Luke Gromen on Tectonic Shifts in the Financial System and Oil - FED 85

In this episode of Bitcoin Magazine’s Fed Watch podcast, CK and I welcome a special guest, Luke Gromen. Luke is founder and President of Forest for the Trees (FFTT) LLC, where he provides clients with macro insights and investible analysis of the global financial system. In this wide ranging conversation we dive deeply into Russia, gold, oil, the shadow banking system, bonds, you name it, we probably talked about it on the episode. Fed Watch is a podcast for people interested in central bank current events and how Bitcoin will integrate or replace aspects of the aging financial system. To understand how bitcoin will become global money, we must first understand what’s happening now. Thanks for listening and watching. If you like the content please share! Thank you. Common Misperceptions of the Market  We start off the show (after an awkward intro by me that Christian rescues) with Gromen giving a summary of his model for viewing the current economic landscape. He points to two widely held misconceptions that have created the situation in which we find ourselves: 1) The value of the petrodollar is the dollar, instead of the petro; and 2) thinking debt doesn’t matter. These are things people believe, but are in reality the opposite. I try to clarify the origins of these misconceptions, but do so badly. I believe that those misconceptions are due to the system in which they arose. In the long history of the post-WWII era, however, they were not misconceptions. The value was in the dollar of the petrodollar and US debt didn’t matter. They only became wrong as this era is ending. So, what I was wondering was did these misconceptions cause the end of the era or did the end of the era cause the misconceptions to become wrong. Achilles Heel of the Dollar System In this part of the podcast, Luke dives deeper into the tweet that prompted this interview, about Russia perhaps weaponizing gold, and as a response, the US weaponizing bitcoin. There is a fragile gold market out there of unallocated gold trading, centered on the LBMA and COMEX. Luke’s contention is that if Russia wanted to, they could simply declare that they will sell oil for gold and that could crash these markets and instantly transform gold’s market cap to a size able to handle the world's financial clearing. According to Luke’s interesting thought experiment, this move toward a petro-gold standard would lead to fewer US securities being held in national reserves around the world and lead to a multi-currency trade network. Dollar is Rising, Not Falling One of the things we could expect, if the theory about a multi-currency future was correct, is for the dollar index (DXY) to fall relative to other currencies. However, over the last couple of weeks, the dollar has exploded higher, reaching 99.4, the highest since May 2020. It is a level of strength the dollar has only achieved for a few months in the last 5 years, mainly during that brief period in early 2020. What ar