Bitcoin vs the Infinite Money Printer with Luke Gromen - WBD732

Luke Gromen is the Founder and President of Forest for the Trees
(FFTT). In this interview, we discuss the state of the economy,
government borrowing and the bond market. We explore the
implications of increased US government borrowing and spending on
debt and taxes. We also talk about cycles of quantitative easing,
a comparison of the economies of Argentina and the US, the
impacts of inflation on different groups and investment
strategies during a recession.


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Luke Gromen has been praised by former clients and colleagues as
having a "unique ability to connect the dots". Well, there are
lots of dots at the moment, and none of them are static. The
economy still seems like it’s in a perilous state with debt
levels seemingly out of control. We discussed whether there is a
limit to how much money the Treasury can borrow, and how the bond
market might be signalling that the Fed needs to restrict
borrowing.


We talked about how debt has ballooned as a result of the
reliance on quantitative easing (QE) as a means to bring down
interest rates. As Luke explained, this tool results in
inflation, the need to raise interest rates again, then rinse and
repeat. This cycle has been ongoing since 2014 when global
central banks stopped growing their holdings of reserves.


The issue is who will buy the US’s burgeoning debt? Many expect
the US to follow Japan’s model if the Fed starts buying bonds.
However, Luke stated that the US risks mirroring Argentina’s
economic situation as US government debt is financed mostly by
foreign entities. This significantly hinders the US government's
flexibility: it constrains money printing, adds upside risk to
bond rates and makes containing a spiralling debt burden much
more difficult.


The economic system's evolution over the past 30 years has
contributed to growing wealth inequality and unrest. We discussed
how these issues are manifesting in the US, suggesting that it is
likely to be due to the hollowing out of the middle and working
classes by successive governments from both sides of the aisle.


The result is a more comprehensive welfare budget, which
increases the tax burden. But, given that GDP growth lags behind
inflation and consumer spending is down, increased government
spending requires more debt. Money printing for entitlements only
adds more fuel to the inflationary fire. It is little surprise
that Luke remains bullish on Bitcoin.


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Show notes:
https://www.whatbitcoindid.com/podcast/bitcoin-vs-the-infinite-money-printer


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