh, well, I suppose it's a factor. You're right. It would I mean the the the question or the thing that would argue against that is if America coerces uh allies or other countries into holding dollar assets uh or somehow it tweaks the system whereby it encourages uh a wider pick up of dollars and I think stable coin as I indicated may be that may be that vent it's you know as I go back to the example if you're a if you're a Chinese exporter u you know if you can't hold gold or you can't move gold out of the country which is clearly the case. Uh maybe stable coin um is one way to do that. Um so that that may you know perhaps this is a race to get one or other currency system embedded and it may be may well be that the west ends up with uh a financial system which is backed not by treasuries directly as it was but it's backed by treasuries indirectly via the conduit of stablecoin whereas the Chinese uh side of the world is actually u a monetary system that's backed by gold. Michael, coming back to the uh the debt versus liquidity slide or or discussion here because I'm quite curious what does that look like for the US and uh I can add your slide back here on the screen. I'm just curious like what does that look like for the US in comparison um oh if we go if we go right back uh in the presentation be there's a a version there for all advanced economies and the US is the uh is the dominant player there. So you can pretty much read that. It does go back the other way. Go back. Oh, the other. Got you. There we go. No, no, bit further back. I I'll tell you when. Bit further back. Here. No. Next one. That's it. So that's that's the debt liquidity ratio for all advanced economies. But you could read that more or less for the US because um uh that's obviously the largest economy. uh the only other big one would be uh would be Japan in there. Uh and we saw what Japan looked like. So this is dominated by the US. Now if you look at that chart, the point about the chart is to say what's really key in terms of financial stability is maintaining a stable debt to liquidity ratio which is what we uh are looking at here. The dotted line is a long run average. The data goes back to 1980. Um and what it says is that very broadly you need something like uh uh 2:1 in terms of the ratio of debt to liquidity. Uh in other words, that's what you need to roll over the debt. And that assumes you've got something like a five-year um average rollover or average maturity of debt. So the point here being is who is going to do the role? You need this liquidity base to do the role. Now if you don't get the role, in other words, if there's not enough liquidity in the system, you've got a financial crisis. And if you look at the annotations that I put on the chart, what that basically shows is when you get crisis historically, that's when the ratio is high. If you go to the other extreme, when you get very low ratios, you get asset bubbles because liquidity is not needed for debt refinancing. It's there in the financial system and it basically goes into financial assets. U and what we just had is the everything bubble. Now, what you're seeing is that orange line is starting to go northwards again. U and that is the that's obviously a worry going forward. Why is that? Because a lot of debt in the COVID crisis was termed out because interest rates were zero. It was termed out to the back end of this decade and that's now coming up to to be repaid. And the other is that the liquidity growth uh is beginning to roll over. Now those are the two stories that are relevant in the near term. And if you look at the next slide that basically shows uh that particular process. So this is the annual debt role and the red areas are the projections of the annual increase in the debt role over the next um four years. So you're looking at you know sizable amounts of new debt that need sorry the old debt that needs to be refinanced in that period. Now if you don't get the role what you start to get are financial tensions and if you look at the next slide what this is basically saying is that those financial tensions will be expressed in a widening uh in spreads in the repo markets. Excuse me. And what you see here is the sofa less fed fund spread. And when you start to see big spikes what you're looking at is tensions. And those tensions can be expressed in a financial crisis. But you can see that's the problem. Now, why is that going on? Well, if you look at the next couple of slides, I think it's the maybe the one either the next or there. So, the next one on um uh what that's showing is the reason you've got this is that Fed liquidity is starting to slow down. And this is slated uh in the data and it's basically because of a lot of technical stuff, but the Fed is continuing stated QE policy, sorry, QT policy and hidden QE things like the Treasury General account, the reverse repo program have now fizzled out as sources of liquidity. And so what you've got is the potential for maybe up to uh a $300 billion drop in the size of the Fed in the active part of the Fed balance sheet liquidity injections uh which is about a 10% fall and if you look at what happened last time that that occurred it wasn't good news and you can already see I think in the following slide that trade fails have be have begun to pick up. Now, this is looking at the net result of that Fed liquidity squeeze, which is falling bank reserves in the US. And those falling bank reserves are starting to see an increase in trade fails, which is the black line inverted on the right side. And what is that what is that really telling us? It's saying that the primary dealers at the heart of the fixed income market, the treasury market, are basically seeing failures in their transactions. In other words, there's a failure to deliver failure to either deliver securities or come up with cash required and so you get uh a trade written off and that's uh the size of trade fails. It's spiking because liquidity is starting to contract. Now why is this going on? My view is because of what the what the administration is doing is it's swapping Federal Reserve QE for Treasury QE. Now that's a subtle twist, but it means taking money away from Wall Street and giving it to Main Street. And in other words, the hose, the Fed's hose, which was sort of, you know, being waved around everywhere and soaking every asset class is now being focused on particular industries, be it technology, be it defense in the US real economy by the federal government spending. And what they're doing is they're using stablecoin and effectively bill issuance to actually fund that program. So that's the shift. So what I would argue is that actually what we may be seeing in the next six to 12 months is evidence of a stronger not a weaker US economy uh or maybe a stronger not a weaker world economy in fact because the Chinese are easing at the same time and that would clearly be good for real assets. So this is the side of the fence you want to be positioned on from a cyclical point of view. You want real assets. From a long-term standpoint, you want monetary inflation hedges, which are real assets. 2 plus two, no, what is it? 1 plus 1 equals three in that equation, which is perfect. And both the Americans and the Chinese are helping us. Fantastic. Michael, unfortunately, we're already at the end of our a lot of time here sadly because I got a ton of follow-up questions um just just in regard to like even the government shutdown. Maybe maybe as a very last question, Michael, just with a short answer. Is the US government shutdown having any impact on the liquidity? Not not particularly. I mean, not as far as we see. I mean, if anything, it's it's a negative because it's basically causing the Treasury General account to rebuild, but it's not noticeable yet. Okay. So, we're not worried about not issuing any short-term bills or any refunding issues or anything in the US as of yet. Not at the moment. If it continues, maybe. Fantastic. Awesome. Michael, what a wonderful conversation. Always enjoyed chatting with you. You're obs like you're definitely the godfather of liquidity. So really appreciate you coming on. Um where can we send our audience to follow more of your work Michael? Well the I think the best way is to look at Capital Wars which is on Substack. Um there we give you know regular two three times a week commentary and provide a lot of liquidity data. Fantastic. Awesome. Michael, thank you so much for coming on. It's always great to speak with you. We have to do this again very soon. Looking forward maybe year- end guidance. Um maybe we'll do that at the end of December. we'll bring you back and uh we'll chat what 2026 would might look like. So really looking forward to this. Everybody else, thank you so much for tuning in. What an insightful discussion here with Michael How of Crossber Capital. Make sure to go check out his Substack Capital Wars, but also follow him over on X. Amazing insights on a daily basis. Also, he he dissects the the crypto crisis that we've seen last Friday as well. Uh lots of topics that are need to be discussed from a very different point of view than we usually chat here on Soore Financially. If you enjoyed this conversation, hit that like and subscribe button. Helps us out tremendously. And of course, leave a comment. Helps us out as well. Thank you so much for tuning in. We'll be back with lots more. Take care out there. 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The Godfather of Liquidity: Monetary Inflation Is Here, GOLD Rally I Michael Howell
Summary
Transcript
We are in the middle of an everything bubble, everything rally. You choose the definition, you choose the term, but everything is going up as we speak. Gold over $4,000. Silver over $51. The S&P 500 as we record up 1.2% in the futures market. The dollar is doing better. The Dixie at over 99 points. And the bonds bond yields are dropping as well. What is going on in the world? What is happening? I've invited the godfather of liquidity onto the program. His name is Michael How. He's the brain behind Crossber Capital and I'm excited to welcome him back in a few short seconds. But before I switch over to my guest, hit that like and subscribe button. It helps us out tremendously and we much much appreciate it. Now, Michael, the godfather of liquidity, it's great to welcome you back. It's good to see you again. Well, hi Kai. It's great to be here and exciting times. Lots going on and lots of peaks occurring. Absolutely. The question is like where are we in this cycle? Why are we in the like what I I actually don't even know how to ask the question, Michael. What is happening? Um maybe we'll start at the top and then we'll work our way down. Uh let's start there. Okay. Well, I think the first thing to say is that um liquidity uh has been uh rising strongly as we know pretty much since the low point in October of 2022. Um it's in a strong uptrend, but it's also seeing a sharp cyclical rise. And I think one's got to understand liquidity by differentiating uh the cycle from the trend. The trend is going uh very strongly and that trend is with us uh well over the medium term. I mean we're in an era that I describe as monetary inflation where basically the only way to get out of the huge debt that we've got in the world economy is to monetize it. And that basically means creating lots of liquidity. The trend is definitively going up. But on top of that, we're seeing a cycle and that cycle is a cycle which is uh driven by central bank policy among other things. Uh it's in uh related to the real economy. It's related to the speed of debt refinancing etc. And that may well be coming closer to a peak. So I think you've got to uh take these two things separately. The trend is unambiguously strong and rising. But on top of the trend there is a cycle. And at the moment the trend is going up. the cycle is going up, but be ready for some cyclical turn, some inflection, you know, over the next 6 to 12 months. And that's really what we're we're trying to anticipate. Yeah. Well, we'll we'll get to that part um in in in a second because we'll look at some charts and you brought us a presentation that we'll go through here in a second as well. But are you concerned or I don't want to use the word confused because you obviously know what you're talking about, but maybe I'm a bit confused because everything is going up right now. All the asset classes, I mentioned it in the intro. It doesn't matter if it's stocks, bonds, the dollar, the currencies, gold, silver. Why is that? Why is liquidity flooding all the markets, all the asset classes? Because because pure and simple, it's a monetary inflation. There's a lot of liquidity being created. And the vent is financial assets uh or the first event is financial assets. And that's why everything is rising. We're in an everything bubble. Uh and we've been in that period for some time, but it's now accelerating. people are starting to realize that they're losing out. Uh there is a fear of missing out going on for sure. Uh but basically everybody needs to protect their wealth. Uh it's not that we've got high street inflation, certainly not yet, but we've got monetary inflation and the first uh dimension of monetary inflation is really reflected in asset price inflation and that's pretty much what we've got. So if you're printing money, um this is where it's going. It's going into financial markets and uh and other assets. Plain plain as that. It's straightforward. Maybe if you phrase it as financial markets, it makes sense. But it used to be not not too long ago, like 6 months ago. Maybe only the S&P 500 went up. Everything else sort of moved sideways. Gold only started moving in March really. Um or the market the mining market started moving in March. Like why is it everything now? The money used to be very selective. Now it's everything. Like what has changed there? Why is it not as selective anymore? Yeah, because I think that what what people are beginning to realize is that uh this is not just a cyclical change, it's a trend change. And you know, if you look at for example the slides I I sent you, if you look at the first slide, what you can see there is a chart which basically looks at gold uh gold bullion in in US dollar terms against real interest rates. Now traditionally uh everyone has understood the fact that the gold price the orange line there has been related inversely to real interest rates. So the black line is US TIPS uh Treasury inflation protected security yields inverted and up until that period that we've circled in early 2022 uh there was a very neat relationship where whenever real interest rates went up in other words the black line on the chart goes down uh the gold price fell and whenever interest rates uh came down real interest rates came down so the black line going up then you'd expect the gold price to move upwards. What you saw very clearly in that period that we identify as the break is that real interest rates started to go up but the gold price really soared and the point is that that break which some people ascribe to the Ukrainian invasion I think it's a lot lot more than that that's the mark I think was when you started to see central banks and government become a lot more proflegate uh and running very uh uh imprudent monetary policies there was a lot more monetization this was a period in particular where I describe yelomics came on where you basically saw the treasury issuing lots and lots of treasury bills in other words funding the deficit through the short end of the market uh that is reckless in monetary terms and I think investors worldwide started to realize what was going on now the associated Ukraine invasion didn't help them the situation uh where Russian assets being sequestrated uh basically persuaded a lot of governments to say look what we've got to do here is to but uh uh shifting more and more towards assets which are uh goldbacked and that's exactly what we've been uh been seeing. So uh effectively uh there's a restriction in supply to the free to the free world if you like or to free markets the private sector which is the orange line uh shooting up uh on that basis and then on top of that you've got monetary uh a monetary explosion as liquidity has been created which has pushed the orange line up even faster. So, it's a combination of increased demand uh as that liquidity gets pushed in combined with a restriction in supply as central banks start to hoover up uh more free supply. Is it fair to lump gold and silver uh in particular into into the same asset classes, the S&P 500, as the bond market, even the dollar right now? Is is it fair to lump it together or is are those separate asset classes and we should should look at them from a different point of view perhaps because different factors at play perhaps? Well, I think you've got to put the bond market to one side because I think that is that is different dynamics. But I think if you look at the other factors, uh if you look at gold, you look at silver, you look at crypto from a demand point of view, it is exactly the same story and that is just that's responding to monetary inflation. So all these mon traditional monetary inflation hedges are basically going up. Uh and you might extend that although I think the equation has changed a tad here. uh for prime residential real estate. That's another monetary inflation hedge. But generally the prime hedges which you would say are gold um and probably large cap equities um they're really benefiting significantly. Uh and silver is catching up. Silver's clearly got industrial uses too, but uh you know just note the fact that silver uh platinum, palladium, gold, they're all moving significantly in an upwards direction. When when I look at this chart, it feels like there was a massive lag though between gold moving and all the factors that we've discussed. Um why is it now like so parabolic? Like why does it feel like it's such a violent move while instead it could have just gone up slowly and steadily ever since 2000 uh 2022 as you mentioned. It feels like just the last few months ever since pretty much March gold is on a tear. Before it was almost negligible that move. Well, I I would say that what you're seeing is that, you know, you you're seeing a cyclical move in liquidity. I mean, that's what I've been I've been arguing uh for the last three years, but it's now it's it's accelerating because we're coming towards the top of the cycle. And there's a a great sort of FOMO, a fear of missing out by investors who realize that gold has gone up and uh they need some sort of monetary inflation hedge. they realize what's going on more and more uh across governments and they're seeing the you know the stark fact that we're not just necessarily in a high street inflation. I think you need to make this distinction. It's not necessarily high street inflation but it is monetary inflation. So it's the devaluation of paper money and that is being purposeful and it's deliberate and it's occurring really across the west and you start to look at the broken finances in a lot of countries you start to realize that this is actually a real real threat uh to investors worldwide. So they're scrambling on this bandwagon. So I think that that's going on. Now I think if you add to that and you say well okay you know is this purely geopolitics? Is it the fact that uh uh Russian assets were sequestrated and central banks uh outside of the west uh scrambling for gold? I think it's more than that because if you talk to scrap metal dealers, what they tell you is that normally in a big move like this for gold and precious metals, they would start to see new supply being given to them. In other words, people are trading in their gold uh and swapping it because prices are high. But that's just not happening. So what you're getting is uh a real supply shortage coming on uh given the demand that's out there and I think these are significant changes. Now that's not to say that uh you know markets go up in straight lines because they don't but I think one's got to start thinking about uh you know the difference between the cycle and the trend and if you look at um uh maybe a a slide further on from the one that you just had we can see you know how this starts to evolve. Now, maybe we skip this next one because this is a US deficit. But look at this one. This is a really interesting one. Now, this data, I'm going to have to explain what's going on here. But what you've got is the orange line, which is basically showing what I call the structural deficit in the US. That structural deficit uh consists of effectively four things. It consists of Medicare spending. Uh it consists of social security. It consists of interest payments on the debt. and it consists of defense spending. Now, these numbers come from the Congressional Budget Office. So, it's a sort of it's a bipartisan but semiofficial uh source in the US goes right up to 2050. The only difference that I've made in that in their calculations is I've assumed that defense spending in the US hits the NATO target of 5% of GDP. So, that's the only difference. Otherwise, it's the same figures. The other thing that you've got to take into account in the CBO projections is they never uh project a recession. So these figures are likely to be conservative because the budget deficit blows out in recessions. We know that this is showing you how much that budget deficit that structural budget deficit goes up. Okay, so this is excluding discretionary spending items. It's the underlying it's the core of the budget. That is an unbelievable increase. And what you can see alongside is the is the broken line, the black broken line which is effectively looking at debt to GDP, the consequences for debt to GDP. That skyrockets up to 250% of GDP uh by 2050. Now these are eyewatering numbers. Okay, this means that you've got a real problem in terms of financing the deficit. Now does it mean that the deficit won't be funded? No way. Because governments always find a way to fund. They either do it through debt issuance at the longer end, forcing interest rates up, or what they do is they print money. Now, spoiler alert is what's going on right now is they're issuing at the front end. They're doing a lot of bill issuance and shortdated debt issuance, which the banks hoover up because they love that stuff. And that is pure monetization of the deficit. Now, what does that mean? It means that basically monetary inflation hedges go up medium-term. If you go to the next chart, what we've done here is to basically say, well, okay, let's look at that that rise in debt to GDP that is being caused by this structural deficit and let's say okay, let's hold the debt constant in gold terms. Okay, that stock of debt. What would the gold price need to be? Because you can't create gold. You've only got a you've got a constant stock by definition. What happens if you start to see that uh that the gold price going up to match that increase in debt and that exponential curve there which you can read off pretty much tells you what's going to happen and what that is saying is you know you start to look through these numbers you're looking at skyhigh levels for the gold price going forward I mean easily 10,000 $15,000 per ounce in the 2030s and then you get right up to 25,000 or uh by 2050. I mean these are eye watering numbers but they seem unrealistic. But hey, listen to this story. In year 2000 uh what was US federal government debt? Uh it was about uh you know it was a figure which is about a tenth of where we are today. So you've got 28 trillion of debt today. Uh that's gone up 10 times since year 2000. Okay. In 25 years. How much has the S&P gone up in that time? answer less than five times. How much has gold the gold price gone up? 13 times. Now what that's telling us is that gold matches or more than matches the increase in federal government debt. But it is not just about the federal government. This is about Western governments. It's about all governments. In fact, everybody needs to devalue their debt. And there are big debt burdens out there. Now what I'd like to do is to shift on to the other side of this story which no one really talks about and that is what's happening to China. So I'm going to ask you to flip on in the presentation Kai and go to some slides right towards the end. Uh we can get back to the middle bit but that's looking at the cycle and I'm going to go right towards the end which is looking at China and uh maybe a couple more a few more but we're we're getting towards that point. Um next one. That's it. this one. Now, this is looking at the debt to GDP ratio of Japan shown there in black and China shown there in orange. Now, the point that we make is that it's not debt to GDP that really matters so much when it comes to refinancing debt. It's debt to liquidity because in other words, debt has to be rolled over and you need liquidity to do the role. debt to GDP doesn't really, you know, tell us very much in that regard. Debt to liquidity does. You need liquidity to roll the debt over. Now, Japan's problem was that it had this huge bubble in debt and it had refinancing problems because at the same time as debt was going up, it was tightening liquidity. vis the very strong yen exchange rate and it was trying to if you like uh you know go into some sort of purgatory after the uh debt the uh the asset bubble in the 1980s. So Japan basically led its debt to liquidity ratio sore. That created huge economic problems and what they've been doing for the last 10 years uh you know under initially abonomics but you know continuing that theme they've tried to devalue the debt by printing money and letting the yen be trashed and that black line has basically started to go down and arguably it's got to go down lower to lower levels. Okay. If you look at the orange line, that is the equivalent China uh Chinese debt to liquidity ratio. It's about 10 to 15 years behind what we saw in Japan. So, what you've got to expect is the same thing going on that the Chinese are trying to equally print money and they're trying to uh devalue uh the yuan exchange rate. Now if you look at the next slide, what it shows there um is PBOC, that's the People's Bank of China's liquidity injections. And just this is a six-month change, but just look at what happened at the beginning of of 2025. There was a huge increase in Chinese liquidity injections. Now, evidence what's happened to the Shanghai stock market, it's soared. evidence what's happened to the Chinese bond markets. Yields have started to rise significantly and what you're seeing is this blowoff. Equally, what you're seeing is the Chinese yuan has begun to devalue very sharply. And if you look at the next slide, what you can see um hopefully is the Chinese exchange rate. Now, what I have not done here is to look at the yuan against the US dollar. What I've looked at is the yuan against gold because this is what the Chinese are focused on. They think they they need to devalue their paper unit, the yuan, against real assets. Gold is a real asset. So what's going on here is that in my view, China is ultimately driving the gold price. It's not just the Americans, it's not just the West, it's not just bad fiscal economics across advanced economies, it's also what's happening in China. And China's a big economy with a huge footprint and it matters hugely not least because they are the big buyers of physical gold and the Shanghai exchange really dominates in that regard and I would say if you want to know who's setting the gold price it's China and China is monetizing. Now why is it doing it right now? I think we can make conjectures, but my view is that what China is basically realizing is that stable coin in the US are a whopping great threat to the integrity of the Chinese financial system and hence the Chinese Communist Party. And what they need to do is to somehow stabilize the system. Why are stable coins so important uh as a threat? Simply because if you're a Chinese exporter, where are you going to hold your wealth? Okay. Are you going to hold it in a western banking system where it can be sequestrated? No. Are you going to hold it domestically in uh in a Chinese central government digital currency where they can take it away if you don't behave? No. Why not put it in stable coin? It's the obvious thing to do. So, I think what the Chinese are trying to do here is two things. One is to devalue debt uh in their financial economy. In other words, to reconstitute and to uh if you like strengthen make more robust the Chinese financial system. And secondly, what they're trying to do is to put gold behind that financial system and in some form doesn't necessarily mean going to a full gold standard, but it may mean that gold forms some part of the yuan. So this is the dynamic that I think is really important to understand over the medium term. You want these monetary inflation hedges because governments are cheating wholesale. Lot lots of brilliant information in there. I just want to share something real quick before I forget it, Michael. Um, and that's what something that's happened also late last week. BHP bulletin shifts uh to REMI iron or settlement with China cuz the Chinese said, "Well, if we buy your iron ore, we're going to pay you at least 30% in remi." Um, that's been big news here in the mining community and overall as well. What do you make of that, Michael? Well, I think this is just another step down the road that I was describing. I mean, this is trying to get the Chinese yuan as a trading currency, and that's going to occur more and more the more that it is backed uh by um, you know, gold or or other precious metals. Uh, you you've got that, you know, underlying uh, value there in the currency. uh it's not purely a paper unit. Now the the next slide I think is one just to maybe to pause on which is saying this is an index of Chinese liquidity injections which is the orange line. the two black lines, one is including energy and the other excludes energy, but it shows industrial commodity prices. And that's saying if China is going through with this full-scale monetization and that's what the dotted line is trying to project, then you're looking at stronger commodity markets generally and that is where you've got to start looking. I think the world is shifting from um a financially a financial asset boom towards a real asset boom. And I think China is part of that. And I think stable coin and what I've labeled as Treasury QE in the US is also part of that whole equation. My head is spinning, Michael. A lot lot really really good content in there because I got a couple follow-up questions. Of course, a can you be a bit more granular on what that means? Like a Chinese back or sorry, a goldbacked yuan or how what could that look like? We've been trying to make sense of this for the last couple of years. Do you have any inkling of what that could be like? what that could look what it could be. I think I think it's hard to conjecture exactly what they what they're thinking of, but I think that you know the more that um I think you can maybe go down two roads. You can think about it in two in two terms. One is to say that if China is accumulating gold against the yuan um either formally or informally as some sort of backing, it's going to make the yuan a much more attractive currency uh to hold and maybe settle in. So I think that's that's one thought. The full scale thought is to say uh well okay why don't they go onto a gold standard full gold standard. I think that's impractical and I'm not saying that's going to be bullish for the gold price going forward because clearly if they're fixing the gold price uh and they're targeting it u that is a rather different thing but I think the you know the process of traveling from A to B if A is where we are now and B is a full sale gold standard they simply couldn't do it at the current exchange rate they'd have to let the paper yuan devalue dramatically uh first and if the paper yuan devalued, then all paper units worldwide, I think, would tend to follow that. So, you'd be looking at a massive monetary inflation going on before we hit a full gold standard. Now, I'm skeptical about whether we'd actually do a full gold standard, but I think what we could do is do some sort of halfway house or some uh some fudge in the middle, but I still think the fact is that China is building up this gold pool u as backing. And if you're a commodity uh you know commodity supplier to China uh and you're supplying iron ore or you're supplying oil for example uh and you're getting yuan which are semibacked by gold that may give you some comfort uh particularly if you've got the ability to exchange that into gold uh through uh through some settlement mechanism which I believe the Chinese are already thinking creating. Let's hypothetically speaking, Michael, if if China were to back the yuan with with gold, wouldn't that automatically make it the world next world reserve currency? Because who would own who who in their mind would own dollars if there's something goldbacked available based on all the discussions we've had on this channel with all the guests before believing that fiat is dying and the dollar is just a worthless piece of paper. Um, wouldn't that automatically create a new world reserve currency? Uh, well, I suppose it's a factor. You're right. It would I mean the the the question or the thing that would argue against that is if America coerces uh allies or other countries into holding dollar assets uh or somehow it tweaks the system whereby it encourages uh a wider pick up of dollars and I think stable coin as I indicated may be that may be that vent it's you know as I go back to the example if you're a if you're a Chinese exporter u you know if you can't hold gold or you can't move gold out of the country which is clearly the case. Uh maybe stable coin um is one way to do that. Um so that that may you know perhaps this is a race to get one or other currency system embedded and it may be may well be that the west ends up with uh a financial system which is backed not by treasuries directly as it was but it's backed by treasuries indirectly via the conduit of stablecoin whereas the Chinese uh side of the world is actually u a monetary system that's backed by gold. Michael, coming back to the uh the debt versus liquidity slide or or discussion here because I'm quite curious what does that look like for the US and uh I can add your slide back here on the screen. I'm just curious like what does that look like for the US in comparison um oh if we go if we go right back uh in the presentation be there's a a version there for all advanced economies and the US is the uh is the dominant player there. So you can pretty much read that. It does go back the other way. Go back. Oh, the other. Got you. There we go. No, no, bit further back. I I'll tell you when. Bit further back. Here. No. Next one. That's it. So that's that's the debt liquidity ratio for all advanced economies. But you could read that more or less for the US because um uh that's obviously the largest economy. uh the only other big one would be uh would be Japan in there. Uh and we saw what Japan looked like. So this is dominated by the US. Now if you look at that chart, the point about the chart is to say what's really key in terms of financial stability is maintaining a stable debt to liquidity ratio which is what we uh are looking at here. The dotted line is a long run average. The data goes back to 1980. Um and what it says is that very broadly you need something like uh uh 2:1 in terms of the ratio of debt to liquidity. Uh in other words, that's what you need to roll over the debt. And that assumes you've got something like a five-year um average rollover or average maturity of debt. So the point here being is who is going to do the role? You need this liquidity base to do the role. Now if you don't get the role, in other words, if there's not enough liquidity in the system, you've got a financial crisis. And if you look at the annotations that I put on the chart, what that basically shows is when you get crisis historically, that's when the ratio is high. If you go to the other extreme, when you get very low ratios, you get asset bubbles because liquidity is not needed for debt refinancing. It's there in the financial system and it basically goes into financial assets. U and what we just had is the everything bubble. Now, what you're seeing is that orange line is starting to go northwards again. U and that is the that's obviously a worry going forward. Why is that? Because a lot of debt in the COVID crisis was termed out because interest rates were zero. It was termed out to the back end of this decade and that's now coming up to to be repaid. And the other is that the liquidity growth uh is beginning to roll over. Now those are the two stories that are relevant in the near term. And if you look at the next slide that basically shows uh that particular process. So this is the annual debt role and the red areas are the projections of the annual increase in the debt role over the next um four years. So you're looking at you know sizable amounts of new debt that need sorry the old debt that needs to be refinanced in that period. Now if you don't get the role what you start to get are financial tensions and if you look at the next slide what this is basically saying is that those financial tensions will be expressed in a widening uh in spreads in the repo markets. Excuse me. And what you see here is the sofa less fed fund spread. And when you start to see big spikes what you're looking at is tensions. And those tensions can be expressed in a financial crisis. But you can see that's the problem. Now, why is that going on? Well, if you look at the next couple of slides, I think it's the maybe the one either the next or there. So, the next one on um uh what that's showing is the reason you've got this is that Fed liquidity is starting to slow down. And this is slated uh in the data and it's basically because of a lot of technical stuff, but the Fed is continuing stated QE policy, sorry, QT policy and hidden QE things like the Treasury General account, the reverse repo program have now fizzled out as sources of liquidity. And so what you've got is the potential for maybe up to uh a $300 billion drop in the size of the Fed in the active part of the Fed balance sheet liquidity injections uh which is about a 10% fall and if you look at what happened last time that that occurred it wasn't good news and you can already see I think in the following slide that trade fails have be have begun to pick up. Now, this is looking at the net result of that Fed liquidity squeeze, which is falling bank reserves in the US. And those falling bank reserves are starting to see an increase in trade fails, which is the black line inverted on the right side. And what is that what is that really telling us? It's saying that the primary dealers at the heart of the fixed income market, the treasury market, are basically seeing failures in their transactions. In other words, there's a failure to deliver failure to either deliver securities or come up with cash required and so you get uh a trade written off and that's uh the size of trade fails. It's spiking because liquidity is starting to contract. Now why is this going on? My view is because of what the what the administration is doing is it's swapping Federal Reserve QE for Treasury QE. Now that's a subtle twist, but it means taking money away from Wall Street and giving it to Main Street. And in other words, the hose, the Fed's hose, which was sort of, you know, being waved around everywhere and soaking every asset class is now being focused on particular industries, be it technology, be it defense in the US real economy by the federal government spending. And what they're doing is they're using stablecoin and effectively bill issuance to actually fund that program. So that's the shift. So what I would argue is that actually what we may be seeing in the next six to 12 months is evidence of a stronger not a weaker US economy uh or maybe a stronger not a weaker world economy in fact because the Chinese are easing at the same time and that would clearly be good for real assets. So this is the side of the fence you want to be positioned on from a cyclical point of view. You want real assets. From a long-term standpoint, you want monetary inflation hedges, which are real assets. 2 plus two, no, what is it? 1 plus 1 equals three in that equation, which is perfect. And both the Americans and the Chinese are helping us. Fantastic. Michael, unfortunately, we're already at the end of our a lot of time here sadly because I got a ton of follow-up questions um just just in regard to like even the government shutdown. Maybe maybe as a very last question, Michael, just with a short answer. Is the US government shutdown having any impact on the liquidity? Not not particularly. I mean, not as far as we see. I mean, if anything, it's it's a negative because it's basically causing the Treasury General account to rebuild, but it's not noticeable yet. Okay. So, we're not worried about not issuing any short-term bills or any refunding issues or anything in the US as of yet. Not at the moment. If it continues, maybe. Fantastic. Awesome. Michael, what a wonderful conversation. Always enjoyed chatting with you. You're obs like you're definitely the godfather of liquidity. So really appreciate you coming on. Um where can we send our audience to follow more of your work Michael? Well the I think the best way is to look at Capital Wars which is on Substack. Um there we give you know regular two three times a week commentary and provide a lot of liquidity data. Fantastic. Awesome. Michael, thank you so much for coming on. It's always great to speak with you. We have to do this again very soon. Looking forward maybe year- end guidance. Um maybe we'll do that at the end of December. we'll bring you back and uh we'll chat what 2026 would might look like. So really looking forward to this. Everybody else, thank you so much for tuning in. What an insightful discussion here with Michael How of Crossber Capital. Make sure to go check out his Substack Capital Wars, but also follow him over on X. Amazing insights on a daily basis. Also, he he dissects the the crypto crisis that we've seen last Friday as well. Uh lots of topics that are need to be discussed from a very different point of view than we usually chat here on Soore Financially. If you enjoyed this conversation, hit that like and subscribe button. Helps us out tremendously. And of course, leave a comment. Helps us out as well. Thank you so much for tuning in. We'll be back with lots more. Take care out there. 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