Episode notes
Mentor Sessions EP 103: Michael Howell on Global Liquidity, the Everything Bubble & When Bitcoin Rallies
Global liquidity is still rising in absolute terms, but the momentum is cracking fast, and that shift is already bending bond markets, credit spreads, and Bitcoin. Michael Howell breaks down exactly what's moving underneath the surface.
In this episode you'll see why Howell calls Bitcoin a "liquidity sponge," how the debt maturity wall forces old debt back into the system, and why roughly 80% of all financial market transactions are really just debt refinancing. You'll learn how to read the four indicators Howell watches before every crisis, why the euro system has no safe asset, how Japan quietly devalued its debt through a weaker yen, and why China is "basically Japan ten years later" buying gold for 23 straight months. You'll also hear his specific call: Bitcoin may struggle for three months, then do quite well into 2027 as Treasury QE monetizes government spending.
⏱️ Timestamps:
0:00 - Intro
1:06 - Is Global Liquidity Expanding Or Contracting?
2:33 - Momentum Indicator Signals Liquidity Rollover
3:25 - Why This Is a 5-6 Year Debt Refinancing Cycle
4:28 - The Debt Maturity Wall Explained
5:59 - Debt-To-Liquidity Ratio And Crisis Thresholds
7:20 - Where Liquidity Shifted: CapEx And AI Data Centers
8:54 - Treasury QE: The New Hidden Liquidity Conduit
12:54 - Fed September Hike And Liquidity Management
13:17 - Why 80% Of Lending Is Collateral Backed
14:12 - MOVE Index And Rising Bond Volatility Risk
15:42 - Bessent Buybacks Targeting Off-The-Run Treasuries
16:26 - Fed Managing Repo Spreads And Bank Reserves
17:30 - What The Repo Market Actually Is
20:05 - SOFR Spreads And The Danger Line
24:20 - What Really Drives The MOVE Index Higher
25:49 - Are We Heading Into A Financial Crisis?
26:53 - Two-Year Yields vs SOFR: Rates Rising
29:24 - Where Interest Rates Could Peak
33:25 - Bitcoin As A Liquidity Sponge: The Framework
34:17 - Howell's Medium-Term Bitcoin Bull Case
35:43 - Yield Curve Signals And Bitcoin Bull Market Timing
40:38 - The Eurodollar Market And Gilts
42:36 - France, Germany And The Oat-Bund Spread
43:29 - No Safe Asset In The Euro System
45:26 - Why The Eurozone May Not Hold Together
47:18 - Japan, The Yen Carry Trade And Weaker Yen
49:30 - How Japan Devalued Its Debt Successfully
51:39 - China Is Japan Ten Years Later
53:07 - China Printing Money And Buying Gold To Devalue
56:16 - Could The US Engineer A Domestic Devaluation?
58:25 - How Bitcoin Reacts To Chinese And Treasury Liquidity
1:02:04 - Final Thoughts On AI, Private Credit And Risk
Michael Howell runs Global Liquidity Indexes and publishes the Capital Wars Substack, where he tracks global liquidity data and the indicators referenced throughout this conversation.
Links & Resources:
→ Michael Howell on X: https://x.com/crossbordercap
→ Michael Howell on Substack: https://capitalwars.substack.com/
→ GL Indexes: https://www.glindexes.com/
⚡Previous Episode:Rational Root: https://youtu.be/ZkpoEFOQ_cM
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