In this conversation, Michael Howell and Pascal Hügli explore the late stages of the current liquidity cycle, noting how policymakers are working to extend it by injecting more liquidity. They examine how a weakening dollar supports global liquidity, the relevance of the MOVE index, and how Treasury Secretary Scott Bessent aims to shorten duration—despite criticizing his predecessor, Janet Yellen. The discussion also covers the role of stablecoins in the U.S. debt landscape, why they differ from the eurodollar market, and how their adoption could inhibit bank credit growth. Finally, they consider how these developments point toward a Modern Monetary Theory (MMT) framework.
Chapters:
00:00 Intro
02:33 Liquidity Moves in Cycled
07:11 The Role of Debt in Financial Markets
14:02 Late Stage Liquidity Cycle
19:50 How Dollar Weakness Help Liquidity
26:04 Asset Allocation in High Liquidity Environment
32:34 Navigating Fiscal Challenges and Debt Management
36:08 The Role of the Federal Reserve in Liquidity
39:18 The Impact of Political Dynamics on Monetary Policy
46:46 The Emergence of Stablecoins and Their Implications
52:57 The Transformation of Banking and Credit Creation
57:27 Investing in a World of Monetary Inflation
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