Michael Howell, CEO of CrossBorder Capital, an investment advisory firm, and author of the book, “Capital Wars: The Rise Of Global Liquidity,” returns to The Julia La Roche for episode 161 to discuss the global liquidity cycle and its impact on the economy. 

He explains that liquidity is a key driver of asset prices and that the current liquidity cycle is pushing asset prices higher. Howell argues that the focus on interest rates and policy rates is misplaced, and that the long-term rate and liquidity are more important factors. He also highlights the importance of liquidity in the refinancing of debt and warns of the risks of a liquidity shortage. Howell suggests that investors should consider assets like gold, cryptocurrencies, and solid companies on Wall Street as hedges against monetary inflation.

Links: 

Website: http://www.crossbordercapital.com/

Twitter: https://twitter.com/crossbordercap

Substack: https://capitalwars.substack.com/

Book: https://www.amazon.com/Capital-Wars-Rise-Global-Liquidity/dp/3030392902

Takeaways

• Liquidity is a key driver of asset prices and the current liquidity cycle is pushing asset prices higher.
• The focus on interest rates and policy rates is misplaced; the long-term rate and liquidity are more important factors.
• A shortage of liquidity can lead to banking and refinancing crises.
• Investors should consider assets like gold, cryptocurrencies, and solid companies on Wall Street as hedges against monetary inflation.

Timestamps: 

00:00 Introduction 

1:38 Macro view + liquidity cycle 

3:07 Interest rates 

6:10 What really matters is the integrity of the US Treasury market 

07:47 Hedging Against Monetary Inflation

9:16 Gold

11:56 US public debt 

15:15 Monetizing the debt 

18:06 Gold is the pole star in the financial system

20:40 US dollar

26:29 Inverted yield curve

31:37 Conclusion and parting thoughts