The Julia La Roche Show #269 Luke Gromen: The Fiscal Situation Is Completely Cooked - Powell Faces Impossible Choice, Get Out of Government Bonds Into Hard Assets
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Jun 27, 2025 
Luke Gromen, founder of FFTT, offers a thought-provoking macro perspective on the U.S. fiscal crisis. He argues that the government is spending far beyond tax receipts, pushing the Fed into an impossible position regarding interest rates and inflation. Gromen warns against government bonds, urging investors to pivot towards hard assets like gold and Bitcoin. He believes major fiscal challenges lie ahead, with Trump officials advocating for rate cuts due to untenable economic conditions. This conversation highlights significant shifts in the investment landscape and the complex relationship between currencies.
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Central Banks Are Cornered
- The breakdown of funding currency relationships between the yen and dollar shows central banks are cornered.
- Powell must choose between crushing the dollar via inflation or the bond market via higher rates.
Shift Into Hard Assets
- Get out of government liabilities and into private liabilities and hard assets like gold and Bitcoin.
- Retail investors heavily loaded in long-term Treasuries are positioned as likely losers in the current environment.
Central Banks Shift to Gold Reserves
- Central banks are increasingly buying gold, decreasing dollar FX reserves share.
- U.S. math requires sustained negative real rates to work, pushing foreign central banks toward gold.
