Why Listen?

In this conversation, we sat down with Garrett Baldwin to talk about the role liquidity plays in financial markets, investing, and personal finance. We explore why liquidity isn’t just about having cash on hand. It is about breathing room—and the ability to keep your options open for individuals and families. As Garrett puts it, having liquidity is essential to every financial plan because “liquidity is permission.” It is permission to borrow, to expand, to take risks and to make financial decisions without stress or anxiety.

Garrett breaks down how liquidity influences market behavior, the often-overlooked “financial plumbing” of the system, investment strategies in your portfolio, and the broader economic landscape. We also dig into the behavioral side of liquidity and why it matters so much for financial planning, especially during periods of market volatility. We wrap up with practical takeaways for investors on managing portfolios in a fast-changing environment.

About Our Guest

Garrett Baldwin is a macro and commodity economist from Maryland. He is the author of the Substack site Me and the Money Printer and the host of a daily trading show at TheoTrade. He is a graduate of Northwestern’s Medill School of Journalism with advanced degrees from the University of Indiana, Purdue University, and Johns Hopkins University.

This conversation breaks down the following article: What Do You Mean By Liquidity?

Key Takeaways

• Liquidity is having a margin of safety, providing breathing room for financial decisions.
• Wealth is not just net worth; it’s about having options.
• Liquidity acts as a shock absorber for our lives.
• Markets respond to liquidity conditions, not just earnings.
• The structure of the market has shifted significantly over the past 30 years.
• Investors must consider liquidity when making investment decisions.
• Behavioral finance plays a crucial role in how individuals react to liquidity changes.
• Understanding the plumbing of the financial system is essential for investors.
• Planning for liquidity events is critical for retirement success.
• Ongoing communication with your financial planner is vital for effective liquidity management.