Tom welcomes back Luke Gromen of Forest For The Trees back to the show. The discussion delves into complex economic and geopolitical dynamics, focusing on how global powers might navigate a transition away from the dollar-based system towards a neutral reserve asset like gold. He begins by highlighting that the current dollar-centric system is unsustainable due to high deficits and debt levels. A potential solution, he suggests, involves using gold as a neutral reserve asset, which would allow commodities to be priced in multiple currencies and facilitate trade settlements. This shift could create a more balanced and resilient global economic framework.

Moving on to geopolitical implications, Gromen notes that the conflict in Ukraine has underscored the limitations of conventional military strategies, shifting the balance of power dynamics. He points out that countries like Russia and China are driving efforts to move away from the dollar system, which necessitates a new economic framework. This transition is not just an economic shift but also a significant geopolitical realignment.

Luke emphasizes the importance of incentives for avoiding direct military confrontation with major powers. He explains that such conflicts are strategically unwise due to nuclear deterrence and the deep interdependence of economies. Instead, he argues that negotiating a new economic order aligns with long-term strategic interests and avoids the catastrophic consequences of war.

Drawing on historical context, Mr. Gromen observes that the post-World War II debt-based economy is nearing its limits, making it imperative to return to a more sustainable model. He suggests that transitioning to gold as a reserve asset could reboot global economies, fostering stability and growth without resorting to conflict. This approach not only addresses current economic challenges but also positions nations for future prosperity.

Time Stamp References:
0:00 – Introduction
0:55 – Tariffs & China’s Response
5:52 – Trade Disruption & Inflation
8:26 – Inflation & Real Rates
10:35 – Bessent Put & Move Index
12:26 – Treasury Auction Thoughts
16:45 – W. Buffett Cash Reserve
22:14 – Inv. Funds and Mandates
23:53 – News Cycle/Gold Theory
31:00 – Chinese Fin. Officials
34:46 – Large U.S. Gold Imports
40:48 – Official Denial/Confirm
44:44 – Revaluing Gold Reserves
48:28 – Gold Backed Treasuries?
51:49 – Gold Pricing Cui Bono
54:17 – Oil/Dollar Scenarios
1:02:03 – Russia/Saudi & Oil Mkts.
1:03:39 – Economics & Derisk. Conflict
1:14:53 – Incentives & Ukraine
1:17:17 – End of Debt as Assets Era
1:21:30 – Wrap Up

Guest Links:
Twitter: https://x.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.