Liquidity Is Finally Falling. Here’s What That Means for Markets | Michael Howell

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Michael Howell of GL Indexes and the Capital Wars Substack returns to Monetary Matters with alarming news. His readings of liquidity from over 90 central banks indicate that global central bank liquidity is deteriorating, led primarily by the Federal Reserve. Howell’s measure of Fed liquidity is weakening because the Fed’s Reverse Repo (RRP) facility is effectively fully drained. This is partially offset by U.S. Treasury issuing lots of short-duration bills, as well as People’s Bank of China injecting 7+ Trillion Yuan into its money markets and pumping the price of gold in yuan terms. Howell sees a growing divergence between East and West and warns that 2026 “won’t be a great year for financial assets.” Recorded on October 21, 2025.

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Timestamps
00:00 Intro
02:30 Fed Liquidity Is Tightening
07:55 U.S. Liquidity Mechanisms: Reverse Repo, Treasury General Account (TGA), and QE/QT (Quantitative Easing & Quantitative Tightening)
15:18 The Debt/Liquidity Cycle
30:19 "Crisis" of Tightening Liquidity in Money Markets (SOFR)?
43:12 About Capital Wars Substack
46:20 China is Hoovering Gold and Injecting Liquidity Into Chinese Money Markets
53:22 China "Digging Its Way Out of Debt": Advanced PBOC (People's Bank of China) Mechanics
1:01:12 Gold to $10,000? Michael's Outlook on Precious Metals to 2030s & Beyond
1:10:50 Bitcoin, Gold, and The Debasement Trade
1:18:44 U.S. Dollar: There Is No Widespread Exodus from USD
1:30:35 Will Fed Return to QE (Quantitative Easing)?
1:40:50 Global Central Bank Easing Cycle
1:44:48 Bond Market Outlook
1:46:35 Outro and Capital Wars Substack

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