PodcastThe Wolf Of All StreetsMichael Howell

Bitcoin Holds $86K While The Dollar Hits An 18-Month High | Michael Howell

Michael Howell links strong economic activity and government spending to higher bond yields, resilient liquidity, and continued monetization, while arguing that debt pressures could drive policy responses. The discussion weighs AI-related valuations and potential deflation against monetary hedges such as gold and Bitcoin, with speakers differing on their performance in a market downturn. Howell favors TIPS over stocks on a 12-month horizon, while several speakers warn that a sharp equity decline could also hit metals and crypto.

BitcoinGoldMarket LiquidityInterest RatesGovernment DebtMarket Valuations

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Key Takeaways

Michael Howell argues that fiscal expansion is sustaining liquidity: he says US-China competition makes fiscal retrenchment unlikely, US spending is functioning as “Treasury QE,” and US deficits above $2 trillion must be monetized. He also expects a German bailout of increasingly fragile France to add liquidity.

Howell attributes higher bond yields to a strong economy rather than debt concerns or disillusionment with the dollar, and says the Fed is following the bond market’s signal. He also argues that rate hikes can transfer income to the private sector and support growth, while each 25-basis-point increase adds more than $100 billion in annual G7 government interest expense—making the effects of rate changes difficult to interpret.

Howell sees bond-market volatility as consequential beyond yields: he says Treasury buybacks aim to dampen volatility, which could encourage the basis trade and help depress yields. Because he says 80% of worldwide lending is collateral-based, he also views the MOVE index and collateral-pool integrity as important to the credit system; he expects lower bond volatility to expand collateral-based liquidity and support Bitcoin.

The speakers connect persistent monetization and liquidity to monetary-inflation hedges, but they describe different sensitivities and risks: Howell says Bitcoin responds more sharply than gold to liquidity impulses, while another speaker says gold’s 260-day volatility relative to the S&P 500 is 2.2 times. Howell sees possible gold or crypto selloffs as opportunities to add because he expects monetization to follow, whereas another speaker warns that a sharp market shock could pull gold and Bitcoin down as correlations approach one.

China features in both the monetary and gold discussions: Howell says Chinese debt is a major problem and that China may need to devalue the yuan internally, with capital controls, reserves, and state banks allowing it to diverge from the external yuan. He also argues that Chinese central-bank and retail buying—not G7 monetization—is driving gold at the margin, linking Chinese debt deflation and money printing to gold demand.

GEO-POLITICS

French Debt — Michael Howell argues that France will take on more debt and become more fragile, eventually requiring a German bailout. He says a bailout would add liquidity.

“you know at the end of the day France is going to accumulate more and more debt economy is going to look more and more fragile the Germans ultimately going…”—

TECHNOLOGY

AI Productivity — A speaker argues that technology and AI can raise productivity and create consumer-deflationary pressure, but says AI does not directly affect bond prices. The speaker describes technology’s effect as changing a person’s ability to produce work.

“So what does that mean? It means that the that the bifurcation between things that technology can't affect and what technology can affect goes much wider…”—

AI Valuations — Michael Howell identifies high valuations in US stocks associated with AI and hyperscalers as a major force in the world economy. He says the trend could continue but predicts it will lead to severe future deflation, partly because of technology.

“And we have to point out that we have the number one thing the number one thing driving the whole world economy right now is the excessive valuation US stock…”—

ECONOMY

Fed And Yields — Michael Howell argues that the Fed is following the bond market’s signal that rates should be higher. He rejects the view that rising yields reflect debt concerns or disillusionment with the dollar, attributing them instead to a strong economy.

“the economy is redot. bond markets are telling us that rates should be higher and the Fed is pretty much responding to that message…”—

Rates And Income — Michael Howell says raising the federal funds rate amid substantial bill funding would transfer income to the private sector, boosting incomes and growth. He says this makes the tightening or loosening effect of a rate change difficult to interpret.

“you're in a world where there is you know the federal government is in in hawk to the private sector…”—

Interest Costs — A speaker argues that G7 governments are in fiscal dominance and that each 25-basis-point rate increase adds more than $100 billion in annual interest expense. That would materially affect government finances.

“All of the G7 now are is in hawk. you know, the Germany used to be the outlier. Now they're they're starting to run deficits for defense etc…”—

MARKETS

Collateral Risk — Michael Howell says bond volatility and collateral-pool integrity are key metrics in a collateral-based lending system. Citing a World Bank figure that 80% of worldwide lending is collateral-based, he argues the MOVE index matters because bond volatility affects the collateral multiplier and credit system.

“So I think we got to start looking at you know some of the other dynamics and what I would say is you know we're living in a collateralbased world…”—

China’s Gold Demand — Michael Howell argues that China, rather than G7 monetization, is driving gold prices at the margin, with the People’s Bank of China and Chinese retail buyers among the important sources of demand. He links Chinese gold buying to debt deflation and says money printing in China is associated with rising gold prices.

“My point is that's not true. It's not G7 monetization that's forcing the gold price up. It's China. The real monetization in the West hasn't started yet. Okay?…”—

Gold Valuation — One speaker says gold’s 260-day volatility relative to the S&P 500 is 2.2 times, its highest since 2007, and contrasts $40 trillion of US debt with an $82 trillion US stock-market capitalization. Another says gold relative to a US Treasury bond index is at its highest level in 40 years. A separate warning sign near gold’s peak was unusually large flows through contracts for differences, followed by a correction of more than 50%.

“Right now on a 260day basis, gold's volatility versus the S&P 500 is 2.2 times. That's the highest since 2007. That's a big a headwind…”—

FORECASTS

Buying Gold Dips — Michael Howell says gold or crypto could sell off, but he views dips as opportunities to add rather than reasons to exit. He expects monetization to follow.

“But I think the point I'm I'm making to be more explicit is that you know if you get a selloff in gold which is entirely possible or in crypto…”—

Gold Positioning — One speaker says gold is probably below its trend and would favor a longer position if China and other central banks continue buying it as an inflation hedge. The speaker notes that Mike disagrees and thinks gold could return toward $3,000.

“That that is what it's doing…”—

Selloff Scenario — One speaker expects that if the S&P 500 falls 10%, industrial metals could fall 20% and cryptocurrencies could also drop 20%. Another says a black-swan event involving a 15%–20% stock-market decline in a day or a week would also pull down gold and Bitcoin as correlations move toward one.

“I fully expect everything in my space, no small copper, industrial metals to drop if if S&P drop 10% to drop 20%. I fully expect all cryptos to drop 20%…”—

Greenwich Macro Briefing

The panel opens from Greenwich, reviews the Fed outlook, and flags unusual equity correlations alongside a possible peak in the energy crisis.

Fed Data And Rate Cuts

The host questions the reliability of recent inflation and payroll data, while Howell argues the Fed is reacting to the bond market and strong activity.

Collateral-Driven Liquidity

Howell says rate moves have ambiguous effects in a collateral-based system, and the panel links fiscal dominance, deficits, and bank purchases of government debt to monetization.

Deficits And Monetary Inflation

The panel sees little political appetite to restrain deficits, while Howell argues that monetary inflation—not financial repression—is the central long-term risk.

China’s Gold Demand

Howell attributes gold’s strength primarily to Chinese demand amid debt deflation, and says China may need to devalue the yuan and monetize its debt.

Japan’s Debt And Inflation

Howell argues that Japanese nominal growth and inflation are eroding debt, while Mike warns that rising gold volatility and crowded inflation-hedge trades call for caution.

Gold And Crypto Corrections

The panel debates whether gold and Bitcoin are attractive after pullbacks, weighing monetary-hedge demand against speculation, volatility, and dependence on equities.

Bitcoin Versus Gold

Howell favors holding both assets in volatility-adjusted proportions, while the host and Dave compare gold’s monetary role with Bitcoin’s potential to capture gold’s value.

Bitcoin Risk And Correlation

Howell sees Bitcoin as a highly liquidity-sensitive hedge, while Mike challenges its risk-adjusted record and argues that crypto and metals could fall with stocks.

Bond Market Influence

The panel examines Bessent’s bond-market comments as Howell says US yields reflect strong growth more than debt fears and describes buybacks as volatility management.

Dollar Strength And Europe

Howell links a strong dollar to US growth and weaker alternatives, then discusses euro-area fragmentation, French fiscal pressures, and the UK’s poor outlook.

China, AI, And Deflation

Mike warns that Chinese technology and EV exports could intensify deflationary pressure, while Dave distinguishes productivity-driven consumer deflation from monetary inflation.

TIPS Over Equities

Howell expects policymakers to reflate after a major selloff but sees attractive near-term returns in TIPS, which he prefers to stocks on a 12-month horizon.

Bitcoin In A Selloff

The panel debates whether Bitcoin could rise with bonds or fall with equities, with Howell emphasizing collateral and liquidity and Mike warning that crypto remains equity-sensitive.

Crypto Tokens And Value

Dave distinguishes Bitcoin and leading networks from speculative tokens, explaining how token survivability, tokenization, and the lack of carrying costs complicate valuation.

Monetary Trend And Market Cycle

Howell expects continued monetary inflation but sees bonds as more attractive than stocks over the next year, with any weakness in monetary hedges presenting a buying opportunity.

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Important Disclaimers

Not Investment Advice: For education only — not financial, tax or legal advice.

AI-Generated: Made by AI from source transcripts and may contain errors.

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