Preston Pysh (00:07:32):

I like your analogy there, as far as it being a switch. That it’s not a dial anymore, it’s binary. It’s either on or it’s off. When you kick it on, it’s like oh, my God. If you’re going to say what is causing the CPI gauge, specifically to start demonstrating that Fiat units are being added into the system? Because they’ve been doing this since 2008, 2009. They’ve just been doing it through the bond market. Is it because of the PPP loans? Is it because so much of this debasement that has occurred since the March 2020 COVID shock, is it because they’re mailing checks out to people? Is it because of those factors that the UBI like activities, is that what’s causing the 5% prints that we’re seeing? Or is there something else going on that we’re missing?

Luke Gromen (00:08:19):

I think it’s a combination of that, and I think it’s a combination of what we’re seeing with what’s happening with supply chains related to COVID. Then I think, too, I’m still not convinced that there wasn’t some element where China isn’t slow steaming stuff to us just to stick it in our eye regarding what we’ve been doing to them with some of their national champions like Huawei and some of this trade war stuff for the last three years under Trump and now continuing under Biden-

Preston Pysh (00:08:42):

Touch on that more before you go into your next point, because are they shutting down the ports because of “COVID reasons”, and then just totally messing up the supply chain on purpose? Or is there other things that you think that they might be doing?

Luke Gromen (00:08:56):

The short answer is I have no way of proving that. I’ve asked people in that chain… Here’s what I know, I’ve talked with several different people in the supply chain in the international container shipping business. Those people are telling me, in 20 plus years in the business, they’ve never seen it like this. They are seeing… It’s a perfect storm. The container shipping, the asset owners have been basically in purgatory since ’08.

Luke Gromen (00:09:24):

Unfortunately for them, what they did as we’re moving into ’08 and just after ’08 was load up buying the biggest possible boats they could buy because that’s how you derive efficiencies of scale in that business. You’re trading your 6,000 TEU boat, and you buy a 12,000 TEU boat, and that way… Now, the worst time to do that is right before your demand goes from 8,000 back to 5,000.

Luke Gromen (00:09:49):

That’s what they did. They’ve been burned and now, they’ve been consolidating, they’ve been tightening up capacity. The gist of it is that, the boats are awful and There’s no more boats coming until ’24 or ’25 at the earliest, assuming no more delays to building.

Luke Gromen (00:10:05):

Capacity is not going to grow. Then when you look at what’s happening in Asia, in Southeast Asia, you’ve got problems with the ports to start with. You’ve got COVID cases. I think it was Ningbo a few weeks ago, which is I think their fifth biggest port was shut down for, I think, two weeks for a single COVID case.

Preston Pysh (00:10:25):

One case.

Luke Gromen (00:10:26):

One case. One of my friends said, if it’s one guy, why don’t you just send them home?

Preston Pysh (00:10:34):

You could even lie that it was 100 people, and nobody’s going to question that.

Luke Gromen (00:10:39):

You know there’s something going on there. Either the Chinese are lying, and it’s like 1,000 people, it’s everybody, which is possible. This is something I experienced when… I used to work at a firm where we had this great Ag analysts and she covered names like ADM and Bungie and Tyson and all these. She was very tied in with grain shipments, and of course, China’s a huge player in that.

Luke Gromen (00:11:02):

Something that Chinese would do from time-to-time in that business would be oops, we ordered too much crap. We’re heavy soybeans, we’ve got to rundown the inventories. We’ve got no place to put this stuff. What they would do is they’d go, hey, that boat has GMO soy beans that are against our regulations, send it back or go get it inspected and come back to us.

Luke Gromen (00:11:29):

Of course, they weren’t GMO soybeans, because you don’t send a gigantic boat of soybeans to China without knowing what’s on the darn thing. But what it was, was just an inventory management, it was a way to smooth things out.

Luke Gromen (00:11:40):

Is it beyond the realm of credulity to think the Chinese couldn’t be gone? All right, you’re going to mess with Huawei, you’re going to screw with us on some of this stuff, watch this. What they do is they shut down Ningbo for two weeks. Now, between the capacity issues, there’s things called blank sailings, which I had never heard of in this business before. But what a blank sailing is, when the boat pulls up to the port, and the boat’s already full. So, the boat just looks at the port, looks at all the stuff on the port and just keeps right on sailing by and waits for… It’s like a bus be to and fro. You just, another one will be by in half an hour.

Luke Gromen (00:12:13):

In the case of these things, they’re by in, I guess, four to six more days. The net of it is, in the meantime, stuff keeps pouring into the port, and you keep having… I think is this perfect storm of supply chain. If there is an element of the Chinese slow steaming us to come up our supply chains, I think it’s a minor part of the story. Like I said, I don’t think it’s beyond the realm of possibility. But to be clear, I don’t think that’s a huge part of what’s going on. I think it could be the cherry on top of what’s happening here.

Preston Pysh (00:12:46):

How about the incentives to not work here in the US and maybe other places? I’m not as familiar internationally, if they’re dealing with these social incentives to just stay at home? Are those contributing as well? I know you alluded to Lynn’s piece on inflation. We’ll have a link to that in the show notes. It’s incredible when she gets into some of these ideas, but I’m curious to hear your thoughts on it.

Luke Gromen (00:13:11):

Sure. Yeah. I think from the monetary side, like Lynn’s talked about, if you go back to August of 2019, former Fed Vice Chair, Stan Fischer wrote a white paper for the BlackRock Institute called Dealing With the Next Downturn. Philip Hildebrand, former head of the Swiss National Bank and Jean Boivin, former Bank of Canada governor, worked with him on that paper.

Luke Gromen (00:13:31):

It was an incredible paper at the time because it was basically, in the next crisis, we’re out of room, what’s going to happen is governments are going to spend a bunch of money and we’re going to monetize it and pin yields to make sure that the fiscal stimulus does not drive interest rates up and offset the benefit of the fiscal stimulus. Which was exactly what they did to a tee.

Luke Gromen (00:13:53):

What’s interesting… There’s a number of really interesting things about this paper, but as it relates to this discussion vis a vis inflation, one of the interesting things it said is, Fischer, who was considered the godfather of central bank. He trained Bernanke, he trained Yellen, he trained Draghi. He said, the issue is not whether we can generate inflation. We know this will generate inflation. Governments hand out money, we buy the bonds. It’s the very definition of helicopter money. You’re just giving out money to the populace. This will generate inflation.

Luke Gromen (00:14:25):

He said the challenge is that there are no examples in history of using this to generate just a little bit of fine tuned inflation, which gets back to the whole, it’s on or it’s off. This is not like a a Navy SEAL sniper trying to pick off a couple of Taliban over in Afghanistan. This is like, “Hey, get the B-52s over here, that valley, I want it all gone.” That’s what they’re doing.

Luke Gromen (00:14:57):

They talked about it. They did it. They got their inflation. I think quite frankly, it scared the heck out of them because I don’t think they thought supply chains will break down as fast as they did about which they can do nothing. I think that ties back to both the point before of some of the COVID stuff, some of the supply chain stuff, some of the China stuff.

Luke Gromen (00:15:19):

To your point about the disincentives to work, I think that is certainly an element of it. I did see something interesting the other day, that in the states that have pulled off the unemployment benefits, they’ve not really seen any increase in employment, which I think is, there’s a couple other things I think that are going on. I think one of them is, I see this in my own house where less… You always got to be careful with your own example, but my son for the last several summers has done landscaping work.

Luke Gromen (00:15:53):

All my buddies that are landscapes are like, “I can’t find people. I’m paying $15 an hour, $17 an hour, $18 an hour.” My son who did it for three straight years, I’m DoorDash, I’m making 30 bucks an hour at DoorDash.

Preston Pysh (00:16:06):

Wow.

Luke Gromen (00:16:08):

The clearing rate of pay for some of these entry level jobs may be particularly for… because my kid is dependable. He tells you he’s going to be there, he’s going to be there. He can pass any drug tests you want. God love him. At least is better be able to know. I’m just kidding. I know he can’t. The clearing wage, I think has moved in some areas where just this marginal supply of labor.

Luke Gromen (00:16:34):

I think, in some places, you’re seeing a supply, demand mismatch of labor. I think some of it is being driven by some niche things like DoorDash, and Uber Eats and some of these things where you can make pretty good money with not a lot of hours. Quite frankly, it’s a lot easier to DoorDash than it is to landscape all day. But I think the other thing that’s been going on, and I think is getting worse and will continue to get worse is the reaction of certain workforces related to some of the mandates, as it relates to, and I don’t want to blow up your show, but some of these restrictions that have been introduced recently.

Preston Pysh (00:17:12):

With COVID, yeah.

Luke Gromen (00:17:13):

Exactly. You’re seeing that all over. You’ve seen bus drivers quit, you’re hearing nurses quit. I saw something today where hundreds of navy seals are saying, “We’re done. I’m done. I’m not going to do it.” Without getting into the politics of that, I think that dynamic, it’s really interesting. We wrote about this in a report a couple of weeks ago, one of our reports was that, unsolicited… A friend of ours is an RIA at a national firm, said they are getting so many inbound calls from people planning to quit their job or switch careers over these mandates, that they’ve actually taken the calling as the great resignation internally.

Luke Gromen (00:17:52):

They’re getting so many inbound calls of, “Hey, Mr. Financial Planner, Mrs. Financial Planner, can you help me set up my finances in a way. I’m going to quit my job because I don’t want to do this, and I’m just going to use this as an opportunity to change.

Preston Pysh (00:18:08):

I don’t want to wear a mask for eight hours a day. People will just say, I got to find a different job that allows me to not have to do that.

Luke Gromen (00:18:18):

I think the way… a couple of Pandora’s boxes were open last year, I think one was… I tweeted about this last week that I’m getting this increasing sense that the general populace out here in flyover country had its eyes open to how the money system actually works in this country, as a result of how the Fed responded. I think there is a great deal of people that never gave an ounce of thought to the banking and money and going, “Wait a second, they can just print it up out of thin air and hand it out, and like that’s it?” Why am I paying taxes, again?

Luke Gromen (00:18:54):

That I think is part of it, but I think the other part of it is this element of, hey, I work from home, and it was awesome, and I don’t ever want to go back to an office. I can be very productive. I think there is, broadly speaking, a supply demand mismatch between talented people and positions. I think we’re living through that. I think that’s then reverberating back into the supply issues, et cetera.

Preston Pysh (00:19:25):

When you’re looking across the spectrum of where these things are impacted. It’s just across the board. But the one that I think is just so obvious is in the builders, people building new homes, developers, and you’re just seeing this split between pre-existing home prices and new builds. These people that are halfway in between having a house constructed right now and the cost of labor, the cost of materials. We’re not talking like these 5% numbers that are getting reported. I’m sorry, but you’re not seeing a 5% increase in the cost of building a new house. The numbers are somewhat mind blowing how high that difference is.

Preston Pysh (00:20:08):

When I turn to China and I look at what’s the company that’s blowing up right now, this Evergrande, and what line of business are they in? They’re a real estate developer with 300 billion in liabilities and 200 of the 300 billion are in halfway produced or constructed real estate.

Preston Pysh (00:20:31):

I’m thinking, this isn’t just a US problem, maybe this is a global problem that we’re seeing everywhere. More importantly, to question you, Luke, is this a Lehman type event? Is this really as big of a deal that everybody’s making it to be? What are some of your thoughts around this Evergrande? We had so many questions in the comments about this particular issue.

Luke Gromen (00:20:55):

I don’t know if it’s another Lehman, as it relates to the banking sector. The people understand the China banking sector that I’ve read, don’t seem to think so, based on how the China system is structured. Intuitively, to me, that makes sense, because if you’ve got a state-owned company, effectively, that’s borrowed a bunch of renminbi from state-owned banks, and then defaults on those in the process of building assets in China. Then, at least a net portion of the issue, there’s no systemic connections to the outside world.

Luke Gromen (00:21:42):

That’s why I say purely a Lehman problem, there’s no, as far as we know, at this point, it’s not like somebody was buying credit default swaps on whatever, there’s no financial leverage multiplier within that. If it’s all state-owned, it’s almost like if a tree falls in the forest, and there’s no one there to hear it, it doesn’t make a sound, right? If a state-owned company defaults to a state-owned bank in the state currency. It’s like you move it from this side of the ledger to the other and no one’s out… It’s a domestic political problem for China there.

Luke Gromen (00:22:16):

That portion of it, I would say, I don’t know that it’s a Lehman problem, based on what I’ve read from the people that understand the Chinese banking system and how that works, which I am not a Chinese banking system guy.

Luke Gromen (00:22:28):

Now, with that said, where you get contagion risks, where I do think there are contagion risks, and I think these are almost more like old fashioned contagion. We’re also scarred from Lehman, it’s like, oh, gosh, okay, it’s got to work through the banks. Well, when I came up in this business, my first crisis was fall of ’97. It was the Asian crisis. It was one of these things where Asia Pacific was only 5% of Eton’s business, Parker Hannifin’s business, Boeing’s business.

Luke Gromen (00:22:59):

But it was 30% of the growth of revenues. It was simple, when you just looked at it, it’s only 5% of their business. I don’t have to worry about Indonesia, Thailand, South Korea all these things. That’s October of ’97. ISM in the US is at 55, party on [inaudible 00:23:22] Five months later, ISM is at 47, industrial sector’s in a recession in the US and these stocks have all been haircut 40%, 60%.

Luke Gromen (00:23:30):

That is where I think if there’s going to be a contagion, I think it could be an old fashioned contagion, which is to say when you talk about the inflation in building materials, construction materials. If this goes from just being an Evergrande to being a, “Hey, China is just going to pause for a year for construction.” Then you get into a situation where Cat’s orders, Caterpillar’s orders go from flat against all time highs, they’re down 30% and their earnings numbers come down.

Luke Gromen (00:24:03):

Now, there, we actually… That to me is the potential transmission mechanism to the outside world. Somebody else made a really good point the other day of European luxury goods right. Where if there’s enough Chinese financially harmed by this that they just stop buying luxury goods for a bit. There’s another transmission. I think we have to look at these transmission mechanisms and see where they exist. Then once we understand if other transmission mechanisms exist, then we have the multiplicative effect, which is the system’s too levered. It’s too levered at the sovereign, it’s too levered at the corporate, it’s to levered at the household level. Then you’re going to have problems. Because tax receipts fall et cetera, et cetera, et cetera.

Luke Gromen (00:24:46):

That’s where I think, to me, based on what how I’ve looked at so far where I think the biggest risks are, but again take that with a huge block of salt because I just don’t know the Chinese banking system well enough to make a statement that, yes, it’s a Lehman or no. But the people that I’ve read that know it so far don’t think it is.

Preston Pysh (00:25:08):

Yeah. I think your point is well taken. It’s not a free and open market for the most part. The Chinese government is going to either step in or they’re not going to step in. If they’re not going to step in, it’s going to be for some type of strategic interest, or it’s going to be because of some policy that they’re trying to de-risk the population because they own too much real estate.

Preston Pysh (00:25:30):

One of the things that I hear is a policy or an initiative for the CCP, is this idea of common prosperity is the buzzword, where they want everybody and this is why they were smooshing Jack Ma and other famous billionaires over there is like, hey, we don’t want these influencers of wealth and capitalism to really have a voice or have any type of influence within the population.

Preston Pysh (00:25:58):

When I’m looking at that idea, and whether that would run and then I’m also looking at just strategically, does China have an interest in letting this thing go? These people that were highly levered and everything else, just letting them pay the price and letting them be an example within their country. It wouldn’t surprise me, I guess is how I would respond. I’m curious how you see that particular piece.

Luke Gromen (00:26:25):

I think that makes a lot of sense. It was interesting, I saw someone today saying that the common prosperity, part of that is trying to keep housing affordable for everybody. Which is ironic, because right now if I take a step back and I look at it like, put on my I’m a two year old hat and go, the communists are trying to make housing more affordable and they’re trying to let capital markets work and let somebody take a loss to learn a lesson and the capitalists are doing whatever they can, essentially-

Preston Pysh (00:26:58):

Exact opposite.

Luke Gromen (00:26:59):

The exact opposite. We’re trying to make housing as expensive as we can and build as much political fragmentation in this society as we can. I think that makes sense to me.

Preston Pysh (00:27:11):

It’s Bizarro world.

Luke Gromen (00:27:15):

It really is. But if you look, the only thing the US is trying that hard to cap are Bitcoin and gold. They have no problem with anyone who owns Bitcoin or gold getting taken out to the woodshed and getting beaten. But anything else, the national team’s got your back. You can’t lose in bonds, you can’t lose in housing, you can’t lose in stocks, but the assets that… You can see, it’s interesting, from that, you can divine a national interest.

Luke Gromen (00:27:44):

The national interest is king dollar, and Washington, D.C., the 1% one and king dollar is anything that moves us away from the dollar is bad. I think in China, if that’s what they’re trying to do, they’re trying to manage this over debt laden society with trying to keep social stability.

Preston Pysh (00:28:09):

Continuing on the theme of Bizarro world, for me, this is the elephant in the room, it’s just like a clown with the clown hair and the clown nose, when I think about this right here. The 10 year Treasury is at 1.32%. The CPI print for what, the last five months has been 5%. We’ll just call it 5%. Last month was 5.3%. It’s total insanity. As a fixed income investor, or somebody who’s looking at this spread of 400 basis points, that is a negative 4% real return between those two, how long can something like that last, Luke, this is maddening.

Luke Gromen (00:28:59):

I think the people that have noted that people buying these bonds aren’t buying them for the yield, I think they’re exactly right. I’ve had people say, and I think they’re brilliant people, and they’re very smart. I think they’re right. They’re being regulated into buying these bonds. These bonds are not an investment, they’re pristine collateral. It sounds a lot better when you say pristine collateral.

Preston Pysh (00:29:25):

As long as there’s no other currencies that could come in and supplant the existing currencies.

Luke Gromen (00:29:31):

Supplant the existing… Exactly right. But then it’s the chicken and the egg question. Here’s the sequence of events, 3Q’14, global central banks effectively stopped buying treasuries, 3Q’14, banks start being regulated into buying treasuries as high quality liquid assets. The next year, money market funds get regulated into holding government bonds instead of corporate and private sector money market funds.

Luke Gromen (00:29:58):

You get all this regulation that says that you have to buy treasuries and you get the benefit. It’s pristine collateral, you don’t get a haircut against it, you get the beneficial treatment of your banks, money market funds, et cetera. Why? No one asks Why? The answer is the US has a supply demand problem in the Treasury market, and this is how they’re dealing with it.

Luke Gromen (00:30:20):

We have the leeway to do this, because we’re the world’s reserve currency issuer, we are the Saudi Arabia of money. But what we’re doing is no different than when Argentina did in 2000/2001, they ran out of foreign financing, and they said, “Hey, banks, we’re going to regulate you, domestic banks into buying our Argentine debt. We will give you an attractive rate, we’ll give you an attractive capital haircut against it. Its pristine collateral.”

Luke Gromen (00:30:45):

Now, that’s not to say we’re immediately in that type of problem, but this is directionally the same type of action. The $64,000 question is, are we going to go right back… The only way you can hold this bond as an investment, and the only way this game can go on forever as an investment is, you’re going to get some sort of reversion to the mean. That 5% CPI is going to go to negative 5% CPI. Maybe that happens. The other way you keep this game going, is if, and this is how it appears is, the Treasury market is increasingly not being driven at by investors, it’s being driven by its demand as pristine collateral. Those aren’t investing bonds, those are trading sardines, those are pristine collateral treasuries.

Luke Gromen (00:31:29):

Then as long as the market trends, preferably up because that’s where you need tax receipts, you need tax receipts up, and you can’t get tax receipts up if markets trend down. As long as markets keep going up without too many sharp fall offs, then you could in theory, keep this Treasury funding because it’s pristine collateral, leveraged play asset prices on the upside going for as long as you can keep asset prices going up.

Preston Pysh (00:31:56):

Because it’s all relative to the other sovereign debt that’s out there, and they’re all nothing percent.

Luke Gromen (00:32:03):

Right. The challenge, and the problem I have with the well, it makes sense, because this 5% CPI is going to mean revert to negative 5% CPI as soon as the Fed’s done. The thing I find that, that argument always leaves out is that at negative 5% CPI, at positive real rates, the US government defaults on entitlements of treasuries, or defense or some combination of all the above. Once you get to 130%, that’s the GDP, negative 5% CPI prints are not possible. They’re not sustainable for more than a few weeks.

Preston Pysh (00:32:37):

It’s not accounting for the issues that we were talking about earlier, that’s really driving your CPI is all the supply chain impacts. You can’t go out there and find anybody to work. If you do, they want top dollar. The cost of commodities are blowing out because they just don’t have the supply versus the demand of people that are getting checks in the mail that are going out there and saying, “Hey, you know what, I think I’m going to put a new bookcase in my house, or I’m going to put a new deck out there on the porch or whatever.”

Luke Gromen (00:33:05):

Even last week, I don’t know if you saw that they’re talking about a 6% cost of living increase for Social Security next year. You think they got 6% more dollars sitting in a vault somewhere? Where do you think that’s going to come from? Likely they’re going to print it, or they’re going to hand it out.

Preston Pysh (00:33:20):

They’re going to burn it out. One of the things that has me scratching my head right now is you got Powell and the Federal Reserve, talking about how they’re going to tighten and how they’re going to… I had a comment with a gentleman who’s the big analyst over at Fidelity, and I was asking him like, hey, what do you think is going to happen here? Do you actually believe that they’re going to tighten here? He was like, yeah, I think that they might, they’re going to stick to the course.

Preston Pysh (00:33:49):

Even with all this Evergrande and everything else that’s happening in China. This isn’t going to air for another six days or whatever, but the Fed’s having a meeting on Wednesday. Are they going to come out and just play this back and forth like we’re dovish today, we’re going to tighten tomorrow, or are they going to really stick to that narrative that they’re going to tighten at this point? I’m just scratching my head thinking, there’s no way

Luke Gromen (00:34:16):

I think there’s two questions here, and we’ve written out quite a bit about this over the last couple of three months, which is nominally, yes, I think they’re going to tighten, I think they’re going to QE taper and that’s going to be the headlines, Fed and QE Taper.

Luke Gromen (00:34:28):

That’s what we’re all going to see, and the markets might even sell off a little bit. Maybe the Dow goes down 300 points, people freak out. Now, what’s been going on and the fine print over here is, Fed has already established FIMA swap lines with a number of different foreign creditors. Fed has the reverse repo set up and we know that balance is going up and up and up and up and up. Fed’s been talking about establishing the standing repo facility for treasuries and mortgage backed, I think open for comments in October, I think they want it launched in November.

Luke Gromen (00:34:58):

I got it into my head, I don’t think they can taper this week, tomorrow, whenever they’re talking. I think they talked that they’re going to do it soon. The point is, is that if you actually taper with this hand, the headlines while you have a standing repo facility open for domestic people here, and the foreign swap lines for foreigners over here, you’re taking away liquidity here in big dollops on the headline numbers. Over here, you’re going from, this is the morphine. The 120 billion a month, put it in a needle, shoot it in the vein. That’s going to get whittled down, maybe they’ll only do 100, or whatever they would let down by.

Luke Gromen (00:35:40):

But over here, with the standing repo facility and the FIMA swap lines combined with the reverse repo program, gives them… Basically, that has put an IV into market’s vein, and that’s on a drip, that’s liquidity drip, on an as needed basis.

Luke Gromen (00:35:57):

Standing repo facility sounds really fancy, anything that is eligible for standing repo is basically the Fed continuing to buy that on an as needed basis. Do I think they’re going to taper? Yes, I do. Do I think they’re actually going to withdraw liquidity? No, I don’t. I think to what end, are they doing this? I think this goes back to our initial discussion of credibility. It’s on, or it’s off. With debt and deficits, and the situation we’re in supply chain, they don’t have a dial anymore.

Luke Gromen (00:36:31):

This goes back to my ongoing thing, they’re trying to write two horses with one ass. They want to convince the market, they’re going to inflate the debt away, but they want the bond market to not think they’re going to inflate the debt away, and they’re stuck. I think they have credibility issues, and I think they know they have credibility issues. How do you restore your credibility? You say you’re going to taper, you start to actually taper and everyone’s going to pay attention to this headline number, wow, they actually did it. Everyone that’s saying they’re going to taper and the market’s going to implode is going to be wrong, in my view.

Luke Gromen (00:37:02):

When the market doesn’t implode, the Fed can say, “See, we told you we could get out of that.” In the meantime, the standing repo facility, reverse repo facility, and foreign swap lines are IV in whatever liquidity into the system as needed to keep-

Preston Pysh (00:37:19):

Where would that liquidity be hitting? What type of enterprise, or what type of security would be?

Luke Gromen (00:37:27):

Standing repo domestically is going to be treasuries and mortgage backed.

Preston Pysh (00:37:31):

It’s just going straight back into the bond market, like we’ve been doing for the last decade.

Luke Gromen (00:37:35):

Yeah. Because now, instead of them… The process… Look at the flow. This is an oversimplification. But Treasury spends money, issues bonds, banks buy some of those bonds. Fed prints money, buys those bonds from the banks, that creates reserves in the banking system. That’s fine, but then when you get too many reserves, the banks can’t lend on that other side.

Luke Gromen (00:37:56):

Reverse repo actually sterilizes that process. That takes reserves off of the bank’s balance sheets, and allows them to loan elsewhere, that creates regulatory cap space. Okay, reverse repo helps alleviate that. But that’s the straight QE program. Standing repo is basically Treasury spends money, reissues treasuries to banks. We’re not going to buy as many of those, we’re tapering QE. But hey, oh, by the way, if you get tight, just come over here to our standing repo facility, and we’ll just give you the dollars. We’ll repo them back and forth.

Luke Gromen (00:38:32):

What’s the difference between repoing back and forth as needed over here, versus the Fed showing up once a month or once a week and buying 120 billion a month of treasuries… Dollars are fundable. It doesn’t fricking matter.

Preston Pysh (00:38:46):

From a quantitative standpoint, the numbers all check out, what you’re saying. From a qualitative standpoint, this is just more obliteration of the middle class that we’ve seen since the 2008-2009 crisis. This is not getting the liquidity into the hands of… You can drive through any town in this country right now, there are very few towns you can drive through where it does not look like just total chaos. But you got people on the streets begging for money, you got tent cities. You got stuff that if you would have showed it to me 10 years ago, I would have said there’s no way this is the same country.

Preston Pysh (00:39:25):

These policies, how can they not… I guess they have to know that these policies are doing this.

Luke Gromen (00:39:33):

I think the Fed, I think they’re doing the best they can and I think ultimately if you say, “Luke, who’s really to blame here?” You can only lay this at the feet of one group of people, who do you lay it at the feet at? No question, I lay it at the politicians. I lay it at Congress, presidents-

Preston Pysh (00:39:49):

Is it the spendings driving them to make these-

Luke Gromen (00:39:53):

Yeah, basically. The US wrote… The issue with… Wait, the banks made all these subprime loans, and then they laid off all the risk on AIG. AIG wrote this policy, had no possible way of covering. The United States government, with Medicare, with Medicaid, with social security, with the Iraq War, with the veterans benefits that are… We’re spending 200 billion a year in veterans benefits, and we should pay every time. But someone should have thought about this. That’s a premium.

Luke Gromen (00:40:25):

All of these things were a sovereign equivalent of AIG, writing an insurance policy, it has no capital to cover. The only capital to cover is the Fed’s printing press. The political choice is, hey, you don’t get your Social Security, you don’t get your veterans benefits and you don’t get Medicare, Medicaid, in which case, you have a political crisis in this country, or the Fed does all this and tries to sleight of hand to… To me, I lay it at the feet of a lack of adult leadership in Washington.

Preston Pysh (00:41:04):

Well, it’s short term focus in interests that are driving decision making not long term, 10, 20, 30 year decision making, right?

Luke Gromen (00:41:14):

Right. It’s like a leadership. At the end of the day… You’re a military guy, when something needs to be done, there is skin in the game in the military. There’s been no skin in the game. It’s been about getting reelected. It’s human nature. So, I don’t want to be too hard. But at the end of the day, 70 million baby boomers were born from 46 to 64. Stands to reason, someday they were going to turn 65. They had 65 years to reform this, what was effectively an AIG insurance policy with no capital when Social Security, Medicare, Medicaid went upside down.

Luke Gromen (00:41:49):

The ’80s were a giant party, the ’90s were a giant party. We had surpluses. The Berlin Wall came down, the USSR collapsed. We had this wonderful window, and the leaders that are running the joint now were in power then and they didn’t do a thing.

Preston Pysh (00:42:05):

Let’s go back to your description of using the repo facilities and how they’re going to try to taper. Let’s say that the equity market sells off 20% from the top and maybe does it pretty quickly. Do you see them changing course and getting-

Luke Gromen (00:42:21):

Yes.

Preston Pysh (00:42:21):

Okay. What type of percent Do you think that’s going to take for them to change course and say, well, now, we’re going to go back to easing again. What kind of correction are we talking here?

Luke Gromen (00:42:35):

It’s probably in the 15% to 20% range. Maybe it’s 10% to 15%.

Preston Pysh (00:42:40):

Doesn’t it just totally demonstrate how insanely inept they are, to actually manage any of this?

Luke Gromen (00:42:48):

They’re screwed if they do, they screwed if they don’t. I think Jim Grant has the best quote about the Fed. What was the first thing you would do if you were named Fed governor? His answer’s, resign. The system has been allowed to evolve to this point that one of the great stats I’ve heard has been something that Hirschmann Capital wrote last summer, which is they looked back 220 years, since 1800, 52 countries have hit 130% debt to GDP. Of those 52 countries, 51, 98% defaulted. Typically, via high inflation or hyperinflation, if not outright restructure. One country out of the 52, Japan, has not yet.

Preston Pysh (00:43:32):

Look at the currency and how dominant and how much of a network effect that fiat currency has in the global economy, and its massive.

Luke Gromen (00:43:40):

Its massive. But everybody says, well, we’re Japan. You’ve got 220 years, everyone’s like, well, it’s never different this time. It’s not different this time, we’re Japan. To me, it’s one of these incredible cognitive dissonance hubris, American exceptionalism like, no, no, if it’s not different this time, you don’t get 98% chances in markets very often. There’s a 98% chance that we get high/hyperinflation of some version as our way out of this.

Luke Gromen (00:44:13):

That’s the way you get out of sovereign debt crisis, you inflate the debt away. But it’s challenging because of, the reason the Fed stock is 98% of the time, you just inflate it away. It’s also this reserve currency. They’re trying to not inflate it away, while knowing they need to inflate it away. It’s trying to ride two horses with one ass.

Preston Pysh (00:44:36):

What bitcoin price would have to happen for the world to start saying, “Oh my God, what the hell is this?” Especially in the fixed income way where they’d be like, “Oh, my God, is this becoming a global settlement layer?” What price do you think that that’s happening at?

Luke Gromen (00:44:52):

It’s a great question. I think the way I would answer it, the framework in my mind is, I think it would have To be a multiple of Gold’s market cap before the fixed income people take it seriously. What’s Bitcoin, let’s call it a little less than a trillion now?

Preston Pysh (00:45:12):

Yeah. When it’s at $50,000 to $55,000 a coin it was at about a trillion.

Luke Gromen (00:45:19):

Okay. You’re probably 800 billion, gold’s whatever it is, 12 trillion. Let’s say at that 20 trillion number. The 20 trillion market cap. You’re 166% of gold, assuming gold doesn’t run anymore. What is 20 trillion divided by 20 million-

Preston Pysh (00:45:41):

You’re pointing X from where you are now.

Luke Gromen (00:45:45):

It’s about a million dollars.

Preston Pysh (00:45:47):

About a million dollars, Bitcoin.

Luke Gromen (00:45:48):

Yeah. I think that’s probably about right, I would have guessed just saying hey, it’s probably… Because you’ve seen guys come out and say $300,000, $400,000 price target. I think that would get people on, oh, wow. But I think to really get the bond market in real class. Because when I put that chart up of… It’s a great chart by Dan Oliver at Mercan Capital, you and I’ve talked about it before. It shows the price of gold in Weimar Germany.

Luke Gromen (00:46:15):

I’ve commented multiple times, it looks like the price of bitcoin in dollars. A lot of more mainstream practitioners laugh at me. They got some of the bond guys on Twitter, I’m not going to name them, but they’ve openly mocked me for saying that. That to me tells you, you probably need 10, 20 times, then they won’t be laughing.

Preston Pysh (00:46:35):

Then it’s going to be too late for them.

Luke Gromen (00:46:36):

It’s what makes market.

Preston Pysh (00:46:41):

You have a quote, you posted this on Twitter. I love this. He said economists routinely say debt is deflationary. But most fail to mention that virtually all of the great inflations in modern history have occurred when an insolvent fiat currency issuing nation has attempted to maintain the nominal solvency of its sovereign debt. What are you getting at here?

Luke Gromen (00:47:03):

Sovereign debt. Sovereign debt can’t be allowed to default. It technically could. But it can’t. Politically, the United States cannot default on its debt. When you look at a lot of the great high inflations throughout history, it’s been when you have a sovereign with the ability to print domestic fiat currency to address its bond market, to basically pretend that the bond market is this still… It ties back to the point, the 10 year treasuries at 1.3%. To pretend that that’s actually a real rate, it’s going to take more and more money created to pretend that’s 1.3%. We’re seeing that with the Fed’s balance sheet.

Preston Pysh (00:47:44):

There was a person who responded to you, and they said, “When does the debt go from depressive, to manic?” You said that you’d love this phrase, I love this phrase, because what you’re getting at is, are we talking about something right now, today, where we got a 400 basis points spread, that does not make any sense, fundamentally, to somebody that would be looking at this and holding it through the maturity date. When does it turn from like, hey, this is really strange, to, oh, my God, this is looking a little scary to just total fear, everybody running, screaming their heads off?

Luke Gromen (00:48:23):

I think we have a couple more iterations. It might be as little as one more iteration. One of the things I’m watching on that, it’s an incredible number. This speaks to why we have the inflation. The CPI inflation that we have, and ties back to what we talked about before, which is, I want to make sure I quote the number right, US government transfer payments, as a percent of personal consumption expenditures or PCE.

Luke Gromen (00:48:48):

PCE is a very broad category. It’s crap you buy at Walmart, boats, cars, healthcare services, et cetera. It’s like a $16 trillion line item, it’s two thirds of the economy. US government… Its consumer spending, broad. US government transfer payments. Money the US government is just giving consumers as a percent of US consumer spending, which is two thirds of GDP, recently was 33%. 1/3 of two thirds of the economy is being given to the consumer by the government.

Luke Gromen (00:49:22):

Some of that is counter cyclical coming out of COVID. But a lot of it isn’t. It’s social security, it’s Medicare. The reason I say we might have another iteration or two is, in theory, there’s three ways out of this, and happy way out of this is we get a big spate of economic productivity, some sort of revolutionary technology or something happens. We all go back to work, whatever. You get economic productivity increases, you get real GDP growth, a big bump up in real GDP growth, and that can make the numbers work. That the GDP falls, and they can work down government transfer payments and the deficits as a percent of GDP, as a percent of PCE, and that’s the happy ending. It’s inflationary, but that’s good inflationary. That’s good.

Luke Gromen (00:50:16):

If we don’t do that, then the other two options are option number one is, I think they try to work down government transfer payments as a percent of PCE. The economy promptly goes into a recession, if we don’t get that pick up in productivity. Economy goes into recession with debt this high, then either you get a collapse in assets with a rise in Treasury yields, like we saw start to happen in March of 2020. That’s a fiscal crisis, and we spiral, either the Fed steps up and buys whatever they have to buy, you see a balance of payments crisis in the United States; asset prices falling towards zero, yields rising sharply, until the Fed stops that.

Luke Gromen (00:51:03):

My question is, I think I’m still not seeing the productivity enhancement that drives real GDP growth. If we set aside that doesn’t happen, to answer your question, when do we get the holy crap moment of Oh, God, this is never stopping is, I think it’s probably the next time they try to pull back the stimulus, and then the Fed’s got to go from whatever, 8 trillion to 16 or 20 trillion on the balance sheet to restabilize things.

Luke Gromen (00:51:30):

If it’s not, then, then I think it’s highly likely the next iteration after that, because I think they have, at most, two iterations, and maybe as few as one iteration, but I don’t think… It’s a broad psychological phenomenon. I think there’s a growing recognition that something’s not right. But I don’t think that it’s going to be… It’ll be quick.

Preston Pysh (00:51:50):

What induces that, Luke? Is it going to be just them trying to tighten or do something, and they just get behind the power curve of trying to do too much, and it just turns into contagion? For example, let’s say they’re going to try to tighten here in the coming months, they just let it get too far out of hand, it’s down 20%, the next morning, it wakes up and it’s down, almost like a 1980 scenario, where it was down 40% in a day. If that plays out, they’re coming to the table, and they’re coming to the table with probably double whatever they did during the COVID drop, right?

Luke Gromen (00:52:24):

I think that’s right. I think it’s ultimately just that-

Preston Pysh (00:52:27):

Mismanagement.

Luke Gromen (00:52:28):

That. Then to me, it’s within that, and then it probably also has to be a broader recognition amongst professionals, exactly how far gone the fiscal situation has been left, post-COVID. When I tell people, look, if you look at the US government’s, what I would call their true interest expense, which is just Treasury spending, which is like interest and then whatever they’re doing with COVID and stuff still, which blew up Treasury spending, which I include because if you take it away, GDP is going to fall and that creates a problem, right?

Luke Gromen (00:53:05):

Treasury spending, plus entitlements, just the pay as you go portion of entitlements, which is just the annual interest, if you will, to float the 100 trillion plus in entitlements. Those two numbers in the latest Treasury borrowing advisory committee report, are 111% of tax receipts, with tax receipts at all time highs. And everything, silly ludicrous bubble in everything.

Preston Pysh (00:53:29):

That’s totally nuts.

Luke Gromen (00:53:31):

It’s totally nuts, it’s totally irrecoverable. You’re in the goose and Maverick flat spin.

Preston Pysh (00:53:38):

It’s just not the US. You’re seeing a similar dynamic playing out, you name a country, this is the same scenario for every other country in the world, right?

Luke Gromen (00:53:48):

It is to varying degrees. It depends… Nobody else needs as much foreign capital as we do, because we were the sponsors of the system. We ran deficits. Everybody else has the same, particularly in the West, the entitlement problems. They don’t have as bad a capital importing problem as we do. Now, paradoxically, the Fed has stepped up and filled that gap, that’s what they’re doing is basically foreign creditors have either stopped because they don’t want to, or because they can’t because they have some of their own problems in the same way, they need to keep that capital home. The Fed has filled that gap.

Luke Gromen (00:54:25):

If the Fed stops filling that gap, to tie in with our earlier discussion, paradoxically what’s going to happen is, the dollar is not going to collapse, is the dollar is going to skyrocket because now the US government’s going to see that that’s the milkshake, the US will steal dollar liquidity from the rest of the world. Rest of the world will collapse and then we’ll collapse after them.

Luke Gromen (00:54:42):

But I think, to answer the original question, I get the distinct sense still, that amongst policymakers, this flat spin is recoverable. The only way it is recoverable is with the equivalent of a rollout of some revolutionary productivity enhancing technology, in line with nuclear fusion, portable in our backyard, within a year, or two years. You need something it’s like a leap forward in productivity.

Luke Gromen (00:55:15):

Maybe they’re working on it, I’m fingers crossed.

Preston Pysh (00:55:19):

So, we need magic.

Luke Gromen (00:55:20):

We need magic, and if we don’t get magic, I think really, that’s the thing you can’t measure. I think the thing you can say, okay, when is there a greater recognition that they’re never getting out of this, without that productivity enhancer? It could be an event of, hey, they tried to pull back, it didn’t work, the balance sheet went from 8 trillion to 20 trillion for the Fed in nine months. That could be part of it.

Luke Gromen (00:55:44):

But there’s also, I think, and this is the scarier part of it, or the more unknowable part is when the 100th monkey realizes this is an irrecoverable flat spin. When you look at the finances of the US, of the West, more broadly, they’re not getting out of this. They’re not different than the other 98% of people that have been in this position over the last 220 years. That’s when it can happen like that. When you talk to people like Simon [inaudible 00:56:14] it’s like a thief in the night. Boom, you wake up and all of a sudden, it’s the common knowledge game, Epsilon Theory, Ben Hunt does so well. It was like everybody in Hollywood knew about Harvey Weinstein, and no one did a damn thing. Then all of a sudden, one day, everyone woke up and everyone was like, “Oh, he’s bad.”

Luke Gromen (00:56:33):

It’s the same kind of thing here is, well, everyone’s going to know, and one day we’re all going to wake up and that’s going to be that.

Preston Pysh (00:56:40):

How did we live through such a crazy time? What are your thoughts on Gary Gensler and all the things that he’s talking about with respect to digital assets?

Luke Gromen (00:56:51):

I had a tweet up today and I actually took it out. I don’t delete a lot of tweets. I deleted one after about two minutes simply because I read the article, and I thought he was including Bitcoin in there and plan B pointed out that he is not lumping Bitcoin in with everything else. I wanted to give him the benefit of the doubt, him being Gensler.

Preston Pysh (00:57:10):

Were you taking a shot at Bitcoin, Luke? I didn’t see this.

Luke Gromen (00:57:15):

No, the tweet that I had up was something that basically, I was assuming he was taking a shot at Bitcoin. I was saying, you know what they say happens when you assume. I was assuming he was taking a shot at Bitcoin. My tweet was just that listen, he’s coming down on Bitcoin, and the Chinese Communist Party has come down on Bitcoin. If it doesn’t make sense to you that the head of the SEC and the Chinese Communist Party are aligned on Bitcoin, you’re not the only one. Someone explain that to me.

Preston Pysh (00:57:48):

His big thing is on the stable coins? He’s actually… I think he has a Bitcoin position, I think he’s had a Bitcoin position ever since he was teaching it at MIT.

Luke Gromen (00:57:58):

Plan B said that, that not so much he had that position, but that he’s on the record as saying that it is a store of value asset or what have you. That made more sense. Yeah, that’s why I took that down. I would defer to Caitlin Long on the stable coin stuff. I think she would tell you that he’s probably onto something with some of these stable coins in terms of-

Preston Pysh (00:58:22):

I think he’s looking at organizations like hers, where she’s trying to stand up Avanti, she wants to have a stable coin, and it’s mostly for clearing reasons so that she can immediately clear and keep pace with the new digital age and the store of value that Bitcoin provides. I think from Gensler’s point of view, he’s looking at all of this. How many, there’s 10,000 tokens or whatever listed on various exchanges on coin market cap or whatever, and I think Gensler is looking at it and he’s just like, this is insane. This needs to be controlled.

Preston Pysh (00:59:00):

I’m not saying, in my opinion, this is… As far as I’m concerned, let it be a free and open market. If people go in there and they get hosed, well, I guess they’re going to learn a lesson, right? I’m free markets through and through, stop the manipulation. That’s why we’re where we’re at right now. But anyway, I think Gensler’s point of view is that the stable coins, because they’re going to be touching the US Fed and all these other fiat currencies needs to be regulated, especially some of these ones that are 50 billion in market cap or whatever they are, he’s looking at that and saying this is crazy that there’s really no regulatory body overseeing these things.

Preston Pysh (00:59:37):

I think that’s where he’s coming from, especially when you get into… Caitlin does such a great job talking about the clearing side of things where some of these banks, they might have these things and the way that they’re having to capitalize themselves, they basically adjust the books at the end of every day, and they’re dealing with this thing that’s clearing, in some cases, on a minute to minute basis. If you’re a bank and you’re thinking that you’re meeting certain capital requirements by having enough capital in reserves, and you’re not expecting to adjudicate that until the end of the day. Meanwhile, you have these tokens that are swapping in and out and all over the place, what should the capital requirements be for something that can be exchanged that fast, especially when you have all these other things on your books that are clearing so much slower?

Preston Pysh (01:00:25):

I think that’s where Gensler is looking at it and saying, if we don’t do something about this soon, because this market’s exploding in size, this stable coin space, we need to do something about this now. It’s wild. Then I’m sure you saw the whole Coinbase thing, where Coinbase is trying to work with the SEC, and the SEC is like, no, we’re just going to sue you, and we’re not going to provide guidance as to what we’re looking for.

Luke Gromen (01:00:53):

I saw some headlines today. I didn’t have a chance to really-

Preston Pysh (01:00:57):

It’s wild. When we look at all this stuff that’s happening, the thing that most people are thinking is, okay, Luke, where do I position myself? Obviously you like Bitcoin, you like gold, but what other sectors, or what are the things are you looking at right now, based on the insanity that a person can position themselves in their portfolio that you would recommend?

Luke Gromen (01:01:18):

Another theme that we’ve been writing a lot about, over the last, really, almost a year now has been, I think peak cheap oil has returned as a theme. Peak cheap oil is not to say that we’re running out of oil, but we’re running out of cheap oil, we’ve run out of cheap oil. If you look at, for example, Ex US shale, the world has really not grown global oil production in almost 10, 12 years, in any real way, while demand has risen a bunch.

Luke Gromen (01:01:54):

That’s relevant, because when you look at what shale has done, they’ve effectively hydrated a lot of their reserves, which is to say, they did what any smart, private business capitalistic business was due, which is, because of the unique aspects of that business, has very high depletion rate. You produce a bunch up front in the first three months, and then it tails off very fast, and then has a long flat tail on it.

Luke Gromen (01:02:17):

But the point is that they produced all their best locations first, all their A locations, they went to, they drilled it and those of all… They knew where a lot of this stuff was and they went through it, and they did. Then they went to the B location, C locations. Some of that, the high grading had to do with the cyclicality of the business who went to these vicious cycles in ’14 and again in ’20. It should be ’15, ’16, and then in ’20. Some of it is just the geology of it.

Luke Gromen (01:02:43):

The point is that between the geology and how they hydrated this, because of the business cycle, it doesn’t look like there’s a lot of more… There’s not another 15 million barrels a day of shale coming online, like there has been over the last 10, 15 years. Maybe there is elsewhere, but there’s going to need to be a price impulse there to drive it.

Luke Gromen (01:03:02):

At the same time, something I’ve noticed that has been really, really interesting to me has been this sudden desire by global automakers; Audi, GM, Mercedes Benz, I think Nissan, among others, Audi was the one that really first caught our attention by saying we want to have, I think they’re saying all electric by 2026. Mercedes is going to be mostly electric by then. GM is going to have 30 electric cars by, I think 2025 or 2028.

Luke Gromen (01:03:37):

This struck me as odd because these auto companies tend to be very big, political, slow moving organizations, and no disrespect, they have brilliant engineers, and they put out great product. I drive some of their products, I love them. With that said, they tend to be slow moving, big political organizations, they have supply chains that stretch around the world to support internal combustion engines.

Luke Gromen (01:03:58):

My understanding is that the electric vehicle market is basically an entirely different supply chain than internal combustion engines. It’s not just like, hey, send the trucks here instead of here that day, and… It’s totally different.

Luke Gromen (01:04:12):

Where I’m going with this is, companies like this that tend to have historically been big and slow moving, that have made, in the case of GM, all their money, or most of their money in big gas guzzling trucks, deciding to make what is a monumental shift of their supply chains in a very compressed period of time, we’re talking about five years, to a completely new supply chain, and why are they doing this?

Luke Gromen (01:04:41):

To me, there’s two most reasonable explanations. Option number one is, these executives have decided to basically wager 100 plus year old companies, literally wagered the company on a virtue signaling exercise around climate change now, just out of the blue. Or, option number two is that these are nationally tied in companies. Audi is owned by Volkswagen. They’re the biggest Corporation in Germany. They are the biggest employer in Germany and the German military in 2010 said peak oil will probably be here by 2013, and it will begin to impact the economy by about 2026, which happens to be the same year that Audi and Mercedes, another big German automaker are both set as their target date to basically go all electric.

Luke Gromen (01:05:30):

Option number one is, these big gigantic global automakers have decided to wager 100 year old companies and supply chains on a virtue signal exercise and option number two is these big global national companies have been tapped on the shoulders by their national security apparatus as [inaudible 01:05:47] said, there is a an acute fossil fuel supply demand imbalance coming circa 2025, 2026, 2027, and you need to move your supply chains fast. Go. To me, the virtue signaling exercise doesn’t hold water.

Preston Pysh (01:06:06):

Yeah. I’m with you. Do you have friends that buy into the second narrative there? I’m with you, 100%.

Luke Gromen (01:06:14):

Yes. They absolutely buy into the narrative. I’ve talked to people in the energy business, manufacturing business. I’ve not said anybody who said no, look, it’s just a virtue signaling exercise. I think it’s been unanimous that there’s a fossil fuel supply demand issue. You can go back to Matt Simmons’ work in ’05 with Twilight in the Desert, and some of the things he wrote about. You can look at the Pareto principle, the 80-20 rule holding for global oil supplies. Where if you look… It’s stunning, when you really start digging into it.

Luke Gromen (01:06:45):

100 fields produce like 30% or 40% of the world’s oil, and they’re all 50 years old or older. It all adds up. At any rate, where I go with all this by way of background in terms of a theme is twofold. Number one, the peak cheap oil thing I lead off with, but then number two, anything electric vehicle supply chain from a commodity standpoint, metal standpoint, I think that sector, I think probably has very powerful tail winds coming as matters of national security for multiple countries, for probably at least the next several years.

Preston Pysh (01:07:20):

Luke, we could talk all night. This is how these conversations always end, we could talk all night. But thanks for coming on the show. I want to highlight your book, you got two of them with the Mr. X Interviews are fantastic. If you’re listening to Luke, and you’re saying, how does this guy know so much breadth? I would tell you, having read his books, I just had a much deeper appreciation and it helped me understand Luke himself and the way he processes information from a macro standpoint through those books.

Preston Pysh (01:07:56):

I can’t promote the books highly enough. I love the books that you put out there, Luke. Do you have people a hand off if they want to learn more about you? Give them a hand off where they can learn more.

Luke Gromen (01:08:07):

Absolutely, yeah, they can check us out, our websites fftt-llc.com. You can noodle around on there, find out what we’re up to, also our different product offerings, retail and institutional investors. Then I have a pretty active Twitter feed, @LukeGromen. L-U-K-E-G-R-O-M-E-NI think I spelled My name right. It’s all one word on Twitter.

Preston Pysh (01:08:28):

He’s always deleted tweets whenever I’m up there… Just kidding. Just kidding. Luke, thank you so much for coming on the show. It’s always a pleasure to have you.

Luke Gromen (01:08:41):

Thanks for having me on, Preston. I always enjoy talking.

Preston Pysh (01:08:44):

If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use, just search for We Study Billionaires, the Bitcoin specific shows come out every Wednesday and I’d love to have you as a regular listener. If you enjoyed the show, or you learned something new or you found it valuable, if you can leave a review, we would really appreciate that, and it’s something that helps others find the interview in the search algorithm. Anything you can do to help out with a review we would just greatly appreciate. With that, thanks for listening, and I’ll catch you again next week.

Outro (01:09:16):

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