0:10

For we get going, He's the bit

0:12

where I remind you that nothing with

0:14

disgust should be considered as investment advice

0:16

is. conversation is for informational and hopefully

0:19

entertainment purposes only. So while we hope

0:21

you find it both informative and entertaining,

0:23

please do your own research or speak

0:25

to a financial advisor before putting a

0:27

dime of your money into these crazy

0:29

markets. You

0:36

better listen to a very special preview

0:38

edition of the Grant Weems Podcast featuring

0:40

my very special guest, Michael How of

0:43

Cross Border Capital. the topic under discussion

0:45

in this August episode, ah, I surround

0:47

the quality and the options facing the

0:50

treasury and the fate and what Michael

0:52

had to say is incredibly important for

0:54

anybody investing Monkeys Nice. You'll hear the

0:56

case he lays out for understanding the

0:59

quality is really, really powerful. Every upside

1:01

of the Grant Weems pocket including the

1:03

in game suit dripping happier. The narrative

1:06

game as we can do shifts happen

1:08

and of course Chaos Theory is available

1:10

to Copper and Silver T subscribers at

1:12

my website.dash for hims.com company subscribers get

1:14

access to the podcast while members of

1:17

The Silver to get by The Focus

1:19

and my monthly newsletter. Things that make

1:21

you go to so should you even

1:23

the shot and you want more high

1:25

quality content like it and please make

1:27

relevant to got that williams.com and join

1:29

Eric Santee community tonight And with that

1:32

I want to show. Michael,

1:42

Welcome back to the Pocus my friends! So good to see

1:44

it's been awhile. Got greater De? Gaulle? yeah

1:46

it's been allowed to go to be. In

1:49

the World carries on regardless whether you and

1:51

I said hit chat about it or not

1:53

the sandwich to were because liquidity such an

1:55

important part of everything that's going on at.

1:57

But I want to start with it a.

2:00

tweet of yours or a response of yours I saw.

2:02

I think it was this morning, I saw it. Maybe you wrote it yesterday

2:04

and I just woke up to it this morning. But

2:07

someone was talking about liquidity and where

2:09

it all started from. And you made,

2:11

they were talking about Silicon Valley Bank

2:13

and Signature Bank last year. And

2:16

you jumped in and said, no, it

2:18

began before that. So I want to take your thunder,

2:20

but it struck me that you were absolutely right. And

2:22

I wanted to talk about this with you. So

2:25

where did this liquidity swing start and why?

2:27

And let's trace it through from there if

2:29

we can. The first thing to say is

2:31

that money moves markets. And certainly

2:33

since 2008, central banks have

2:35

been the main source of liquidity or money

2:38

in global markets. What

2:41

is the remit of central banks? Some

2:44

might say it's employment, some might say it's

2:46

inflation. The reality is that the remit is

2:48

to preserve the integrity of the sovereign debt

2:50

market. And that is beyond anything

2:52

they're trying to do. If there are any wobbles

2:55

in sovereign debt markets, you look at the equity

2:57

with its central bank and policymakers come in and

2:59

try and support things. Now what

3:01

was the debacle or what was the event,

3:03

the signal event that changed our thinking? It

3:05

was the British guilt crisis in September of

3:08

2022 when a budget of the incoming new

3:12

Prime Minister Liz Crust was basically thrown out by

3:15

the markets. The guilt market

3:17

sold off aggressively. And

3:19

that was a workup call to Treasury ministers

3:22

and central bankers worldwide that these markets

3:24

are no longer robust. You

3:28

need support. You can't just take these markets

3:30

for granted. Bond the gilantes, as

3:32

they used to be called, taking it back

3:35

in the 80s or whatever, have come back

3:37

again. As governments can't

3:39

get away with these things, they've got to nurture

3:41

these markets very carefully. And

3:43

what we've seen pretty much since then is

3:46

global liquidity picking up. Central banks have moved

3:48

more and more to the easing tag. As

3:51

we speak now, one third of global

3:53

central banks or world central banks are

3:56

easing their liquidity policies. The

3:58

US has been, you know, the US is doing. The

4:00

Us moving slowly, loneliness on the

4:02

numbers is doing it. and despite

4:04

the rhetoric that comes out of

4:06

the Federal Reserve about our add

4:09

on the presidency see that goes

4:11

on monetary policy are also saw

4:13

thousand proof that because advocacy and

4:15

on reserves are both rising and

4:17

others as not a three point

4:19

six trillion there's been a very

4:22

significant jump even last twelve months

4:24

on deliver the market some of

4:26

his clearly on believing them look

4:28

at the pussy since defenses. Like

4:30

tech stocks or look it up

4:32

look a bit of. A

4:35

barometer of was used as a

4:37

sovereign to my help people understand

4:39

this is such a a fascinating.

4:42

Topic. Is something I think of on

4:44

people get confused about because when we

4:46

talk about. Said. Easing.

4:49

People. Are generally thinking about interest

4:51

rates and and I'm cutting to

4:53

discount right? But when you sometimes

4:55

quality easing liquidity conditions is very

4:58

different mechanism and it's something that

5:00

is. Arcane enough that

5:02

only people that really understand the plumbing.

5:05

Understand. How this easy was had

5:07

to help people understand the difference between

5:09

cutting rights and easing financial conditions. Okay

5:11

when I think the first in save

5:13

voice their free for vision with interest

5:15

rates a guess a non is being

5:18

pushed by the sort of economics for

5:20

Tennessee. He basically spent all their time

5:22

worrying about interest rates and that's where

5:24

the centerpiece of most economic tasteless a

5:26

sound of technology to didn't sources and

5:28

of most important thing is he from

5:31

putting money in the past of money.

5:33

His mother was interesting to read. His

5:35

success is as much that you

5:37

gotta look at the slightest interest

5:39

rates for the cost of credits.

5:41

Funny, very different. In a world

5:43

which is dominated by capital spending

5:45

it on the was he got

5:47

less. A young economy, immature economy

5:50

that is capitalizing Oswego topics. Ah

5:52

compliant inside the cost of capital.

5:54

I used the rate of interest

5:56

to be very important. a good.

5:58

But. When on that will be more. Very different

6:00

woven into true economic world. With

6:02

that is paramount. Where is where

6:04

the world economy saddled with three

6:06

hundred and fifty trillion dollars of

6:08

debt and that that has to

6:11

be refinanced. So financial month is

6:13

not, New capital raising mechanisms and

6:15

more. Than. Physically, get

6:17

refinancing mechanisms on. Every

6:19

year, you've got to refinance seventy

6:21

trillion of death. Now if he

6:23

cites a sort of husband example

6:26

of thinking of a hug mortgage,

6:28

Know if you've got home movies

6:30

that you need to roll? Okay,

6:32

ah. To

6:35

the road. Rules which he be liquidity are

6:37

you need to proceed to do the

6:40

role. But the reasons for a Cz

6:42

some of the secondary thing because unless

6:44

you get the role you're homeless the

6:46

corporate that you don't get that role

6:48

dance so otherwise if we cook rice

6:50

and defaults mob. Boss will

6:53

we come up with that? Those qualities

6:55

really the final thoughts and is he

6:57

bought at the role in the debt

6:59

markets you get refinancing from Aziz on

7:02

the site is look back think about

7:04

the last few financial crisis with have

7:06

gone back as a lot for three

7:09

decades civil been refinancing crises I guess

7:11

and that's the reality and these you

7:13

don't forward is with his Suzan Mazur

7:15

death. Sadly markets. We.

7:17

Can get more refinancing crises is

7:19

central banks and or alerts the

7:21

amount of liquidity the system know

7:23

The preoccupation with interest almost goes

7:26

back to sort of things in

7:28

signs are in economics and things

7:30

is why not of the view

7:32

of disease he dismissed the idea

7:34

of each with red interest was

7:36

born. I had the notion that

7:38

our infrastructure pull down to zero

7:40

because then he would see for

7:42

euthanasia of the room to a

7:44

class and other what those people

7:46

up. With. People's a little

7:48

interest and but was an objective

7:50

a so subjective of time. Now

7:52

the problem with an agenda alongside

7:54

that particular way of thinking as

7:57

influence policy makers for the buffets.

7:59

Oh cool. That he gave no the

8:01

holsters in this ridiculous our soul motion which

8:03

is again a fight. Narrative is no such

8:05

thing as all star except in the mind

8:08

of stuff that economists but his all star

8:10

system excuse appointed interest rates down again. Now

8:12

the problem with getting interest rates down is

8:15

what was he doing? Sense of and death

8:17

And but we don't want is lot more

8:19

debt problem top of more debt and that's

8:21

the problem the world economies got and if

8:24

you look that to the history of of

8:26

different economies when the debt to gdp ratio

8:28

starts to sort of playing levels on to

8:31

key in the region of hundred and fifty

8:33

two hundred percent of side with. Britain.

8:36

In the nineteen fifties and sixties,

8:38

it destroys the. Issue:

8:41

Slow. Economic growth but of Britain look

8:43

at Japan. These are great examples of these

8:45

huge debt. Loads of thoughts of the America

8:48

which has been the engine of the world

8:50

economy is getting into that same death trap.

8:52

Yeah it's funny at the beginning of that

8:54

when you said you know we got list

8:56

turning fifty trillion dollars a day and all

8:58

that that needs to be if I paused

9:00

you there and I told one hundred list

9:02

as have finish the sentence. I

9:05

reckon the vast majority of them said repaid. Because.

9:08

Your fc rise refinanced and when you think

9:10

of it sat by it completely changes the

9:12

way think of A or this Could I

9:14

think this idea that as be repaid is

9:16

is completely wrong because no one is them

9:19

as us has never been to repay that

9:21

debt right as and a quarter or that

9:23

I remember is that is exactly right And

9:25

so once you think of this the will

9:28

be live in as a world where. The.

9:30

Ability to refinance is imperative. It helps

9:32

you understand that it isn't the economy

9:34

that's going to dictate policy. It really

9:37

is and we're seeing that now. I

9:39

think with the faith and and how

9:41

they're responding things in and have as

9:43

she said talking while my and acting

9:46

another solace go into before we kind

9:48

of circled back to what you said

9:50

just now. But let's go into the

9:52

fade what they're telling the market they

9:54

doing. And. What they're actually doing and

9:57

why to think that's again another crucial part, the sticks

9:59

or for people on. Then he unearthing Let let

10:01

me also say draw the rest of the.

10:04

Saudi the Federal Reserve, the think the Etti other

10:06

use him as a collective of so she's I

10:08

think one of the things we're seeing berkeley's the

10:10

to what he very much hand in hand the

10:12

moment. I think that would be a surprise willing

10:15

North given the thought. the Janet. Treasury

10:17

Secretary used to be said surface so

10:20

seen as the workings and this and

10:22

I think the and she not only

10:24

the most. Of his political

10:26

pressures second letter members for a

10:28

long long time as is also

10:30

working very closely with Federal Reserve

10:32

is what what is done on

10:34

this puts itself and the types

10:36

of the advances with up to

10:38

deem necessary to monkeys. Now I'm

10:40

I'm of them. All of mine.

10:42

Ah major My finance or whatever

10:44

be a solid brothers as our

10:46

brothers are often. I was there

10:48

in the late eighties to through

10:50

the noises was basically focused almost

10:52

exclusively resistance on flow analysis on

10:55

the sign. For thumbs up as the

10:57

gift of Henry Calvin's who was then

10:59

have research and a lot of writings

11:01

and retail of the time of well

11:03

what do you know rereading because of

11:05

I'm coming back to haunt with a

11:07

lot of his of and all of

11:09

his promises now are basically flow Thumbs

11:11

is important because it's very much different

11:13

to First Economics. For some economics looks

11:15

it uses a funds and always what's

11:17

happening to the consumer of capital spending

11:19

doing litter expos with gotten spending so

11:21

much use the funds. Were.

11:24

Focus on his sources of fun. Song

11:26

was has he death at since into

11:28

the system in the first place and

11:30

a law that sums for liquidity generous

11:33

and on was expensive credit old desensitized

11:35

to it and that's the important thing

11:37

to understand. Now we are in a

11:40

book I read make about five years

11:42

ago capital was I outlined the Lord

11:44

of the Ah. This is a federal

11:47

Chino theory that was created some brothers

11:49

and one of the things like talks

11:51

about them with funding from said liquidity.

11:54

Know the concept of be fun to find.

11:57

A nuisance And fifteen she

11:59

has advocated. is the amount

12:01

of the amount

12:03

about the election creating

12:06

equality in the money market.

12:08

So the kind of amount

12:10

of they can be. The

12:20

full conversation is available to subscribers

12:22

to the copper and silver

12:25

tiers of my website

12:27

grant-williams.com Nothing

12:32

we discussed should be considered as

12:35

investment advice. This conversation is for

12:37

informational and hopefully entertainment purposes only.

12:39

So while we hope you

12:41

find it both informative and entertaining please do

12:44

your own research or speak to a financial

12:46

advisor before putting a dime of your money

12:48

into these crazy markets.