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#134 Luke Gromen: A Hard Landing Isn't Going To Come In Stocks. It Will Come In Treasuries
Description
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:
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