Luke Gromen: Expect Market Turbulence Ahead Due To Tightening Liquidity
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Former Vice President Dick Cheney famously said "Reagan proved that deficits don't matter"
True or not, running greater and greater federal budget deficits has become standard operating procedure for Washington DC.
When Cheney uttered those words, the annual deficit was in the low hundreds of billions. It's projected to be $2 trillion this year.
At that scale, today's guest expert would argue that deficits are indeed starting to matter, because the US is now increasingly challenged to service the debts and other associated liabilities that have accreted from all the years of rising deficit spending.
In fact, he concludes we're on a collision course for a sovereign debt crisis, one that will take the purchasing power of the US dollar down with it.
To find out why, and what can be done about it, we're fortunate to welcome Luke Gromen, founder of macro research firm FFTT, LLC, back to the program.
#volatility #marketcorrection #dollar
0:00-6:05 US Deficit As A % of Global GDP 6:06-11:22 Dollar Liquidity Is Tightening 11:23- 15:55 Why Gold Should Do Well 15:56-22:40 Sovereign Debt Crisis Ahead? 22:41-37:40 Social Crisis Ahead, Too? 37:41-42:03 Are We In Fiscal Dominance? 42:04-44:40 Don't Put Faith In The System 44:01-55:24 Luke's Market Outlook 55:25-1:01:53 Will The Election Outcome Make Any Difference? 1:01:54 Importance Of Mindset _____________________________________________ Thoughtful Money LLC is a Registered Investment Advisor Solicitor/Promoter.
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The US faces a structural sovereign debt crisis driven by deficits consuming 30-40% of global GDP growth, forcing the Federal Reserve and Treasury to choose between austerity (politically impossible) or currency debasement through inflation and dollar weakness, making gold and short-duration assets essential hedges.
- US fiscal deficit of $2 trillion competes with only $6.6 trillion in global nominal GDP growth, creating unsustainable crowding-out dynamics
- Central banks lack political will to cut spending or raise rates sufficiently, ensuring they will eventually monetize debt through inflation and QE
- Gold breaks its historical inverse correlation with real rates starting Fall 2022, signaling markets now price in inevitable currency debasement once debt reaches critical thresholds
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The US demographic situation has shifted from a pyramid to approaching a rectangle (more like Europe), with the critical 25-54 age cohort now shrinking rather than growing, which is a structural headwind for long-term economic growth and tax receipts independent of policy choices.
“so we could probably get people to stick their heads pretty far in the oven um f we go down about this to by the way ju just for a quick point you know America isn't really a a pyramid country anymore it is actually approaching more the the Europe sort of rectangle right and for folks that want to really do a deep dive of this I did a um I did an interview a few week a few months back with Chris Hamilton of um economica who who tracks um the demographics U of the US really closely you might not recognize his name but you've seen his charts before I guarantee you um we talked a lot about this and Luke you know one of the big issues with the US is that we are our naturalized our natural population birth rate is plummeting um uh and this totally separate discussion we won't have now immigration might actually have to become a real important part of the solution if we want to keep our economic model and keep it growing over time but um the the key demographic of 25 to 54 year olds um is actually shrinking now that cohort is shrinking”
The casualty of the government's choose-to-inflate strategy is the purchasing power of the currency, not nominal wealth; the bottom 80-90% of the population experiences real wealth erosion because they own fewer inflation-hedging assets while the top 10-20% owns the assets that benefit from inflation, accelerating wealth concentration and inequality.
“the casualty there um is the currenc the purchasing power of the currency right and and not for nothing you talked about how they they they monkeyed around a bit you know in 2020 well just using tration U measurement for inflation since January 20120 uh they think the inflation rate has been over 25% right so you know you can interpret that is saying well we just lopped a quarter off the purchasing power of the dollar in four years right and there's a number of people that I've mentioned that stat to saying you know what like that actually feels like they're they're you know uh it feels like a low number compared to what I'm feeling in my my regular life right so um you know that can't continue forever because uh the currency is what your populace uses to live right and when they create when they take steps that that try to create a Super Bubble like you said uh what happens well you see the people at the very top do great because they own the assets that respond to that where increasingly the folks uh who aren't at the very top”
The ratio of entitlements plus interest expense to tax receipts is currently at 92-93%, meaning the big three (entitlements, defense, interest) consume 110-111% of receipts compared to just 67% eight years ago, putting the fiscal situation late in the game structurally.
“the big three are call it you know 3.3 trillion of of entitlements is about 66% of receipts interest at a trillion two call it pro forma is another 25% right so there we're at 92 93% right there defense is uh 900 billion on 27 trillion of GDP so or excuse me five trillion of of receipts uh so you're another 18% give or take there so we're at you know 110 to 11% on the big three um in terms versus 67% just eight years ago”
Interest expense on US debt is repricing as the Fed moved to the front end of the yield curve while back-end yields have risen, and the weighted average interest rate will move from 3.1% at the start of the year toward 4% over the next 18 months unless the Fed cuts aggressively, and interest expense will grow at 20% year-over-year.
“interest expense um is actually going to continue to grow really fast because we came into the year at a weighted average interest rate of I think 3.1% um they've moved to the front end you're repricing the back end like that number is probably G to unless the FED starts cutting really aggressively really soon that number's probably heading towards foreign change over the next 18 months and so that's when you look at that plus the 8% ker growth of federal debt you're talking about interest expense which used to be a tiny little Lon item that didn't matter but now it's 20% of the budget it's probably going to be growing you know 20% a year-over-year”
Despite the common narrative about intergenerational wealth transfer from boomers to millennials, the reality is that median boomer savings are very low (more than 50% have basically nothing), and the median-level transfer will be insufficient to power economic growth; only a minority of millennials will benefit from significant inherited wealth.
“I talk a lot in this Channel about the difference between in this environment why it's so key to understand the difference between the mean and the median if you look at the mean well if you look at the mean average savings of Boomers it's actually pretty depressing I mean it's in the hundreds of thousands it's not enough to keep you going for the next 20 years um but if you look at the median it's just terrible right I think like more than 50% of Boomers don't have anything basically saved right and so um if that that intergenerational you know uh transfer does happen it's going to be going to a minority of of Millennials right”
The US fiscal deficit has been upgraded to approximately $2 trillion by the CBO, which compares against global nominal GDP growth of roughly $6.6 trillion, meaning the US government needs about 30% of global GDP growth just to finance its deficit spending.
“us fiscal deficit uh just got upgraded uh from a trillion 5 to trillion 9 so let's just round that to $ trillion um by the CBO a few weeks ago uh that $2 trillion Compares against a global GDP growth let's say Global GDP is 110 trillion growing 6% nominally it might be too high but let's let's be conservative that's $6.6 trillion doll of of nominal GDP growth the US government needs two trillion of it just to keep the wheels on the car so let's call it 30% of global GDP growth just to finance us deficit”
We are entering or have entered an era of fiscal dominance where central banks' primary mandate becomes preventing the debt burden from spiraling out of control; they must therefore abandon their inflation control and employment mandates if necessary to keep debt serviceable
“um the fed's going to go back to um stimulating and and easing for all the reasons that you mentioned um but part of that is because we're entering this era maybe have entered this era who knows um of what's called fiscal dominance where basically um the the central banks are trying to kind of do everything right they're they're trying to keep the economy going along well they're trying to keep price stability they're trying to keep people employed um but really their job at the end of the day is to try to keep the debt burden from spiraling out of control”
Gold wins in both dollar tightening and dollar loosening scenarios: in tightening, it wins because rising rates create questions about US solvency; in loosening, it wins because the Fed will have to print money rather than allow rates to spike and bankrupt the government.
“it had we saw this last fall where gold did sell off a little bit at first and it was only the dollar up but then gold starts Rising the longer it goes on uh while everything else Falls uh for a very straightforward reason which is the US debt load is so high that as the treasury market sells off it begins to raise questions about the solvency uh sustainable sustainability of the solvency of the US government now the US government's never going to go broke uh they own the debt in their own currency yes which is exactly why gold should go up”
As the dollar strengthens due to crowding-out effects from high US deficits, foreigners will sell what they can (not what they want) to defend their currencies, particularly treasury bonds, which sends yields up and further slows both the US and global economy in a self-reinforcing cycle.
“that crowding out impact all seek will drive the dollar up as the dollar goes up foreigners will sell what they can not what they want to to defend their currency that's treasury bonds that's going to send yields up that's going to slow the US economy that's going to slow the global economy wash R repeat until we either get things to really come Unwound or someone supplies more dollar liquidity fed treasury somehow some way”
The government's playbook involves creating Super Bubbles in stocks, houses, cars, and other assets to drive up tax receipts through higher incomes and asset sales, which temporarily reduces the ratio of interest expense plus entitlements to receipts, buying time before having to choose between defaulting and inflating.
“like you know are we going is the US government going to allow itself to default on its debt no okay are they going to cut entitlements and defense by 25 to 30% immediately and permanently no okay then whenever this gets a little crazy they're going to create a Super Bubble in stocks houses cars you know monkey jpegs whatever to drive receips and away we go”
Treasury financing is increasingly concentrated in the bill market (short-duration) rather than the long-duration market because there is not enough demand at long-term yields to absorb the $2 trillion annual deficit, indicating that the Treasury is being forced to effectively 'print dollars' through rolling short-term debt.
“the shorter you get in duration the more cash-like the bond is Right a dollar bill is just a z% yielding Bond of zero duration that's why it says Federal Reserve note on it a note is just a bond uh so c t bills are a little little bit less money like and and the longer you go the much less money like they are so the more you hear the treasury financing in Bill markets the more you should interpret that as the closer we're getting to the treasury financing Itself by just printing dollars and so it's going to be secularly structurally inflationary all else equal”
AI and humanoid robotics could compress wages for the bottom 50-90% of income earners (not just working class but middle class professionals), similar to the China shock of the 1990s-2000s but applied broadly, accelerating inequality and potentially destabilizing demand.
“particularly if you start overlaying things like Ai and humanoid Robotics and things like that where you could be compressing wages of the bottom 50 you know you get another China shock basically except this time not just for the working classes for sort of everybody below 80th percentile or 90th percentile um and if that happens that's only going to accelerate things”
In 2020, the fiscal metric reached 100% for the first time; the Fed responded with $600 billion per week in QE after the Treasury market crashed at lows in COVID, triggering the receipt boom that followed.
“we can go back we see 2020 we got to 100 % for the first time fed came in 600 billion a week in QE after the treasury off the rent treasury market crashed at the lows in Co um and away we go”
Global central banks and BRICS nations are increasingly selling Western sovereign bonds and buying gold, effectively treating gold as the new reserve currency of an alternative monetary system, because gold holds purchasing power in energy terms while Western sovereign debt does not.
“there's a fundamental Catalyst too which is that global central banks are doing exactly that and Global well bricks certainly uh oil exporters and oil importers are also doing that same thing which is sell Western Sovereign bonds by gold use use gold instead I I saw you made the comment that uh yeah everyone's talking about the new bricks currency looks like gold is the new bricks currency that's what they're all investing in”
While productivity improvements from AI in healthcare could theoretically offset wage losses, the reality is that most healthcare costs occur in the final years of life for people who will never be productive workers again, so healthcare automation may reduce costs but will not add workers to the productive economy.
“there could there could be productivity on the other side yes and 177% of GDP in this country is Healthcare right so like yes we're get cheaper healthare but if you wipe out a bunch of the jobs to do it because AI is doing your healthare on your phone for you now like how does that like that's all fine but the debt is the problem the debt let me just interrupt there too which is you know in the healthcare because it is a big chunk of GDP the vast majority of those costs are going to people who are probably never going to be productive workers in the workforce again right because most of healthcare cost and and human life is spent in the last couple of years right so you know we count it as GDP but it's not really advancing the ball forward in terms of driving economic growth no it's digging a ditch one place and you know pouring the dirt into a ditch over here and then diing it out of that ditch and pourn a broken window fallacy in aggate”
For sovereign duration exposure, investors should own gold rather than 10-year US Treasuries; a 0% real yield on gold with appreciation potential is preferable to negative real yields on Treasuries.
“I think you own t- bills I think you own gold uh I think a very substant I I think all of your duration for sovereigns should be in Gold I would rather earn zero in gold with a 5.3% t- bill kicker than I own 4% owning 10year treasuries for the United States uh let alone sort of anything else uh from a long mid to longterm Sovereign uh so I think I think there is no cause to own for people own mid to long-term sovereign debt”
Since January 2020, using alternative inflation measurement, the cumulative inflation rate has been over 25%, meaning the US has eroded a quarter of the dollar's purchasing power in just four years.
“just using tration U measurement for inflation since January 20120 uh they think the inflation rate has been over 25% right so you know you can interpret that is saying well we just lopped a quarter off the purchasing power of the dollar in four years right”
The US job market narrative of strength is contradicted by anecdotal evidence and reported experience: despite more job openings than applicants, it is increasingly difficult for young workers to get callbacks or interviews, suggesting the BLS headline numbers mask deterioration in job quality and accessibility.
“I'm hearing more and more stories um all all over but certainly from my kids cohort um but but also um nationally that even though we have this quote unquote strong jobs Market with still more job openings and applicants and whatnot the general reporting is is that it is really hard to get a job now it's get it's really hard to even get a call back for an interview for posted uh job openings online so even though it you know we're kind of being told hey things are still really good in in jobs world the reported experience of most people really stands in stark contrast to that”
Baby boomers are currently spending at a very high rate relative to wealth (YOLO behavior) as they hit retirement, which is masking underlying weakness in private-sector demand and supporting nominal GDP growth that would otherwise be weaker.
“against that you've got the Boomers who are like hey you know YOLO 75 trillion you know I'm gonna spend it”
The historical inverse correlation between gold and US real tenure rates broke in Fall 2022 for the first time in Groman's 29-year career, indicating that the US debt and fiscal position has crossed a tipping point where rising rates now signal future monetary debasement rather than tight money, making gold responsive to fiscal stress rather than monetary tightness.
“in the fall of 2022 which is United States real rates uh inverted always correlated throughout the vast majority of my career with gold in other words as real rates rose gold fell and vice versa that stopped that that that correlation broke for the first time in my career I've been doing this 29 years um in the fall of 2022 and that was a hugely important message that has continued to this day which is the US debt and fiscal position is beyond the Tipping Point where Rising rates are now good for gold because Rising rates”
Policymakers effectively use two tactics to manage the political sustainability of currency debasement: (1) discrediting objective measures of inflation and encouraging reliance on government statistics ('lying eyes' fallacy), and (2) focusing public attention on divisive social issues (left-right, climate, justice) rather than the underlying currency mismanagement that hurts everyone.
“number one who are you going to trust you know me or you're lying on and you know they do a pretty nice job of discrediting anything that you know you know you're lying eyes um furthermore they do a really good job of keeping the bottom 95% of this country maybe even the bottom 98% of this country focused on Left Right blue red and who's to blame for it versus the actual underlying issue which is currency currency mismanagement it hasn't matter who's been in office not really but as long as they keep people focused on social justice issues and you like like you know climate change and stuff that you know maybe will matter somay”
The $1.3 trillion global bond market will eventually recognize that it is the 'sucker at the card table' and systematically shift assets away from middle and long-duration sovereign debt ($65 trillion in equities, $4 trillion in gold, and $1 trillion in Bitcoin), with those asset classes rising as bond yields fall or bond prices crash.
“I think we're in the early middle Innings I guess of the $1 130 trillion Global bond market figuring out that it's the sucker at the card table particularly at the middle and long-term uh uh durations and starting to squeeze itself into $65 trillion in US equities $4 trillion do in gold and a trillion forign Bitcoin”
The demographic claim that America has better demographics than other developed nations is conditional on AI and robotics not fundamentally altering the productivity of young populations; if AI does compress wages broadly, then young populations become a political liability (protests and instability) rather than an asset.
“this depends if Ai and Robotics do what Ai and Robotics are said to be able to do over the next 10 years now you're going to have a whole bunch of young people you're the the political inst un you know these are going to be your politically stable regions and these are going to be your politically unstable regions because all those young people are going to have their wages depressed and old people don't protest young people do”
If policymakers devalue the debt and currency, inflation will accelerate, but the S&P 500, the broader economy, growth, and jobs will 'rip' (surge strongly), creating a new set of winners and losers different from the winners and losers of the past 40 years of dollar strength.
“if they do something where they they drastically devalue the debt and then devalue the dollar like you know inflation's going to rip but the S&P is going to rip the economy is going to rip growth is going to rip jobs are going to like and so yeah there there will be significant change um there'll be winners and losers as there always are um there'll probably be different winners and losers in happen for the last 40 years if you're talking about weakening the dollar”
Any entitlement reform must be preceded by devaluing the debt first; attempting austerity without debt devaluation will create a debt spiral, so the logical sequence is: devalue the currency/debt first, then undertake entitlement reform, then grow real economic output.
“look entitlement reform you can't do it without devaluing the debt first that's the that's the thing you have to devalue the debt before you start any kind of austerity program or you're just going to create a debt spiral so like to me the windows open on some sort of you know currency movement uh dollar weakening agree something in the first half of next year one way or another no matter who's President”
Once entitlements plus interest expense (the true interest expense) reaches 100% of tax receipts, the situation becomes a four-alarm fire where the dollar rises every day, Treasury yields rise every day, stocks fall every day, and gold may fall but outperforms everything except the dollar
“like I said we're not at 100% when you get to 100% that's like four alarm fire that's where the dollar is going to be going up every day treasury yields are going be going up every day stocks be going down every day gold will probably be going down in that environment as well but outperforming everything but the dollar uh for a bit”
It is astonishing that the American public owns anything beyond T-bills given the track record of government deception; the fact that people hold mid-to-long-term sovereign debt is a market failure or sign of financial ignorance
“I'm astonished that the American public owns anything beyond T bills it's astonishing to me”
Investors should hold a small position in Bitcoin (1-2% of portfolio) because of its volatility, but the asymmetric upside in a monetary debasement scenario justifies the exposure.
“I think T bills f I think gold is an important position I think for most people very small position in Bitcoin because it's so volatile but I do think it's you know a 1 to two% position is important to hold”
Treasury bills at 5.25% are an acceptable core holding for conservative portfolios; however, this should not be viewed as a permanent strategy—investors should not rely on T-bills alone for long-term wealth preservation.
“okay yep you can you can get the safe five and a quarter percent right now um in t bills um that's likely not a forever strategy or I don't know maybe it is but what else do you do you round out a portfolio with besides those”
Over the past 5-6 years, the dominant investment dynamic has been simple binary: if there is enough dollar liquidity, go long the dollar, long gold, and long everything else for strong returns; if there is not enough dollar liquidity, own the dollar and gold but nothing else to preserve capital.
“as you look back over the last 5 to six years uh it's really just is there enough dollar liquidity or isn't there and if there isn't you own the dollar and you own gold and you don't own anything else and if there is enough dollar liquidity you're short the dollar you're long gold you're long everything else and you do pretty well”
If a drastic fiscal or currency realignment occurs, it will happen in the first half of 2025 (immediately after a new president takes office and before midterm electoral pressures begin), because any severe austerity or currency devaluation must be done early in a presidency to allow recovery time before the next election.
“in early 25 they're going to have a full two years until the midterms and so something I've started to think about is that if you're going to do something drastic you do it early it's it's going to happen in the first half of 25 and maybe in the first quarter of 25 which and that look what's drastic massive en entitlement reform that could be something uh a significant devaluation of the dollar that is something that could happen but it's gonna H once you get into the second half of that year it's going to be too late they be moving towards midterm”
Oil prices have been trading in a $70-90 band for the past couple years, and this is not accidental: below $70, US shale production rolls over and OPEC+ gains market control; above $85-90, the US Treasury market dysfunctions and forces policy intervention; the band maintains stability in both sectors.
“my view on oil is it oil's been and forget about my view factually oil has been in a $70 to 90 range for a couple years now I don't think that's a mistake below $70 is the point at which US Shale starts to roll over and we seed the oil Market to OPEC plus above 90 above 85 really is when the US Treasury Market starts to dysfunction and so we're seeing the oil Market being kept between 70 and 90”
If foreigners attempt to sell $100 billion in treasuries daily for just four or five days, the treasury market becomes dysfunctional, volatility spikes too high, and violent asset class selloffs occur globally, triggering Fed/Treasury intervention because such dislocation is 'simply not allowed to occur.'
“if they say here take a 100 billion treasuries for sale I'll be back tomorrow here take another 100 billion treasuries for sale I'll be back tomorrow take another 100 billion and after about day four or five of that what we have seen is that the treasury market gets dysfunctional treasury volatility gets too high um and it creates this violent selloff across asset classes in the US and around the world and it's simply not allowed to occur”
The Fed and Treasury can create enough dollar liquidity to manage crises through swap lines and other tools, but the real governor on their ability is the level of inflation their interventions drive and the political reaction to that inflation domestically.
“can they create enough liquidity absolutely they can um you know swap lines Etc um ultimately again if they get the dollar down it's really the governor on its the level of inflation and really the level of inflation isn't even a governor it's the political reaction to the level of inflation domestically that's the governor on it more than can they uh they can”
The math of the US fiscal situation is such that cutting defense and entitlements by 25-30% immediately and permanently is the only way to avoid needing to keep real interest rates negative indefinitely, and since that is politically impossible, the government will instead inflate away the debt burden.
“so then it becomes down to do you think they are going to slash defense spending slash entitlement spending uh by 25 or 30% effective immediately and permanently I think there's zero chance of that that's what they would need to do to make the math work for like a moment in that case so that they could make room to pay four and 3/4 or 5%”
The Fed should not be trusted because policymakers have repeatedly misled the public over 25 years: NAFTA was supposed to help the middle class but didn't, China WTO entry was supposed to help the middle class but didn't, 'if you like your doctor you can keep your doctor' was false, Iraq had no WMDs, and Wall Street was bailed out at par while homeowners were not, establishing a pattern of broken promises.
“I'm astonished that Americans put any credibility in any of their policy makers utterances and I'm astonished that any people put any credibility in any of their policy makers utterances I mean I guess like it's really Stockholm syndrome right like NAFTA was supposed to be good for the middle class China and the WTO was supposed to be good for the middle class uh you know if you like your doctor you can keep your doctor Iraq had wmd we had to bail out Wall Street at par but we couldn't help you Mr homeowner”
A rational investor would not lend money to the US government for 10 years at 4% interest given the fiscal trajectory and history of broken commitments; instead, investors should accept 5.25% on 3-month Treasury bills and roll them over frequently, or lend money for only 3-6 months at payday loan rates, treating the US government with the skepticism of a subprime borrower.
“what how do I how do I turn that investment thesis I don't lend people money like that at 10 years for 4% full stop I don't lend people money like that I don't I don't you know I don't lend it at 1% to the Japanese I don't lend it at 4% for 10 years to the Americans I don't lend it at wherever the heck we are for the Germans two and a half three four I I you know I haven't checked the German tenure I don't lend people that have stretched the truth to me for 25 years I don't lend them money for 10 years I'll lend them money at 5.3% for three months come back to me in three months I'll give you a payday loan”
The Fed cannot march the dollar down gradually AND keep inflation at 2%—it must choose one or the other; Groman believes the Fed will move the inflation target to 3% and let actual inflation run to 3.8%, then claim success.
“no they're gonna have to choose one or the other okay good that I think you'll see the target go to yeah I think you'll see the target go to three or you know they'll take the target to three and then you know it'll run at 3.8 and they'll be like oh look we're so close it's it's you know we're doing our job”
We are currently entering an environment of insufficient dollar liquidity, evidenced by economic slowdown and increased deficit spending, similar to conditions seen in Q3 of the previous year, Q1 of the last year, and Q3 two years ago, which will produce significant volatility across asset classes until policymakers inject more dollar liquidity.
“tactically uh I think we're starting to get into one of these environments where there's not enough dollar liquidity again it's where we're seeing a bit of a Slowdown the deficit has been increased and so I think we're going to start moving into one of these types of environments uh like we saw in the third quarter of last year and in the first quarter of last year and in the third quarter of the year before and and where there's not enough dollar liquidity and that's tactically um you know probably a lot more volatility coming across a lot of different asset classes uh until until the policy makers inject more dollar liquidity”
Both current major US presidential candidates are running fundamentally the same economic policy—just different types of alcohol—so regardless of who wins the election, the underlying fiscal and monetary course will remain unchanged, making the election primarily a question of divisive social issues rather than substantive economic direction.
“you know Biden is running Trump's economic plan he different different types of alcohol basically yeah exactly um and you know the one thing I would say that I think is worth mentioning for both candidates really who no matter who wins if it's one of the two running as as we stand now they're going to be in a unique position which is to say they can't run again after this they're not going to be running for reelection”
Federal receipts in April 2024 were up 23% year-over-year and in May up 22% year-over-year, and assuming the rest of the economy is flat, this annualizes to 5.1% nominal GDP growth, which combined with government spending equal to 23% of GDP means a recession is unlikely unless there is a massive catastrophe.
“if you look at if you look at the uh April Federal receipts were up 23% year-over-year may they're up 22% year-over-year um Federal government's 23% of GDP so just those if you annualize that you're talking about 5.1% nominal GDP growth assuming the rest of the economy is flat and and I do think you're seeing a Slowdown in in a number of different sectors particularly the more interest rates sensitive uh but against that you've got the Boomers who are like hey you know YOLO 75 trillion you know I'm gonna spend it”
If the Baby Boomer generation dies off and passes wealth to younger generations, entitlement spending (which represents the largest obligation) will fall because most is spent on the sickest 20% in their final years; this would mathematically ease the fiscal crisis, provided the transfer occurs and isn't absorbed by healthcare costs.
“and then ultimately if they can go long enough or the boomer generation who has all of the obligations and you know vast majority of the obligations and a vast majority of the money then the math can work right if the Boomers largely pass on and pass their money largely on to their kids the United States fiscal situation sort of okay a bunch of 45y olds holding you know 70 trillion in assets in the prime spending of their life and that 3.3 trillion in obligation annually for entitlements Falls dramatically particularly if it's the sickest 20% of Boomers have pass on”
Investors should own US electrical infrastructure equities, US industrial equities, and energy equities because they benefit from government stimulus spending and are positioned to profit from the dollar weakness and inflation that will follow Fed monetization.
“and then I want to own equities I want to own uh electrical infrastructure equities for the United States uh industrial equities”
Whether you think you can or you think you can't, you're right—mindset is the determining factor across all areas of life including business, health, and relationships, and this belief was formative in the decision to start FFT LLC.
“whether you think you can or you think you can't you're right uh that's that's been a big one for me um in everything uh Business Health relationships Etc um so much of it is so much of it is mindset”
Jeff Bezos' regret minimization framework—projecting yourself to age 70 and asking whether you would regret not attempting something—was influential in the decision to start FFT LLC, and the outcome has been better than expected with unexpected benefits in terms of people met and experiences had.
“when I started fftt I read uh um as I was thinking about starting it um Jeff Bezos said something about call it his his regret minimization framework where he projected himself forward to age 70 and looked back and thought okay would I regret this and I knew I would regret if I didn't try it and you know it didn't always it it doesn't look today like I thought it would uh when I started 10 years ago um it's a lot better to be honest I could have never imagined uh places I've gone people I've met things I've seen Etc uh but wow it's been totally worth it”