АДМИНИСТРИРОВАНИЕ: Luke Gromen: Understanding the Sovereign Debt Bubble 2021

Tom welcomes Luke Gromen back to the show to discuss the signposts in the markets. The global sovereign debt bubble is bursting, which last occurred a hundred years ago. They are nearly entirely out of options, and bond markets are beginning to understand this fact.

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The United States is running unprecedented massive trade and fiscal deficits. The rest of the world finances our debts, and this is quickly breaking down. Luke believes these obligations will be resolved through inflation both internally and externally. There is a lack of political will to default.

He discusses a Black Rock paper that predicted interest rate control and is what is now occurring. The Biden administration plans further stimulus. The US government is now driving economic growth through monetary and fiscal policy.

The Fed is actively testing yield curve management over the past several weeks by buying assets to back up the 10-year bonds. They are testing levels to determine where rates start to become a problem. They are likely to maintain this policy until something else breaks.

He thinks the Fed policy in the short-term may be bullish for the dollar. They want to reflate the global economy via fiscal spending while keeping currencies in the same overall channel.

He explains how gold could be revalued and how that could fund the treasury without increasing debt. However, this would be a last-ditch option for the United States.

The Fed wants inflation, but it doesn’t want bonds to react. It can’t have both, and ultimately we’re going to get and are experiencing inflation. If the Fed doesn’t buy enough debt, we see that as deflation This is the first cycle where if rates don’t rise too much, we will default. At some point, defaults lead to weakening currencies.

Conceptually money velocity is important but measuring it isn’t easy. There is the real economy, and then there are the financial markets. It’s a marginally valuable metric, but it simply has too many moving pieces.

He discusses how bitcoin could be reflecting what gold should be doing. Bitcoin is not a centralized controlled market, and when big buyers enter the market, it moves higher. Physical gold takes a lot longer to obtain, but paper gold can be bought immediately, which accounts for the performance difference.

Time Stamp References:
0:00 — Intro
0:36 — Signposts
3:37 — Debt Bubbles
7:13 — Money Supply Control
10:30 — Yield Curve Control
13:00 — Dollar Path Forward
15:04 — Hail Mary’s
16:29 — Gold & The Fed
17:46 — Foreign Treasuries/Gold
19:29 — Inflation Vs. Deflation
22:07 — Measuring Money Velocity
25:34 — Bitcoin and Gold
28:33 — Gold Short Positions
31:21 — Gold and the TLT
32:55 — Gold Investing Criteria
34:52 — Concluding Thoughts

Talking Points From This Episode
— Global sovereign debt bubble crisis.
— Yield curve management vs. control.
— Dollar outlook, money velocity, and inflation
— Why bitcoin reflects what gold should be doing.

Guest Links:
Twitter: https://twitter.com/lukegromen
Website: https://fftt-llc.com/

Luke Gromen began his career in the mid-1990s in Research at Midwest Research before moving over to institutional equity sales and becoming a partner. While in sales, Luke was a founding editor of Midwest’s widely-read weekly summary («Heard in the Midwest») for the firm’s clients. He aggregated and combined proprietary research from Midwest with inputs from other sources.

In 2006, Luke left FTN Midwest to become a founding partner of Cleveland Research Company. At CRC, Luke continued to work in sales and edit CRC’s flagship weekly research summary piece («Straight from the Source») for the firm’s customers.

In 2014, Luke left Cleveland Research to found FFTT, LLC («Forest for the Trees»), a macro/thematic research firm catering to institutions and individuals that aggregates a wide variety of macroeconomic, thematic, and sector trends in an unconventional manner to identify investable developing economic bottlenecks.

Luke also provides strategic consulting services for corporate executives. He is a graduate of the University of Cincinnati and received his MBA from Case Western Reserve University and earned the CFA designation in 2003.

#LukeGromen #FFTT-LLC #DebtMarkets #Gold #Stimulus #Deficits #Bonds #FederalReserve #Gold #Inflation

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37 комментариев

  2. So paper Gold is Fiat Gold 🤷‍♂️ I’ve bought physical gold & silver 😎

  3. Great stuff Mr. Gromen. You’ve made the most sense of anyone I’ve listened to the past several months on YouTube.

  4. How many TONS of gold are you using in your equation. I believe the # is 8100 tonnes. @ 2k an ounce somebody's short?

  5. Excellent content and review of the history of the mess in our lives now. Something will break.

  6. Awesome interview he mentions very simply the variables mostly defining fed economic measures to state if macroeconomy is stable or weak. He lays it out simply and clearly enough.

  7. Love the internet. No one has ever seen the same internet, the same world, or agrees on the future. What a great time to be alive.

  8. We live in a fantasy world.

  9. Good talk. Everything he is saying makes sense except the notion, that Luke appears to take seriously, that government spending grows the economy. It may make the numbers go up, but is it actually productive growth or just more malinvestment? If it was productive growth then we should have the strongest economy ever as should Japan. Rather I think increased government spending is just re-arranging deck chairs to service political interest groups mainly at the (inflation) expense of producers that save.

  10. listening to your guest no wonder we are going off a cliff paper paper paper america the shit show

  11. Luke is a brilliant individual. Always look forward to his analysis.

  12. Tom, I learned more from Luke in this one interview than I have in hours of listening to lesser minds. I have to follow this guy on Twitter. Tom you are quickly becoming the premier interviewer among the masses of podcasts out there. I appreciate you and Palisades.
    Guest suggestions; Mike Alkin, Bill Sheriff and Keith Neumeyer. Much obliged.

  13. Luke is a definitely sharp tack. Always elucidating

  14. How many hedge funds are a margin call away from Archegos-style implosion?

  15. Why did Powell mention BTC as the competitor of gold, not of USD?

  16. BTC has futures, though.

  17. Excellent discussion thxu

  18. MV=PG sounds like the momentum formula in Physics. Can the FED lose the control? How about the technological deflationary/disinflationary forces, then, like Gravity?

  19. Why does the FED want inflation: to render the government debt serviceable?

  20. Hirschmann's target for gold was $6k, too.

  21. How would growth make the debt more serviceable & the debt less burdensome?

  22. "…keeping interest rates well below CPI…", he means?

  23. Luke Groman is the most clear and cogent macro-analyst I have heard.

  24. Superb. Thanks Luke and Pallisades.

  25. Re-invite Brian Hirschmann!

  26. Big Gromen fan. Always love to hear his latest thoughts.

  27. I am not sure there is a better macro analyst alive than Luke Gromen. His weekly report/analysis Tree Rings is amazing.

  28. Excellent interview. “ Riding 2 horses with one rear end” What a great image.

  29. I think this interview was recorded before yesterday's big drop in metals.

  30. Excellent info Tom. Great interview as always.

  31. That's a hell of an intro.

  32. "Any society where there is money is doomed to dehumanize itself until every Man becomes a thing … a commodity"

  33. It is not a fantasy world but the accomplished reality of the fetischsime of the totalitarian commodity in its upper stage, as all the insurrectionary groups of radical criticism had envisioned.

    "Never has it been allowed to lie to them with such perfect lack of consequence: the viewer is only supposed to ignore everything, deserve nothing. "

  34. Favorite podcast 🙌

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