The Compound and Friends

New Year’s Resolutions, the $15 Trillion Liquidity Flood With Garrett Baldwin, Reacting vs Predicting

84 snips
Dec 30, 2025
Garrett Baldwin, a financial writer and investor known for his macro analysis, discusses the dynamics of global liquidity and its impact on markets. He highlights how a $15 trillion liquidity surge has driven asset rallies and shares insights on the importance of repo markets over the Fed funds rate. Garrett also touches on the growing foreign capital influx into U.S. markets, discusses the role of insider buying as a bottom signal, and emphasizes the need to react to market signals rather than predict outcomes. A compelling analysis on the financial landscape!
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INSIGHT

Market Structure Amplifies Unwind Risk

  • Post-2008 structure shifted flows: passive and leveraged allocations dominate versus 1990s value-driven flows.
  • Baldwin warns this concentrated ownership plus rehypothecation creates violent unwind risk.
INSIGHT

Financial Stability Became The De Facto Mandate

  • The Fed's practical priority has shifted toward financial stability and preventing debt‑deflation spirals.
  • Baldwin argues this operational focus explains repeated market backstops since 2008.
INSIGHT

Liquidity Explains New All‑Time Highs

  • Record numbers of all‑time highs occurred despite extreme policy swings because liquidity cycles drive markets.
  • Ben Carlson and Baldwin link liquidity peaks to the surge in new highs since 2021.
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