

Moonab
98.9K posts




Global liquidity is best understood as a perpetual refinancing machine. Debt keeps expanding faster than economic output, which means liquidity must expand in parallel — otherwise the machine stalls. The solvency of governments, banks, and the broader system depends on it. The problem is that in the US, debt growth is now running ahead of liquidity expansion. That imbalance is becoming more important than the old debt-to-GDP ratio in signalling systemic stress. This chart isn’t perfect. It only captures a narrow definition of liquidity — excluding Treasury short-term bill issuance and private lending pools . But it is useful. It tells us when the system has stretched too far in one direction. When the ratio is high, excess liquidity feeds inflation. When it’s low, funding pressures emerge and risk assets become vulnerable. The last time this ratio fell to today’s levels was just before the September 2019 repo crisis. For reference, US equities were printing fresh all-time highs at the time. Within weeks, stress in the plumbing forced the Fed into emergency repo operations. So what? This isn’t telling us we’re at the end of the cycle. But it does signal fragility. If debt growth continues to outpace liquidity, we should expect funding stress to reappear — and for markets to become more sensitive to cracks in collateral values. I dont expect that to happen. The Spice Must Flow.









20 minutes into an investment committee meeting for a $50 billion RIA. @Polymarket has already been referenced twice.





