Michael Howell & Raoul Pal: Liquidity Cycle Masterclass

25:34And it's a little bit like thinking of the Californian economy again. So, you know, this is the paradox. And so whenever China's trade surplus goes up, there's great pressure on the yuan, US dollar cross, ironically. And so the Chinese have got to tighten. So they need something. The dollar is so critical to them that they need some sort of deal done here. So I think it just has to happen. And as we know, the thing every economy with high debts and aging populations fear is a debt deflation because the real cost of your debt keeps going up. And the answer is and has been led by Japan and is always monetization.

26:14There's no other way around it. What are the Chinese going to do? Just let the economy burn to the ground, which is what a lot of commentators suggest. And I'm like, actually, it's the opposite, because the probability is of more and more stimulus to stop that happening. Yeah, I mean, absolutely right. I mean, one of the metrics that we look at is actually not debt to GDP. because I think that's a slightly sort of, I don't want to say bogus statistic, but it's sort of meaningless in the sense that we got academics, as you'll recall, maybe 10 years ago saying 90 % was the critical level where everyone's lights went out.

26:49We passed that and we're sort of going towards a lot, lot higher, maybe 200 % or whatever the number is. And we're still living, that's not an issue. What you're going to look at is debt to liquidity because debt has to be refinanced. And it's that ratio which is really the critical one. Now, if you start to look at that ratio, what you find is that a lot of economies are actually below that threshold, apart from China. And China is significantly above that debt liquidity threshold. And to get it back down again, you either get rid of your debt, which they can't do, or you create a lot of liquidity.

27:22And the answer is they need at least 30 % increase in their liquidity base. And that's really why you need this big devaluation. Now, the rest of the world, ultimately, will have to create liquidity too in the longer term. And one of the things that I focused on before, which is yet another bogey to dare to jump, is this issue that you've got a debt maturity wall coming back into the markets from all this debt that was turned out during the COVID crisis. So at the end of the day, what we know is that liquidity has to keep rising to match debt. And that's inevitable. So you've got monetary inflation long term, which is all these assets that we know and love, like gold and Bitcoin and crypto, are bound to be going up in long term because they're in life by these global liquidity and monetary expansion.

28:08Yeah, the other thing that I've looked at is, you know, we use forward-looking liquidity indicators of financial conditions. But in the end, the business cycle in the US is still below 50 in the ISM. We haven't even started the upcycle. So it just feels that I know a lot of people fear a short cycle, but last time around in 2021, liquidity was drawing in March. And it stopped because the business cycle peaked. We haven't even got through the, you know, we've had the bottom of the business cycle. You're not seeing the expansion. So I think there is a probabilistic risk that it actually extends into Q1 2026 as well.

28:48Yeah, well, that's, you know, let's not roll that out. I mean, I don't know. But I think, you know, the issue will be is if China does create this big stimulus or if this is something like a plaza 1995, then you've got have got an extension leg in that liquidity cycle. There's no question. You know, we're talking about the cycle and the cycle is totally important, but the trend behind it is equally important. And that's the thing that's going to keep running in the longer term. And that trend is a powerful trend. And what's more, it's probably exponential, as I think you've very accurately described.

29:21And that's why a lot of these assets have just got to keep going up. And people have got too few of them. Let's talk about Japan a little bit, because I don't really understand what's going on there now. Is just the gain to just keep weakening the yen? What is their end game right now? Well, I give you my take on it. I mean, I think Japan is, I mean, I think there's a whole lot of dynamics in Japan that we need to sort of think about as examples of you, as you've sort of correctly identified that Japan got here first, went through the debt deflation. A lot of the remedies that Japan is following, everybody else is being forced to follow now.

29:59But I think you've got to, you know, let's put Japan in the context of was it a tool for US policy to try and put pressure on China? My view was, and I've probably said this before, but I think that the whole weak yen is very much a deliberate policy to basically hold China's feet to the fire. And the timing of that and the scale of the move is interesting. But I've never seen a major currency, particularly yen dollar, fall with the speed it fell in such a short time before. Markets don't do that to currencies, only governments do. And, you know, that devaluation of the yen and the persistence of the weak yen, it can only sort of underscore that.

30:46You know, so many analysts have said, look, on a PPP basis, the yen is so radically undervalued. Well, OK, so what? Maybe it is. But the fact is, it's being held below, you know, below the surface by policy moves. And what they want is a weak yen, a weak yen, because it puts pressure on China. And if you look at this policy, I mean, maybe this is the wrong analogy, but it's a little bit like sort of the arms race in a lot of ways that we saw the Cold War during the 1960s where the Soviet Union couldn't keep pace with America. And now what we've got is a sort of currency war where China can keep pace with the US dollar.

31:22And I think the US dollar has been, well, I mean, whether it's been deliberately strengthened or not is a moot point, but it's clearly been strong. The whole policy post-2008 of actually forcing banks to hold more and more collateral and dollar-based collateral has certainly underpinned the dollar. That's without question. And then you get China, who after the Shanghai Accord in 2016 wanted to keep the dollar stable against the yuan. And all their policies have been focused on that. And pretty much since 2016, what you've seen is tight or unusually tight Chinese monetary policies. And that's why the economy is really sort of not just stuttered, but virtually skidded to a halt.

32:04And that's the problem. Now, what went on on top of that was that the yen was then deliberately weakened to put even more pressure on China from a competitiveness standpoint. And the weak yen, I think, is part of that sort of Trojan horse or whatever, which is forcing the Chinese to act. So I think, yes, it's true. Will they do anything to correct the weak yen? I just don't think they can because their scope for raising interest rates is so limited given the interest bill they've got. They're in the same boat but actually worse than most other countries. Their debt burden is just so big. They cannot raise interest rates.

32:40No, I completely agree with this view. and I also think it was purposeful policy because the China-Japan composition in terms of exports is real. There's maybe South Korea, Taiwan. There's a few countries involved in that and it has been a purposeful stick to beat the Chinese with. And the answer I think we'll see is via Japan. We'll see because the Japanese banks are the euro dollar market really. They're the biggest players. Some of the European banks as well and some of the South Koreans, I guess. But really, it's Japan. So it leaks back into China if China wants dollars without the US having to give direct dollars via swap lines to China, which it's never been wanting to do.

33:24So I think dollar yen is very important from that thing because I think you're right. I think it's a much bigger picture. It's not actually about the Japanese economy at all. It's about what the US wants to do versus China. Yeah. So that's my take. So I think ultimately there's very little tightening Japan can do. But if Japan needs to be bailed out, it too needs US easing. But that's already a deal that will have to be stuck with the Chinese. But I just think the Chinese are on the ropes right now. And what about the Europeans? Europe feels really messy because it's so fragmented at the moment.

34:00It's a disaster. But they can't live with a strong dollar either. I mean, you're looking at sort of myriad funding problems everywhere. I mean, they've got no energy. They've got no real sources of funding. Their economies are drying up fast. They've got big demographic problems. They've got a defence bill, which is only going to go up. So I think it's not a happy place to be. And you can see the struggles that Britain is having already with the socialist government trying to fund themselves. I mean, it's just an absolute disaster. And I think if you think the US has got funding problems, well, just start looking at Britain.

34:39Britain's got a big current account deficit. It's got a public sector deficit. It's got an economy that is slowing down. And I would imagine within two years, Sterling is going to be parity with the US dollar, if not sooner. Must he anyway can re-square the circle? He'll get Sterling down fast. Do you think the UK and Europe have a higher propensity of just doing straight out QE? Because it's less politicized QE there than it is versus, let's say, the United States. Is that a way for them? Because it feels like Europe's going to have to do something. Yes, we need the weaker dollar because the Germans need to export for Europe to work.

35:14But if not, it's still a huge mess. And the UK, I mean, I don't know what the answer is here, but somebody needs some help somewhere. Yeah, absolutely. But I think the only solution is ultimately monetization because they're losing their funding sources. I think in the case of Europe, it's tricky. But then the ECB has allowed a sort of degree of freedom. so they can probably start to expand liquidity. But, you know, again, it's a tough call. I mean, a lot of these guys have sort of painted themselves into a corner with sort of bold statements in the past, and they're going to have to retract those.

35:51But I think ultimately we're in a world where, you know, QE has got to go up. I mean, you know, that I think is a given. We have to restart, and it's really a question of not if but when. I think the difficulty you've got is really what the leverage of that liquidity is within the system, when you've got bond markets that may be fragile. And I think that's the other issue to take because the collateral base is so important. And you can be easing through your central bank, but if your bond market is running away and out of control, then you've got a serious problem. And we've seen that in small measure with France.

36:25We've seen it definitely in the case of the UK where yields are higher than under the Liz Trust disaster. Germany, we've yet to see what happens after the election, But, you know, who knows? But I mean, none of these countries are in a great position, as we know. What do the Bank of England say about this? I've not kept up with what they're talking about. They're usually quite thoughtful. What are they saying about this? Well, the short answer is not really saying very much. I mean, they've been... But we know that when push comes to the shaft, they act with alacrity. And that was very clear after the Liz Truss debacle.

37:00I mean, they switched from QT to QE overnight. So every government wants to support the sovereign bond market. And these are the issues with bond vigilantes flying around. These are the issues that are really going to come to the fore. And that's why I think we need to watch bond volatility. And that's why I think I've said in the past that looking at the move index, which is a measure of bond volatility, is actually way more important than looking at the VIX. Because not only does it affect the equity bond cross, but it really affects the whole generation of global liquidity, because everything is collateral based these days.

37:33Yeah, there's a lot that has to happen. And there is no way around it because we've got this debt rollover. Everybody's got to do it, whether it's China, the UK, the US, Europe. There's not enough liquidity in the system. But the question I want to ask is, why are they still doing QT? What is the purpose? Are they just trying to get the excess liquidity above and beyond the standardized debasement of, let's say, 8 % a year? is that what they're doing? Just bringing it back in line with the ongoing debasement? I mean, I don't get it. Well, I think the answer is that the public face is that they are doing QT.

38:16But what we know is, as that chart I highlighted is suggesting, they're doing, in the US at least, they're doing a secretive QE anyway. And there's a chart which I can point you to, which is slide 13 in the pack I sent, which is looking at arm measures of what central banks are doing. Now, you can look at that quantitatively or you call it by count. But from what we see, something like 85 % of world central banks we monitor are adding liquidity to their systems right now. So by definition, they're doing some form of QE. Whether you call it explicit QE or not is a moot point. But de facto, it is.

38:54Now, in terms of size weighted, it's not quite as impressive as that. because what you've got is recently China and Japan have been tightening a bit. But generally speaking, that World Central Bank Liquidity Index is actually bottomed around late 2022. And it's shot higher dramatically in the last two years, which is explaining this sort of everything bubble. Now, there's a heat map behind that, which basically illustrates what's going on. And that heat map is very clearly going from red, danger, traffic light, central banks tightening, to green, orange, central banks easing to date. So over a two, three-year span, there's been a dramatic change in what the central banks are doing.

39:38So their public faces is very different from what they're actually doing in practice. But what we're saying is they need to be even more explicit about this. And they've got to get their balance sheets definitely a lot higher than they are. So even though they're adding liquidity. They're not adding in quantitative terms quite that much yet. But they're not far off, as far as I can see. So who's going to be the liquidity driving leader in all of this? Is it China? Is it still the US? Or is it just net net, everybody in the same kind of percentage terms? How do you see it playing out? Because every cycle is always a bit different.

40:11Who is the big provider of liquidity? What are your thoughts? Well, I think that the country that starts it has probably got to be the US. And I think the US has got to move back to some sort of QT pretty quickly, as we've been saying. Sorry, QE, beg your pardon. I've got to move back to QE pretty quickly. I think we're agreed on that. I think the scale will be China because China just needs so much more liquidity in a short space of time. So as I said, if you look at the, I mean, one of the things, if you investigate what's going on within the announced programs that China has made, One of the things they've done is they've allowed banks, they've increased bank capital by about a trillion yuan.

40:56Now, that's going to give them a lot of scope to actually monetize the debt. They're not monetizing debt as we speak. In actual fact, what you see is the PBOC tightening liquidity. And if I refer to a chart, which is slide 15, which looks at latest PBOC liquidity operations, they're taking a huge amount of liquidity out of the markets right now. But that is all about the strong dollar. But what that's telling us is that it's showing how bad the situation is right now, because they're having to react to this strong dollar. And as a result of this, the Chinese bond market is skidding in terms of yields.

41:33So yields are collapsing. And it's not about rate expectations dropping, it's about term premium falling, which is everybody's demanding safety and safe assets in China. And that's really the issue. So the situation is getting bad. And as you rightly say, no government wants to oversee a collapsing banking and financial system, which is what debt deflation brings. And so China is definitely in the... I mean, this is 1930s America looming. To me, it feels like 2025 is potentially a perfect storm for liquidity, right? All of the chickens come home to roost. Something has to happen here. And we're in that poor zone.

42:12Yes, the TGA may help for the time being. And then really that Trump administration wants it. Maybe it will clear the debt ceiling forever, i.e. get rid of it. And that frees things up and that changes the structure a bit. But I can't help but think within that construct you and I've talked about where everybody has to provide liquidity to monetize this debt, you've also got the Trump administration, which is all about growth and markets. And it will not pass their attention that the easiest way to fake the growth and markets is just to continue adding liquidity. Yeah, I go along with that. That may be a solution.

42:54I mean, it's a feel good factor for sure. But then you're in an environment where you've got monetary inflation, you've got underlying underlying high-street inflation in the US already, I think, over 3%, near a 3.5%. And that's pretty much what the Michigan survey is already indicating, the expectations of about a week or so ago. That's more or less saying that. So underlying inflation is higher. That may well limit the Fed's room in interest rates, which means there's a lot more emphasis, which has got to go back on the balance sheet, which strikes me that the inevitable course has got to be back to QE at some stage and rather sooner than later.

43:34So I think all these boxes are ticked. I think that's absolutely right. But all I'm saying is that I think that's a great way out. I think that the Fed has got to lead on this. And I think China will follow through very, very quickly because it has to. The question is, who fires the starter's gun and when? And it might be that this is three months away. It may be that it's sooner. I can't really see it happening sooner, but it It could be, you know, we're talking about maybe summertime for this. But, you know, what that would mean is maybe there's an opportunity to buy these markets cheaper before they go up again.

44:09But, you know, all I'm suggesting is there's dangers near term from an air pocket because the dollar is strong. That's a wrecking ball. The bond markets look fragile. That's a problem. And we haven't really got clarity yet on what the Fed wants to do with its QE policy. No, although I think we'll be rescued by the TGA. One thing I've used is, and I think you and I have talked about this before, I've used the framework of the 1950s, post-World War II, as this. And we had that same everything code cycle of every four years of rolling the debts. And the outcome there was yield curve control, which is, it's all the same thing.

44:45And so you run inflation slightly hot, and then you just have financial repression for 20 years, and it gets rid of most of the sins. Do you think yield curve control is an easier way to do it? Well, I mean, my view is that I think if you – to come back to the financial repression point, I mean, I sort of get the financial repression. I kind of agree with that. I think the issue is that there's a lot in there in terms of assumption about what the government can really control. Or does the Fed and the Treasury really have the ability to control all these things? Can they really control inflation?

45:25Can they really control the bond market, et cetera? And I think that in 1945, it was a lot easier than it is in 2025 in many cases because things are a lot more international. There are fewer. Obviously, there are no capital controls or limited capital controls. So I think it's kind of more difficult. And what I would say is that I think the solution to this is not necessarily, well, I mean, financial reversal will play a role in it. But I think the big issue is this thing about monetary inflation and the differences between monetary inflation and high street inflation. The two are not necessarily the same thing.

45:57And inflation always used to be, in economist parlance in the 19th century, devaluing paper money. And that's what we're really talking about, that devaluing paper money. It's not actually that gold is going up. It's actually everything else is going down. It's devaluing against gold. Gold is the pole star in the sky, which holds its value, right? And that's what we've got to think about. And I sort of take this point that if you've got a backdrop where global liquidity is compounding at a rate of 8 % to 10 % per annum or whatever the figure is, you've got to choose assets in your portfolio that at least have got to deliver that sort of return.

46:35And if you're getting a bond of 5%, it ain't doing that, right? You've got to think about things like gold. Gold, if you look at the longer term, and I'm sure you've done the same analyses, but look back to the 1970s, one of the very few assets that's actually kept pace with global liquidity over that period is the gold price. Okay, gold has gone up 25 % in the last year. Great. Okay, that's good. It does what it says on the tin. But Bitcoin went up 150, wasn't it? Yeah, exactly. Gold, people have got to stop thinking of gold price going up and just think about gold as a steady value against all things.

47:11And therefore, yeah, there's a bit of demand and supply, but really it's the devaluation of the paper currency. So it does its job, as you say. It's never going to make you rich in purchasing terms, because it'll be the same as real estate or even the S &P 500. It kind of just - It's a hedge. It's a hedge. But yeah, Bitcoin's been vastly different because it's a technology. So it's got an adoption effect as well. So you've got, it's kind of gold squared, which is fantastic because it really helped young people who've got no savings. Because buying gold is not going to help them buy a house, because it doesn't go up versus houses because they're both seeing the denominator go down, which is the fiat money.

47:55So Bitcoin's been a kind of savior for people to avoid the debasement effect and actually make some returns. And tech stocks have been the same. Yeah. And I think the analogy, I mean, maybe I've used it before, one can extend it dangerously. But if you go back to the 1920s in Germany, where you saw hyperinflation, the question was, how did people react to that? Now, what you saw in the 1920s Germany were the older generations basically buying what they'd always bought, which were bonds, because that was always a safe asset. That's what they've been told. But their wealth got wiped out. Their younger generations were buying equities.

48:30They were told by their peers, you're idiots. OK, don't buy equities. They're fragile. OK, but equities went up dramatically in price because they were inflation hedges. So there was this whopping great wealth transfer in Germany in the 1920s for the old generations, for the young generations. Now, obviously, there were political consequences. Let's not go into that. But the wealth transfer was very, very significant. Now, if you look at what's happening now, I think you're getting a parallel because you're getting a monetary inflation. OK, we're not having a hyperinflation. We're getting a monetary inflation.

49:03The older generations are saying, well, what are you going to do? You're going to buy value stocks, OK? This is what we've always done. That's what's going to make you money. OK, and the younger generations are saying, well, they don't understand that. We're going to buy crypto or whatever it may be, or tech, because we understand that. The older generation is saying, you're mad, you know. And then, you know, once children turn around and say, well, OK, well, I bought Bitcoin at$200, you know, good luck there. This is where you get the wealth transfer. I think that's dead right. I mean, that feels like the wealth transfer is the opportunity.

49:37And that was probably the downfall of the US government as well. To go out and have a war against young people was stupid. It was really narrow-sighted when, like, here's the opportunity for people, as I say, to unfuck their future. They get this opportunity. And the Democrats in the US were like, well, you're not going to have it. We're not going to give it to you. I'm like, how do you win an election telling people we're going to actively stop you making money? Yeah, I think that's absolutely right. But you look at, I mean, you will be familiar with these figures as well. But when the average baby boomer turned 25, the wealth that the baby boom generation controlled was 20 % of household wealth in the US.

50:15When Generation Z turned 25, the average wealth that they controlled was 4 % of total wealth. And the size of these generations are pretty similar, about 70 million people each. So there's a radical difference in terms of the opportunity. And that's why I think this wealth transfer through technology is probably the route forward. So, I mean, I get that for the US, but the UK and Europe are so lagging behind. I mean, you live in the UK. It's frustrating, right? You see the opportunity. And the banks don't let people bank. The exchanges are not easy. Is it purposeful just to stop capital flight out of currency?

50:59or why such reluctance to allow people to have the opportunity? But even if I speak to my friends in the UK, they're still cynical of crypto, for example. I'm like, guys, it's going to outperform me now. Yeah, I think a lot of that is media failure to understand, failure to understand technology, et cetera. I think that's a sort of a general fault. But I think the other thing is that what you're seeing is not a flight of capital. Out of the UK, you're seeing, or maybe Europe, a flight of talent. So I think increasingly one hears stories about, you know, I mean, friends of mine have got children increasingly are in Australia or the Middle East working full time because it's much better environments.

51:43And that was unusual, you know, even five years ago, but it's actually commonplace now. So it's happening more and more and more. You hear stories of people that leave London, traders that leave London and go to the Middle East. And they basically are working, I don't know, in London with sort of a group of a collective group of different foreigners. They go to the Middle East and actually they're working among, you know, UK and European European persons of their own age, peers, because that's where everyone's moved to. So you're getting this sort of, if you like, offshore center of talent, which is in low tax jurisdictions.

52:18And so all the talent is leaving and basically hollowing out Europe and the UK, which are high tax regimes. And so what you're getting more and more in these countries is wealth taxes, because it's really difficult to take your wealth with you. They can control that. And that's, you know, that's the reality. I mean, look at what the socialist government in the UK is doing. And they're struggling to raise money and they're going to have to start taxing pensions more explicitly. what a bloody mess right this i think it is i mean this is the problem of an aging population it is very hard to deal with because you can only use debt so much and then debt becomes goes from being the answer to the problem we've seen this endlessly and then and that's where we are today yeah and you you have to devalue your currency because you can't fund the deficits so ultimately, gold goes up or all these other hard assets go up.

53:14So in a regime where you've got too much debt and you've got too much ultimately paper money, you've got to get ultimately into real assets in some form, shape or form. And it's better to have real assets in productive areas of the world or holding things like gold or Bitcoin or technology in some form to preserve your wealth. A lot of this is actually maintaining wealth levels. That's the critical thing now. in real purchasing power parity terms. And it's interesting to see how few people really still get this. A lot of people still saying, it can't last, there's going to be a collapse. I'm like, there can't be a collapse.

53:46They've taken the left tail out of the risk out of the entire economy. Because if every time you look to see collateral values falling too much, they just pump in liquidity to stop it happening. So what you've created is this, I call it the greatest macro risk-taking opportunity of all time. because if they've taken out the downside risk, they're using liquidity to manage it and debase the currency, it makes it a very easy game, which is, you know, you and I would have made more money being on the short side, you know, 20 years ago. And now it's like, it's all on the long side. It's either long or you're flat.

54:20That's it. Yeah, I think that's absolutely right. Absolutely right. I mean, we're in a monetary inflation, absolutely clearly. And I think, you know, if you start to think about, you know, where we've come from and what the last few years have shown, I mean, if you go back to these sort of debt-liquidity relationships, and there's a couple of slides that you can put up within the interview. But there's one, which is slide 32, which is basically looking at debt-GDP ratios of different countries, US, China, Japan, Eurozone. But also on the same chart, what you've got is debt-liquidity ratios. Now, what it shows on that is the parlous situation that actually China is in, where it's got to devalue, as we've said, hugely, whereas all the other countries are actually nearer equilibrium.

55:09But then on the following slide 33, what I show is look at the advanced economy's debts collectively against liquidity. Now, the interesting point is that what there is in that chart, and it shows an equilibrium level at about sort of 200 % or thereabouts, anything above that, you get debt refinancing crises. And there's been a lot in the last two or three decades, whether it's 2008, whether it's the Asian crisis or whatever, it's all about debt refinancing. And that's because there's too much debt around relative to the liquidity. But ultimately, the central banks come in and bail the system out.

55:46Now, when you're below this threshold, what you get is too much liquidity relative to debt. And so you get asset market booms. Now, the interesting point about the last 10, 15 years is we've had an abundance of liquidity and not very much debt to be refinanced because a lot of the debt was turned out during the period of COVID or whatever and zero interest rates. So investors termed their debt out to 2026, 27, 28. And there was lots of liquidity simply because of the response to COVID and the GFC with central banks bumping in liquidity. So what you've had is this big suppression of the debt liquidity ratio, meaning you've had this whopping great asset bubble going on.

56:26But that's really a taster of the future because they simply cannot let now that debt-liquility ratio rise very much without there being a financial crisis. And they cannot afford to have a financial crisis because the financial system is a debt refinancing system. And so ultimately, you've just got to keep pumping liquidity into the system. And that's the reality that people have got to get used to now. Politicians will be kicking the can down the road. There's no ultimate solution for this unless you destroy the welfare systems of the West. and that's not going to happen. And Trump has definitely said that's not happening on his watch.

57:04And I've taken it very simply. I've come to terms with it and peace with it by saying, okay, let's say the basement rate is 8%, 10%, whatever it is, globalized. That's the cost of an annual put option on the system not going bust. It's as simple as that. Yeah, that's a good way of looking at it. And would you pay that? Is it rich? Probably not. It's probably, I would take that. If I can therefore take a max risk position because they've taken that away and I'm paying 10 % for that privilege, that's okay. It's much better than a down 80 % in one go. It sure is, yeah. And that, I think, is the deliberate decision that a lot of these governments' policymakers are taking, that it's far easier to kick the can down the road in this respect and create this monetary inflation.

57:51And you can control expectations. You can live in a hope that that doesn't spill over into the high street. And the system holds together. But you can trim at the edges and you can try and bring in tax revenues and sort of squeeze the middle classes more and more and more through wealth taxes, which is what Europe's doing. But ultimately, it's all about debasing paper money. And that's why we've got to hold to gold and Bitcoin and cryptocurrencies in the longer term. This is what makes sense. But the question is, as I say, it's coming. We know it's coming. But the big driver this year will be China, because China definitely needs this whopping great bailout.

58:31Yeah. So the sooner the US concludes some form of negotiations with China, the better. We've already seen some noise. I mean, the dollar's down as we're speaking, a percent or so, just because the US rhetoric is changing somewhat about how they're going to implement tariffs, because it's all a negotiation. But Mike, thank you as ever. A fantastic conversation. Let's see how 2025 plays out. But like you, I can't see any reason that a liquidity cycle over the balance of the year will not play out as normal. Well, I think that's absolutely right. I mean, that's what I'm certainly projecting. And I think you too, and you've had some fantastic calls in the last few years, all along the whole idea that we're moving exponentially.

59:17I think we definitely are. There's no question here. Fantastic, Mike. Anyway, good to see you, my friend. Thank you, Mel. Enjoy it. You know, always a great conversation with Mike. And I understand for many of you, it's very difficult because you don't know how to construct many of these global liquidity indices. You don't have the data for them, all sorts of stuff. But, you know, we've got your back covered at Real Vision for sure. So just as part of the macro investing tool, Real Vision Plus, all of our liquidity analysis is there. Obviously, in Real Vision Pro, you get all of the deeper insights, all of the trade ideas, other stuff.

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