Luke Gromen, founder of FFTT, joins The Julia La Roche Show to discuss the macro picture and the sovereign debt bubble that’s bursting in the U.S.
In this episode, Gromen makes a case that he thinks this is the year where the consensus realizes the Federal Reserve as a “shadow third mandate,” which is the Treasury market functioning. He explains the concept of fiscal dominance and its implications for the economy, including higher inflation and a weaker dollar.
Gromen predicts that there will not be a recession in 2024 due to the Fed’s focus on maintaining the functioning of the treasury market. He recommends investing in gold, Bitcoin, and industrials as these assets are likely to perform well in the current environment.
Gromen also discusses potential scenarios that could avoid the negative outcomes of the sovereign debt bubble.
Links:
https://fftt-llc.com/
Twitter/X: https://twitter.com/lukegromen
Dr. Charles Calomiris’ paper on fiscal dominance: https://files.stlouisfed.org/files/htdocs/publications/review/2023/10/02/fiscal-dominance-and-the-return-of-zero-interest-bank-reserve-requirements.pdf
Timestamps:
0:00 Introduction and macro view
1:40 The Fed has a “shadow third mandate”
3:54 Fiscal dominance and its symptoms
9:24 Realization of fiscal dominance by the consensus
14:10 No recession in 2024
21:31 It’s a new Great Depression
26:00 Investment Opportunities: gold, Bitcoin, and industrials
35:19 Avoiding the scenario
40:05 Conclusion and parting thoughts
#economy #bitcoin #gold
source
A huge shoutout to everyone who recommended I ask Luke Gromen on the show. I ALWAYS appreciate your guest suggestions, so please keep them in the comments section or email me at julia@julialaroche.com. I hope you all enjoy this episode as much as I did. Be sure to hit the like 👍, subscribe, and ring the notification 🔔! This will help me grow the channel and bring on more great guests. I appreciate you all. 💙Julia
Where/when is the point after which yellen (or whoever) cannot afford to pay these higher interests? Can he offer a specific calculation for that point of no return, so to speak?
Fiscal dominance is a notion pertinent to the Treasury, not the FED, right? How did the FED’s rate hikes put us back into fiscal dominance? Aren’t negative real rates more ideal for the Treasury’s debt-servicing? Besides, didn’t the Treasury collect higher taxes during the QE+ZIRP regime, when it came to fiscal dominance?
Great interview. Subscribed. Like your interview style Julia.
IT SOUNDS LIKE THEY ARE HYPERINFLATING THE DEBT AWAY AT THE EXPENSE OF THE MIDDLE CLASS.
Luke Gromen's explanation and recollection of how the FED (Chairman J.Powell) and US Treasury (Sec Yellen) dealt with the 'bail-out' of the banks in March 2023, examples SVB, Signature Bank etc and the creation of the BTFP which is to come to a close this March 2024…..soft landing recession, is no destruction of the banks and
the equity markets….
CPI wouldn’t rise within two months from re-starting of QE, it’d take 1.5-2 years… Monetary policy acts with lags.
When will different assets stop trading in the same direction?
There is going to be a recession, as well as 1-2% CPI this year!
Luke should learn about the Quantity Theory of Money!
How does increasing fiscal deficits amount to stimulation when it is for paying interest expenses in practice?! This individual is confused.
M2 has contracted this much only four times in US history. The result: three depressions, one banking crisis. How can these mavens project no recession? Yellen has already had her victory lap. She is not going to look smart towards the election!
He is so wrong again! Even if the FED make that choice, it will take months for the effects to be seen. We are going to have a recession b/c of what has happened for the past couple of years!
He speaks as though the FED are omnipotent, which they are not.
How would silver act during a recession?
How about gold miners & BTC miners?
People are obsessed too much w/ the funds rate whereas M2 is the real issue here!
What is “net-settling?”
He is wrong again: the long-term treasuries will do well during the recession. (Coming from a treasury-hater.) & if the FED were to cap the yields, how would the treasuries hurt?
How about a Swiss debt break, instead?
What does “objectively” mean?
Not to mention the 4 trillion due this year..
Luke is the best! I'm so glad I watched this pod and found out about the fiscal dominance paper. Our analysis was lacking this key piece of info. We'll be recommending this podcast to our investors.