Liquidity is Coming...! (MOAR COWBELL)

26:11There's more likely to come other sources of liquidity in the US. I'll give you some of my thoughts, but where do you think it might creep up here? Well, I think, OK, if you look at the various elements, I think you've got to differentiate show you what's happening in terms of the Fed balance sheet from the implications of what Treasury issuance is doing. So let me just go down that route. If you look at bill issuance, one of the reasons that bill issuance is important to watch, and extending from that, let's say issuance of short-dated coupons, because it's really rolling in the same mix, they tend to be bought by banks.

26:51The banks like very short-term debt and Treasury bills. OK, now if the banks buy government debt, that is pure monetization. So in other words, in that situation, the Federal Reserve doesn't really have to do very much because in actual fact, the Treasury is kind of doing it for the Fed, if you like. The other thing to say is what about the Fed balance sheet? Because that could actually be a direct monetization rather than a backdoor monetization in the way I just described. That could be a straightforward direct monetization. And what they basically would do there is to expand liquidity, Fed liquidity.

27:27As you rightly say, it could come really in a number of ways. It could come in bailouts, I suppose, if the discount window started to expand. But I think they want to avoid that at all costs. So it's probably going to come through a change in the reverse repo. But I detect that's quite sticky anyway right now. So it's difficult to get that down unless you start to do a lot of bill issuance. I mean, really start to put your foot on the gas pedal. And we're not seeing that yet. So that could be a possibility. It's not really being enacted. But it's the Treasury General account, which I think is the key thing to watch.

28:03Now, what I would argue, and this is sort of going down a slightly different rabbit hole, but let me just play this theme. What you've got is the potential seasonally for about 250 to 300 billion to come out of the TGA over the next three months, because that's what the seasonal numbers say. So you've probably got a fairly significant drop in the TGA and a rise in Fed liquidity naturally because of seasonal effects. I think the other thing that you've got to factor in is that maybe the treasurer would like to get the TGA down for a number of reasons. One may be to stop the orange man getting into the White House, which one would surmise is really the agenda of a lot of Fed and Treasury officials secretly, or maybe even overtly, in fact, but I would say secretly.

28:51So I think they want a better liquidity and economic environment. But the other thing is what's happening to the dollar? And here, I think, you know, lies another puzzle and quite an interesting one. Now, you're familiar, I know, because you platformed it, Greg Johnson's dollar milkshake theory, which I think is a fantastic explanation of really what's going on in the dollar. Now, one of the things that we wrote about a few weeks ago was to say, actually, I've subscribed to this view, but maybe you can do a variant of it, which I called flippantly the bent straw version of the dollar milkshake view.

29:28I saw that, yeah. And the reason that we spoke about that was that what you've got in China right now is a very, very curious situation. It's a paradox. The bigger the Chinese trade surplus, the stronger the US dollar. Now, that's a head-scratching moment because everyone would say, actually, what you'd expect is the opposite. But let's start thinking about this, think this through. Actually, China is still very much, or Chinese trade is still very much dollarized, either directly or indirectly. So the Chinese surplus is, to a very large extent, a dollar surplus. So it's a bit like California, you know, earning a much bigger surplus.

30:06And what would that do to the dollar? It should raise it. Now, I accept the argument people say, well, OK, China is trying to diversify out of dollars and it's trying to re-denominate a lot more trade in yuan. OK, fair enough. Oil is priced in yuan if they're buying from Saudi or UAE. OK, fair enough. But the key question is, are the Saudis or the Emiratis holding those yuan or are they converting them back into dollars? And there's no evidence they're building up yuan holdings. So in actual fact, what's happening is that you've got this still swelling dollar trade surplus from China. So that's basically demand for dollars.

30:48Now, what China's role in this situation is as well, is to recycle those dollars back into the world economy. But the threat of sanctions through mainline US banks or confiscation or whatever it may be, persuades them that they ought to go down a different route. And what they ought to be doing is maybe recycling it through less direct avenues, like Middle Eastern banks or maybe Asian banks. Now, that's going to be less efficient than doing it through JPM or whatever it may be, or Bank of America. So the elasticity of dollar supply basically becomes compromised. And so what you've got is a situation where the dollar just keeps powering up.

31:26And that is the situation we're in. And does the Treasury want that ahead of an election? I don't know. That's an interesting debating point. Some people would argue that that actually is the long-term agenda of the US administration. They want a strong dollar because they can squeeze and control the rest of the world. I'm not sure they want it this strong. And I would suggest that what they're going to do is to try and push forward easing in the next few weeks or months to try and get the dollar down a whole bit where it is. And the whole idea about the bent straw is that if you're sucking the dollar milkshake and the straw is bent, you've got to suck even harder, and you may get a dollar overshoot.

32:04And you may get soaked with milkshake. But that's basically the way that it's going. And I think that that's an interesting point to ponder, because it's really curious that the dollar keeps going up and the yuan keeps going down. So how I've looked at this is, I assume, much like Brent, there is an ongoing dollar shortage in the world, because there's so many dollars, as the global economy slows down, there's just not enough dollars. It's a game of musical chairs. First was Silicon Valley Bank blowing up. Then it was Credit Suisse blowing up. Next, it's dollar yen, which is the big one. So dollar yen, the Chinese banks are the euro dollar market now mainly, right?

32:43So they're clearly short of dollars. Next minute, Yellen's in China twice because China's like, hey, listen, we don't want to devalue, but this is going to force us to devalue. I think the US is kind of allowing Japan to go through this pain barrier to kind of negotiate with the Chinese. Yeah, I agree 100%. And so the outcome for me is, and I think you may have even written about this as well, is probably swap lines to the Japanese or some ability for the Japanese to short infinite amounts of dollars to then inject liquidity. And then that will flow through the Japanese banks. because the US doesn't want a direct swap line with China.

33:27It doesn't look good. But the Chinese know, Yellen knows, that their entire property sector is short on dollars and they desperately need them. So you inject the dollars in and they come back out into US treasuries, which is what Janet does is she sells bonds for a living. So that's kind of where I've got to it in my mind. Yeah, no, I think that I would go along with that. I think it makes sense. I mean, I've had the view for a long time that the yen is a stalking horse. they're deliberately putting pressure on the Chinese financial system by forcing the yen lower. And I think that's, you know, I mean, my view back in 2022 was, in all the years I've been in markets, I've never seen a major G7 currency fall as quickly as the yen did.

34:08And markets don't do that to currencies, only governments do. So I think that was a deliberate push down. Super interesting. Now, the other ones that I'm thinking of for the US is, first, I just want to So what shenanigans is Yellen doing with adding liquidity to the off-the-runs? Is that another kind of backdoor mechanism to continue doing what she's doing? How do you see that? A lot of people don't understand this bit. But for me, it's not quite yield curve control, but it is. Yeah, well, the whole principle there, to let me describe it, is what's happening is that in the bond markets, you distinguish between on-the-run, which are newly issued, and off-the-run bonds, which are stale bonds.

34:52And as it happens, institutions always like to buy the new ones. And therefore, what the Treasury is doing to improve liquidity in the markets is replacing a stale bond of a particular maturity with a newly issued bond. Now, they can clearly in doing that change average duration in the market, but they say they're not doing that. So let's assume they're not for a moment. But the very act of improving liquidity in the bond markets is going to reduce bond market volatility, get the move index down. And as the move index goes down, what you've then got is an improved collateral multiplier in the system, because there'll be smaller haircuts given on collateral by credit providers in a situation where you've got lower volatility.

35:37So in that situation, it's very positive for global liquidity. So it shows you why Janet Yellen's in the Treasury position, because that connection between Powell and Yellen is that they're the same. They're working for one job, which is to refi that debt, because that can't blow up, because it's too big, and it's the end of everything. So they're all absorbed by that. The next thing on my list of potential ones is, we know the commercial real estate issue. I think the old-fashioned way of doing this is an SPV. Bad bank. SPV that's backstopped by the Fed or the Treasury. Right. And then we can get it off.

36:23That's another nice backdoor mechanism that... Yeah, I think that would make sense. As you say, it's happened before. So why not? Think of the SNL crisis back in 2020. Yeah. Which was very similar to this crisis. Yeah, exactly. But I think they have to do that after the election. But I think in the interim, they want bank reserves to keep going up to make sure there's not another Silicon Valley bank problem. They can't afford that. There's another one that's on my radar screen, which is interesting. I think it's Fannie Mae that's applied through Congress for a change of its charter to be able to add mortgage refinancing or no, not mortgage refinancing.

37:10What's it called? Second mortgages. Second mortgages you can do. And that's a very big deal, I think. And it wouldn't be captured by the standard liquidity measures, but it feels like it's a massive gush. And I was in Australia a couple of weeks back talking to them, and they did that back in 92. And it gave them a massive liquidity boost of like six years of liquidity came out of it. So talk to people about this, what it is and how it works and how you're thinking about it. Well, it's basically just what it will be doing is you'll be creating equity withdrawal. You'll be encouraging people to take out a second mortgage on a second property.

37:46So it's basically more credit collateralized against your second home. It's something I've looked at and I've tried to ask the question about, could it be done speedily? Because my view was initially quite cynical. thinking this couldn't be enacted fast, but apparently it can. People were talking about maybe within a six-week period. Now, will it make a difference this year? I don't think so. But as you rightly say, I mean, this is a window of potentially more liquidity over the course of maybe a five-year period. It could easily step up. Is it in normal liquidity indexes? Not if you're looking at central bank liquidity.

38:27It's in our measures because we actually look at Fannie May, Freddie Mac as liquidity creators because it's part of the shadow banking system. So it would start to come through in our numbers. But it could be sizable. And there's no question about that. I saw estimates of$5 trillion. Yeah. As I was saying, if you look back to the period ahead of the GFC, that was all about the growth of shadow banking. And you've now got another upleg. And this is important. The system needs liquidity to grow. So not just the US, but look at China. I mean, China stalled the economy through COVID. They can't get it enlivened again without pumping lots of credit in.

39:10If they pump lots of credit in, the yuan drops. So they're already stuck. They've got to have some deal. And that's why I think that you're spot on with those talking about what Janet's doing out there. I mean, Janet Yellen doesn't normally just go across the US. and the press keep it pretty quiet. I'm like, there's something much bigger at play here than just Janet's having a nice visit to Beijing. It's like, we understand what you need. You understand what we need. We're going to have to reach some grand compromise. You need dollars. You don't want to devalue your currency. We don't want you to.

39:45The Europeans don't. We've all asked you not to. And we're going to have to do some sort of trade deal on the back of this, I guess. Yeah, I think that's right. Because if you look at them, I mean, you look at the pressures that are on the yuan on the Chinese system. They're enormous. I mean, China is displaying all the characteristics of an overvalued real exchange rate. Now, I know economists say, well, OK, look at the trade surplus. The yuan should be going up. Well, no, I don't agree with that. It should be going down. And the reason that the real exchange rate is falling, or the evidence is, you just look at asset prices, they're collapsing.

40:16You look at high street prices, they're skidding lower. And the nominal yuan wants to devalue. So it's all symptomatic of an overvalued root exchange rate. Where did we see that before? We saw it in emerging Asia. We've seen it in Japan at different times. We've seen it in Scandinavia. These are classic reverse bubble phenomenon. And China had a bubble when all that capital flow went into China. Now it's exiting. China's deflating. And the question to ask is, how much longer is capital flight from China going to go on? Because it's clearly happening, despite the capital controls. That money is leaving.

40:53And this is a long-term decline of capital, withdrawal of capital out of China. And that's the big problem they've got. And they need a deal. Now, the reason is - They have to replace that capital, essentially, with liquidity. Exactly. Because if not, the system ends up without any liquidity. Yeah. The Chinese economy implodes. Now, that may be on the agenda of the US, but I don't think so. I mean, they basically want, I would imagine, China to stabilize around here. And therefore, that's what they've got to think about these solutions in terms of liquidity. But the Chinese can't inject liquidity unless the US devalued the dollar first, then they can inject liquidity and everything kind of balances out.

41:37Exactly. But if that happens, which I think is quite likely, that would be my scenario, then you've got gold and crypto, which explode on the upside, because this is further monetary inflation. And the only way to keep the plates spinning, if you like, is to basically keep pumping liquidity into the system. And the reason that China is so important is that China is not the Soviet Union. The Soviet Union was an autarkic economy that you could easily disassociate from. You could cut the Soviet Union off. You can't cut China off because it's integrated so deeply into the world economy. And that's the fact.

42:11It's integrated into trade. There are huge supply chains worldwide. and it's also integrated into the financial markets. Because, you know, they're holding some treasurers and they're whopping great current account surplus. The other one, there's, yes, another thing on my radar screen, which is Basel IV. Yeah, and I think that's another good one. Because I think that's likely. Well, as far as I've gone down the rabbit hole, it's like Europe implements it in January 2025 and the US and the UK, June or July 2025. And for those people who aren't aware, it's basically forcing the banks to own yet more bonds.

42:48And when I looked at it, yeah, it's reasonably big for the Europeans and decently big for the UK, but it's massive for the US. It's forcing the banks to own huge amounts of bonds. Exactly. And then if you start to look, and there's a fact of a chart I think I sent over, which is maybe the first chart I put in there, which is capital inflows into the US dollar over the last 20 years. Now, if you look at that, you can explain an awful lot. And what's really driving a lot of that capital inflow is, number one, Basel III, because the implementation of Basel III meant people had to buy dollar assets, particularly dollar bonds.

43:27And you've got this big inflow of money into the US. Now, what does it mean? It means the US real exchange rate's got to go up. And if the US real exchange rate's going up, that means either asset prices in America are rising, or the dollar is rising at the same time. And actually, we've had a luxurious combination of the two. So the more that happens, the better it is for US financial markets.

43:51Europe, there's also some stuff at play. One is the ongoing green energy transition, which is basically being financed from money printing. And we've seen links with Russia. We've seen what they want to try and do. And also, I think the Europeans and the Chinese are at the forefront of driving up productivity by driving down the cost of electricity over time. So people think it's wasted capital. I actually think it probably works in the end. But they're going to keep doing it. So that's a stimulus, a net liquidity injection. And talk to me. I hadn't heard the one about the French banks. That's because of what's going on over the election.

44:29How could that end up being a liquidity injection? Well, only in the sense that the French banks are pretty integral to the euro-dollar system or what's left of the euro-dollar system. They tend to get a lot of their funding very, very short term. And if you've got problems ahead of the French elections, there's uncertainty about what the outcomes may be. It may be more difficult to get this short-term funding. There may be a shock result. I mean, who knows? I mean, that's pretty likely, isn't it, given what we know so far. So the risks are there. And that may mean that you've got to see dollar swap lines coming to the French banks.

45:04I don't know. I mean, this is purely surmised. But clearly, we're not looking at a straight path going forward. This is a pretty bumpy road. And a bumpy road really means that central banks have got to be alert to what's happening. And that normally means more liquidity is added. Do you think any of them will use the balance sheets again? I mean, maybe the Chinese will. But do you think the Europeans or the US will? or will they just hide it? The central bank balance sheets. Yeah, the basic central bank balance sheets. I think undoubtedly they use it. They've got to. And I think even if you look at, I say even if you look, if you look at the Congressional Budget Office projections of US debt over the next, what, 10 years, that shows what the Federal Reserve balance sheet is going to do in terms of their projections.

45:51And you can see them buying lots more treasuries. I mean, it's like a dog leg. They assume it's going down in the near term because of so-called QT. But I think QT died a long time ago. But then buying of Treasury starts to come through significantly. But the game is not just about Treasury, it's also bill finance. There's a lot of debt to issue, and it will come at shorter durations. But if it comes at shorter durations, banks will buy it. And at higher rates, you have to issue more debt. Yeah. That's the difficulty. So you don't really want rates to go up, which is why I think rates probably plateau.

46:28But as you rightly say, the interest bill just keeps rolling up. And that's the reality here. So they're basically printing money just to pay interest. So let's talk about trajectory of liquidity over the next, until the end of 2025. How do you see the liquidity cycle? when, I mean, it's been relatively flat recently, having risen last year, it's kind of flattened out a bit. When do we start increasing velocity, the rate of change, and what trajectory do you think that takes over time? Okay, well, if we come back to my sort of three-pronged approach of saying, let's look at the Fed, let's look at the People's Bank, and let's look at the collateral multiplier, In other words, the move index on volatility.

47:18What you've had in the second quarter is you've basically had the Fed tightening liquidity. And that's really been a simple fact of the Treasury General account going up because of the taxpaying period as of end of April 15th, sorry, 15th of April. So that taxpaying period meant the TGA jumped and that sucked liquidity out of US markets. And it's only just starting to come back again. So one of the ways that, as I say to people, if you want to monitor that, just look every Thursday at 4.30 Eastern time and look at the Fed H4.1 press release, and that will give you everything you want to know about what's happening to bank reserves, et cetera.

47:58And I would imagine they're going to keep moving higher, but let's see. So that's number one. Number two are the People's Bank of China. What is it doing? Now, it's been very concerned about the yuan. The yuan has been weak. It's been trying to hold it up. And it's tightened monetary policy since the end of the Lunar New Year to date to try and hold the yuan. What it's done in the last 28 days is it's injected 600 billion yuan back into money markets, which is actually quite a big move by the Chinese. So it may be that either accepting the fact that the yuan's got to devalue a bit more, or there's some deal that's being cooked that, as you were discussing, that maybe there's a deal with Yemen or the US is going to start to ease.

48:45But take it from a comment that Lagarde made from the ECB. She said, I think a matter of two or three days ago, that US and ECB policy are not going to diverge very much. Actually, I think she even said rates are not going to diverge very much. Well, they're keen to start cutting rates. The Swedes are saying they want to cut rates. The Swiss have already done it. So I think what you've got is an environment where central bankers are basically already saying they're going to be cutting quite aggressively in the course of the next few months. The Fed may not go wholeheartedly in there, but I still think there's a cut.

49:22And the cut may come as early as July, I think. I think it's underpriced as the July cut. Yeah. So we're in a situation where you've got the US, which I think is going to start easing, where the PBOC looks like it is, but that's really an uncertain factor depending on the currency. And then you've got the move index. Well, what Janet's doing is improving bond market volatility, sorry, improving bond market liquidity, which is pulling down bond market volatility, improving the collateral multiplier. So you've got another potential green light. So I would imagine that in the course of the second half of the year, I think liquidity is going to start to spurt higher.

49:59I mean, I've gone on record saying I think the liquidity component of the Fed balance sheet could be rising in a 20 % annualized clip through the second half. Part of that's seasonal, I grant you, but it could easily be because they actually want to get the dollar down. And they've used the TGA in the past at times to try and weaken the dollar or put the dollar down. So I think that all that's feasible. And then, as I say, watch China, because that's clearly the elephant in the room when it comes to liquidity. And we know the Chinese economy is weak. And one of the charts I put in to the pack, I see, was a very simple chart that looks at PBOC liquidity injections and the change in the price of iron ore.

50:42Now, iron ore is a pretty fundamental commodity to the Chinese economy. And the correlation is remarkably close with a lead time of about two or three months on Chinese liquidity. So if the PBOC injects liquidity, you're going to get a turnaround in the world economy. And all the evidence seems to point now is a cooling in the world economy, not a recession by any means, but a cooling. And the very, very best time for risk assets, as you will know, is when you get a sluggish economy that central bankers want to stimulate. And that's what we've got now. And there is a upside, a bigger upside than potentially expected by many people for 2025 based on, let's say, Basel IV, the second mortgage idea.

51:29There's a bunch of things on the horizon that could make 2025 see a continuous increase in liquidity. Is that how you see it? You think it's a pretty smooth cycle we go through? When do you think the cycle peaks out at? Well, I think it peaks. I mean, our view has been it peaks somewhere around late 2025. It may be, in other words, sometime in the second half. And I think that's really a combination of probably two or three things. One is that, in my view, inflation is still very sticky. You know, I'm not a high inflation person, but I do think it's sticky. And I think that may well colour Fed thinking or central bank thinking at that time.

52:13The second thing is I think the economy by that stage will actually be pretty good. I mean, one of the questions we have asked is, where are we in the cycle? My view is I think we're actually relatively early cycle in the world economy. I don't know about your view, but that would be much. Exactly the same. I mean, the ISM's barely turned up. Yeah. We can't be late. We can't be mid. It's about 50 right now. It's just coming up. Yeah, exactly. So I think you're going to get a much stronger economy through next year. That will clearly absorb liquidity from financial markets, take it away from financial assets.

52:47So that's another factor. And I think the third thing, which the cynic in me says, is that Janet, if she's still there or whoever, have got to sell a lot of debt. And what they'll want to do is to force people back into the bond markets if they can, even temporarily. So I think that may be one of the reasons why they'd like to squeeze liquidity, maybe at the back end of next year. So what I would say is we've got a cycle. remember the cycle, but underlying that cycle is a whopping great uptrend because liquidity is going up in the long term because this is a clear monetary inflation. And in monetary inflations where you've got insolvent governments rather than insolvent private sectors, that's the difference.

53:29What you find are things like gold outperform. We've now got crypto, which outperforms. And you've also got the other phenomenon is that credit markets outperform government bond markets. And that was a feature of the early 1970s as well, when you again had insolvent governments and monetary inflation. Yeah, and we've seen it in Japan periodically as well. And that's what I got to with all of this, is this is the super force that controls everything right now. And it controls all assets. And there's no diversification. None. They're all driven by the same force. So if there's one magnetic force that pushes and pulls everything, then I just got it down to, I took the entire morons approach is, well, I just look at all of the asset classes versus the global liquidity, of which there's only two that form, which really has been crypto and technology stocks.

54:26Exactly. Then I just divide technology stocks by crypto, and it's down 99.97%. I'm like, there's kind of one easy bet to take here. Now, not everybody wants that risk. Gold does certainly well enough. But for me, it's the easiest risk-taking environment I've ever had. Because there's so little dispersion in economies or anything. Because every central bank, you said it, Lagarde, is saying the Fed, and the Fed is visiting the Chinese and the Japanese. So everyone's just like, one, two, three, let's do that. One, two, three, let's do that. It's like, this can be easier. RAOUL PAL, Exactly. And the Fed and the Treasury are in bed together.

55:04Strange concept, but in the context. I want to get that out of my head. Yeah, exactly. But there we are. So at the end of the day, I'm subscribing entirely to your view as well. I think that what we've got is a huge liquidity expansion going on because that's the only way that we can finance these whopping great deficits. And the fiscal arithmetic just doesn't add up whichever country you look at. I mean, the US looks bad, but believe me, Europe looks worse. Japan is pretty horrible. China's not great. And so what they've got to do is they've got to start printing money because politicians will only kick the can down the road.

55:41Nobody is talking about tax increases. Everyone's talking about more spending. And you've even got sort of competition now in terms of who can lower corporation tax the most or give the most incentives to industrial capital. So all these factors cost money. And the only thing to do is to either issue bonds, which is difficult unless you change the rules. So Basel IV is a great theme. All what you do is you print money in some form. And that's what they're doing. I looked at this, and I suddenly discovered the period after World War II, after we had the big inflation that came down, the spacing between the financial crisis and the pandemic was very similar to between the 1929 Depression and World War II.

56:30After that, we had a perfect four-year cycle. And it went on all the way until the 70s. And it was a debt-refi cycle because we had the same problem as all the global governments were massively in debt. The Fed chose yield curve control as their vehicle over that period. And they just kept doing it until productivity picked up, which I think is how this is going to end. We've seen AI and robots and maybe the lowering of electricity costs and a bunch of things that could really change the outcome? Because we've got aging demographics. They solved it back then by having kids. Now we're going to have our kids are the AI and the robots, but we will have a demographic massive expansion.

57:11It's the only way of solving it. I think you're absolutely right. I think this is all about understanding demographics. It's understanding fiscal imbalances or deficits and how all these things are funded. And at the end of the day, it's got to be more liquidity. So the trend is definitely upwards. And this is a clear monetary inflation where you've got to invest and buy monetary inflation hedges. What does well in, I'm not saying hyperinflation, obviously, but what does well in an environment where you've got global liquidity growing at maybe 8 % to 10 % per annum, and you've got underlying high-street inflation at maybe 4%, maybe 5%.

57:48And I see a lot of people ranting and raving about the central banks. But given the understanding of the amount of global debt, the aging population, the inability for GDP to service that debt, which is the cash flow of the overall economy, what the fuck could you do differently? There's no way you can walk away from it all, because the world is 450 % of GDP in debt. You're going to let everything burn to the ground? No. So I just don't get it. And I also don't get, and I got this wrong for years, the central banks are stupid. I'm like, no, actually, I've come around to the point of view is they're actually very smart and they know what they're doing because there is no other choice here.

58:34This is the only outcome. Is that what you think so as well? I think that's right. I mean, I've spent quite a lot of time with central banks. And I know that there's clearly a lot of discussion going on between these groups. The BIS is a forum where they often meet. And I was actually at a BIS meeting when there was discussion, open discussion, about what was the cryptocurrency that Facebook wanted to introduce? Libra. Libra. Well, it had been announced that day. And these central bankers collectively said, this ain't going to happen. We're going to stop it dead. And that was their collective decision.

59:20I thought that was interesting because it was on the spot, almost a visceral reaction from them. They're going to stop it. And I think that's an interesting view. But there's clearly a lot of groupthink going on here. Yeah, I just think there is no separation between central bank and governments. And all of the central banks are doing the same thing. Everyone's got the same problem. Aging population, massive debt. and the only way of solving it is a productivity miracle and a population miracle. But population, you can see 30 years out, we ain't going to get a miracle. So therefore, it has to be the age.

59:54Or you allow a lot of immigration. But even then, it's difficult. There's any margin. And it's difficult for society to deal with, right? You can deal with certain amounts of immigration before it becomes too difficult. Yeah. Mike, fantastic conversation as ever. Really appreciate it. Let's see. All I do know is there's going to be a lot of liquidity sloshing around over the next year and a half. That should make for interesting markets and relatively plain sailing unless something changes that. I don't see what changes it. Anything on the horizon that might change it for you? No, I think markets never go in a straight line.

1:00:27So there's always going to be wobbles. But I think the underlying trends here, as we've discussed, I think I'm very optimistic about the liquidity cycle. Fantastic. Fantastic. And anybody should subscribe to Mike's Substack as well, because it's very useful. If you want to follow liquidity, Mike's the king of liquidity. He's the man. So follow him on Twitter and also on Substack. So that's Capital Wars Substack, yeah. Yeah, exactly. All right, my friend, good to see you. Thanks, Raoul. Have a great day. Cheers. So long. So always a fascinating conversation with Mike. I love the fact that we can both debate different forms of liquidity, what's going on, where it could come from.

1:01:05Because a lot of people ask those questions is, where's the liquidity? Where's the cowbell? How's it going to play out? Is it quantitative easing? Is it this? Is it that? Do rate cuts matter? And hopefully we covered a lot of that ground to say, listen, there are lots of ways for liquidity to come into the system. Some of them are really big, some of them are more subtle, but it's all teeing up for that liquidity cycle, that crypto summer and macro summer and macro fall or autumn that's to come that's driven generally by liquidity. And that should be the rest of 2024 and 2025. So anyway, hopefully that's given you a good understanding.

1:01:43If you want to know more, then myself and Julian Battelle built the macro investing tool specifically for this. It breaks down both the business cycle and liquidity, the two most important things for investing. Every week gives you a deep dive of the charts that matter so you can stay on top of everything. Also, how to allocate assets at various points in the cycle and also where liquidity is and what it's moving. That's built for you and it's part of a Real Vision Plus membership. So when you go to realvision.com, start up for Real Vision Plus and we can open your eyes to the world of liquidity.

1:02:20we can help you see it every week so you don't have to try and figure it out yourself we're there to help you anyway come along to realvision.com and you'll find it from there and it's obviously free to join real vision the plus tier is a paid tier so you can decide if it's suitable for you anyway i'll see you there and see you next time we hope you enjoyed this episode at real vision we arm you with expert knowledge time efficient tools and a powerful network to help you succeed on your financial journey. Get a taste of financial freedom with our free offer at realvision.com forward slash free.

1:02:58That's realvision.com forward slash free.