New Year’s Resolutions, the $15 Trillion Liquidity Flood With Garrett Baldwin, Reacting vs Predicting - The Compound and Friends Recap

Podcast: The Compound and Friends

Published: 2025-12-30

Duration: 1 hr 7 min

Guests: Garrett Baldwin

Summary

Garrett Baldwin discusses the unprecedented $15 trillion liquidity flood and its impact on global markets. He argues for a focus on reacting to market conditions rather than predicting them.

What Happened

Garrett Baldwin, a financial writer and investor, delves into the massive $15 trillion expansion in global liquidity that has occurred since January 2024. He explains that $13 trillion of this increase took place in 2025, significantly impacting asset prices and market dynamics.

The episode highlights the National Financial Conditions Index from the Chicago Fed, which reveals that financial conditions are the loosest they've been since the COVID pandemic. This has contributed to record highs in the U.S. stock market, as well as unprecedented consumer spending and GDP growth in 2025.

Garrett Baldwin discusses the Federal Reserve's shift in focus towards financial stability, particularly in the SOFR and repo markets. He notes that the Fed is now more concerned with preventing debt deflation crises rather than adjusting policy rates.

A significant portion of the conversation centers on the gold and silver markets, which have experienced their best years since 1979. Gold rose by 66% and silver by 169% in 2025, driven by increased global liquidity and geopolitical factors.

Baldwin emphasizes the importance of reacting to market conditions rather than attempting to predict them. He notes that valuations have become less critical due to the continuous flow of money into the system.

The episode also explores the potential risks of foreign capital exiting the U.S. markets, which could lead to valuation compression similar to what happened in 2022. Baldwin provides insights into his investment strategies, including his bullish stance on precious metals and his momentum strategy based on liquidity, policy, and momentum signals.

Garrett Baldwin also touches on the geopolitical influences on the markets, particularly the role of China in the global economy. He believes that understanding these dynamics is crucial for making informed investment decisions.

Key Insights