CrossBorder Capital CEO Michael Howell says a coming wave of debt refinancing could prompt monetary expansion favoring gold and Bitcoin (BTC), even as economic growth currently tightens financial-market liquidity.
In an interview published Tuesday by Bitcoin Magazine, Howell said borrowers extended debt maturities at very low interest rates after COVID. He expects refinancing needs over the next several years to put pressure on policymakers to create more money. That remains his forecast, not an announced policy.
For now, Howell sees capital moving toward activity in the wider economy and away from financial markets. He said strong nominal growth, partly reflecting inflation, is contributing to the squeeze. Rising bond yields, a flatter yield curve and wider spreads on lower-rated bonds are among the signs he cited.
Howell said the strain was appearing first in less-liquid markets. He expects any downturn in the liquidity cycle to be milder than the tightening of 2021-22.
Separately, the U.S. Treasury estimates it will borrow $628 billion in privately held net marketable debt in the October-December quarter, assuming an $850 billion cash balance at year-end. That borrowing estimate does not measure the debt maturities behind Howell’s forecast. Treasury said in August that it expected to increase bill auction sizes in October because of seasonal fiscal outflows.
Howell called bank purchases of short-term Treasury bills “Treasury QE,” his term for a form of monetary expansion through government financing. Federal Reserve Vice Chair Philip N. Jefferson said in January that the Fed’s own bill purchases to maintain bank reserves are distinct from quantitative easing. Jefferson was discussing a separate Fed operation, not Howell’s characterization of Treasury financing.
Treasury’s next quarterly refunding announcement, scheduled for Nov. 4, will update its financing plans.
