Preston Pysh (00:02:07):

So weird. So weird. All right. On a serious note, the last time we talked, we were talking a lot about the dollar. We were talking about interest rates. We were talking about how the Fed was in a no-win situation based on the spreads. And then this, this thing happened. And I mean, I just want to start off by saying, blessings to the folks in the Ukraine and in this area, and all the families that are affected by this, our prayers are with you and God, I hope this ends in the most peaceful, less stressful way for everybody involved. But with that, Luke, take it away with your thoughts on where we’re at, what does this mean? Where do we go? Take it away.

Luke Gromen (00:03:01):

Maybe I’ll start at the end, which is, I think that 40 years of globalization, 40 years of disinflation, 40-year bond bull market on a real basis, at least, I think they all died on Wednesday night. I think Pax Americana likely ended on Wednesday night. I think a global marketing to market of global relative power levels appears to be happening before our eyes. And I think the way that looks is the U.S. and the EU are going to get downgraded relative to China and to Russia. And I think the multicurrency, multipolar world featuring multicurrency energy pricing, multicurrency reserves/gold reserves, I think that system, that world was likely fully born Wednesday night.

Luke Gromen (00:04:02):

So I think Wednesday night was I think a really, really big… I think it was a really, really big moment. I think we’re going to look back in history and see that. And when I say the relative power levels being marked to market, what I mean by that is, look, we could sanction Russia’s energy. We could kick Russia’s energy out of Swift. There’s no reason we can’t, except there is a reason we can’t. Russia is too big a part of the energy market and we have too much debt. And that’s why I say is I think there’s been a lot of questions like, “Hey, what’s Putin’s grand strategy?”

Luke Gromen (00:04:44):

I think the grand strategy is basically to trigger a reset. I think the thing that I see a lot of discussion about tactics and reason, and let’s set aside the possibility that he has sort of off his rocker, which we’ve seen some intelligence speculation via Marco Rubio on Twitter and others. Let’s set that aside. It’s a possibility, but it’s uninvestible, unknowable. And so okay. So we set that aside. So what’s the plan here? First off, I think that I don’t think Putin could do this without the, tacit if not explicit, blessing of Xi in China, because this whole gambit fails if Xi walks away from Putin, Putin’s done. So that’s point one. I think in the aftermath of what the U.S. did with Iran regarding Swift in 2012, if you remember, we kicked Iran out of Swift or facilitated that and the Iranian economy hyper-inflated by October.

Luke Gromen (00:05:58):

And so I think Putin had to know this was coming. I think that China realizes that if Putin goes, China’s next. And I think if Xi had any illusions, if China had any illusions that the United States could not starve him to death using the Swift system before last week, he knows now. And I think that’s going to factor into his thought process. And so Putin and Xi need each other perversely. Last week, they were already moving together. There was already this alliance, it was already threatening. It was already sort of awkward. We have now crammed them. They are there now I think out of necessity, tied together based on what happened last week. And maybe more important last week, what happened over last weekend? And I think ultimately what’s happening here, what the gambit is, is that the reality of peak cheap energy, which you and I have talked about a number of times in prior conversations where not that we’re running out of oil, but the incremental oil supplies are getting more and more expensive.

Luke Gromen (00:07:07):

Ultimately, I think there’s a calculus here that Putin did and that Xi did, which is, they’ve been wanting to change the system for 15 years. You can go back through history. I mean, March of ’09, the PBOC saying, “We need a new currency system.” 2014 Putin saying the problem with the global economy is the dollar. And particularly the dollar’s monopoly on oil pricing. It’s killing the world economy. And I could literally go through page after page after page of these examples throughout history. And so I think what I think a lot of people are missing, in my opinion, is that this isn’t… Nominally, this is about what this is about. But I think the grand strategy here is very opportunistic, which is peak cheap energy means we cannot afford to sanction Russia’s energy out of global markets without the global economy crashing, without the global bond market crashing. And they know that. It’s pretty straightforward math when you just start doing some back of the envelope stuff.

Luke Gromen (00:08:11):

And then that context, plus the context of something you and I have talked about [inaudible 00:08:15] in the last couple shows, which is the fiscal position in the U.S., fiscal position in the EU, they are in no position to have a recession. If they have a recession, they’re either going to default on their sovereign debt or the money printer going to go brr in both places. And so if you have those two pieces information, then you say, “Okay, let’s go for it.” And you say, “Well, they’re going to sanction you out of Swift.” Great. If your goal is to trigger a reset of the system where you have a multicurrency system, perfect. If I have to take some pain to do that, if I’m Russia, I’d do it. Perfect.

Luke Gromen (00:08:54):

It was fascinating to me this weekend to watch the U.S. and EU central banks do what they did as it relates to FX reserves. And I understand why they did it. I understand the strategy behind it. I’m not sure they understand what they really did, which is, they completely discredited sovereign debt as an FX reserve, completely. I mean, if you’re China, you’re looking at this going, “If I look sideways at Taiwan, they’re going to take away my FX reserves.” And to remind the audience, FX reserves, at their core, are just the aggregated savings of a nation’s trade over any number of years.

Luke Gromen (00:09:37):

So that’s why I say, I think everything has changed now, right? And there’s a lot of different ways we can look at this. There’s a lot of different ways China can respond, a lot of different ways Russia can respond, we can respond. But the bottom line to it is, I think something very, very big happened last week. It was I think the… When you have these processes happening, I’m always asked, “What’s the trigger? What’s the catalyst? How are we going to know?” I think we know now. I think it just happened. And not just that that happened, but then the West’s response to it is going to… I think things are now in motion, they can’t be stopped.

Preston Pysh (00:10:16):

All right. So I agree with everything you just said. I think that the example that I’ve been providing to people is, I think from Putin’s standpoint, he was looking at this, he’s looking at leadership across all of NATO. He’s looking at the Ukraine and he’s looking at a president who…

Preston Pysh (00:10:38):

And I’m going to brand him in a way that I think maybe Putin was looking at him is, this guy’s a comedian. Literally. This guy was a comedian before he became president, right? He’s like, “I’m just going to run the queen right down the board. And I’m going to check mate this situation. I’m going to basically take the Ukraine and nobody’s going to do anything about it. It’s going to be the 2014 Crimea type situation, only this time, this guy’s going to get scared. He’s going to step down. There’s no way that they’re going to go against my Russian military. And he’s just going to roll over, looking for a golden parachute and Ukraine’s going to be mine. And I’m going to basically demonstrate to NATO that they have no response. They have no response. And it’s just for the taking at this point.”

Preston Pysh (00:11:27):

And I think he did that move. He ran the queen down the board in order to do the checkmate. And he found out that the game wasn’t over and that the response was probably a 180 from what I think a lot, myself included, if I was going to give myself a grade as to how I thought this was going to play out with them, with the Russian troops on the border, all the news, all the hoopla around it, I just suspected that they were going to probably get what they want and just roll in there and take it. And there wasn’t going to be too much of a response. And I’m telling you, I would give myself an F for what I thought was going to happen.

Luke Gromen (00:12:08):

Me too. Me too.

Preston Pysh (00:12:10):

And Zelenskyy’s response has just been unbelievable. Unbelievable how the Ukraine’s responded. If I was going to attribute, and sorry to just… I need to be asking you the questions, but-

Luke Gromen (00:12:27):

No, no, you’re fine.

Preston Pysh (00:12:27):

When I was looking at the response, I really think that in 2014, with the whole Crimea situation, I think that the Ukraine set up massive defensive positions for if this day would come. And I think anybody who probably lived in the Ukraine had a way different site picture than ignorant people like me living over here in the U.S. as to how this would potentially play out if it ever happened. And obviously it did. But I think that anytime you’re trying to go up against a well defended military position, it is way different than trying to attack and not accounting for the most important, critical point. Especially when you get beyond day two, logistics. I mean, the logistics footprint that’s now required to sustain them, the Russians, is just… I don’t think a lot of people understand how complex that goes from a military standpoint-

Luke Gromen (00:13:29):

I can only imagine. Yeah. I can only imagine.

Preston Pysh (00:13:30):

… to sustain these operations that they’re now in. And wow. I mean, I was blown away when I was seeing all this information being published on Twitter of the aircraft, shoot downs, the air defense, everything. I was just awestruck by all of this. There’s no question in that. Other than, I think you agree with me. I think Zelenskyy’s response was the thing that just… I don’t even think NATO was expecting that response out of him.

Luke Gromen (00:14:06):

Yeah. I think it’s been surprising. I mean, to everybody, it’s been surprising.

Preston Pysh (00:14:15):

So here we are. I think where are we at, day six right now?

Luke Gromen (00:14:20):

Yeah [crosstalk 00:14:21]. Yeah going into day six, right? Wednesday night, so end of day five going into day six over there. Yeah.

Preston Pysh (00:14:28):

Yeah. And I think this is where it really starts to get interesting. So the negotiations broke down. I think that was fully expected. I don’t think you go in there and have the number of casualties that you’ve had on both sides and expect there to be any type of agreement at this point. And I think some cost bias when you get into war and there’s a lot of casualties on both sides is just unimaginable how strongly entrenched, I think both sides quickly become in a situation like this. And I guess where I’m going, Luke, is it doesn’t seem like this is moving in a good direction. It seems like this is going to get… And who knows? By the time it airs tomorrow, this airs tomorrow, and who knows what’s going to happen? But it really seems like this is not going in a good direction. What do you think?

Luke Gromen (00:15:19):

Yeah. I mean, to me, it speaks to a fracturing of the world order that we’ve all come under, right? Because if China walks away from Russia, Russia’s done, they’ve got nowhere else to go with the oil, the energy-

Preston Pysh (00:15:40):

I don’t see that happening. That’s-

Luke Gromen (00:15:41):

It’s not going to happen. And it can’t happen, because you can almost guarantee that Putin’s telling Xi, if Xi needs to be told, “Look, if I go, you’re next. Make no mistake, they’re going to do the same thing to your FX reserve. They’re going to sanction them. They’re going to take them. They are going to force a coup on you. And then they are going to put someone that they want in there to run China, like they liked before that and make sure that Taiwan is safe.” And the challenge is that there’s… Like you just said, there’s two opposing viewpoints to what’s happening here. And the two opposing viewpoints are not politically reconcilable.

Luke Gromen (00:16:24):

We’re past the point where the naivete of, well, if we get the Chinese rich, then the Chinese Communist Party will change, which is what a lot of the 30 years up until now was based on and up until a few years ago, at least, was based on. And so you’re in this weird situation where… Look, when Russia defaulted in ’98, the United States government was running a surplus. We were a unipolar power. China was a backwater. You had good demographics in this country. We had low debt to GDP. We hadn’t spent $6 trillion accomplishing, securing Iraq’s oil for China in Iraq. And my point is that long-term capital still blew up and still almost took down the whole system with a much more stable system. And so this-

Preston Pysh (00:17:32):

But that was back when it was not acceptable to manipulate the markets like they are today. I mean, that was pre, it’s just obvious that we’re manipulating markets, right?

Luke Gromen (00:17:45):

Oh yeah. Right. It was funny. I think I said something on Twitter last night. I said, “Watch, once the PPT, once the Plunge Protection Team shows up today, you’re going to see gold down and you’ll see the dollar up and you’ll see stocks up and you’ll see the ruble down.” And I’m not saying the ruble didn’t deserve to be down. It did, clearly, but you’re going to see as much it down as they can. You’ll see Russian stocks down and you’ll paint the picture. It’s this managing to optics instead of outcomes, all of which is fine. But then that gets back to the oil thing. That gets back to the energy question. You can manage to optics until the lights don’t come on, until the heat doesn’t come on.

Luke Gromen (00:18:26):

And so it goes back to your point of, what’s the response? Russia starts slowing gas to Europe, right? What happens? We’ve already got a German boot market that’s yielding zero with German PPI at 25. And the only reason that I understand there’s a whole big [inaudible 00:18:45] bond market that owns bonds because they’re regulated into it, or they have to, or it’s matching liabilities, whatever. There’s a big chunk of the bond market that is mindless buying. I get that. I understand that. But then there’s a part of the bond market that owns bonds, because they actually think inflation’s going to come down in the second half this year. They actually think supply chains are going to get better in the second half of this year. And after last week, I don’t know how you can possibly think that supply chains are going to get better. I don’t know how you could possibly think inflation’s going to come back down, unless this thing wraps up quickly and cleanly.

Preston Pysh (00:19:21):

But don’t you think what we saw… And just so people know who maybe aren’t intimately familiar with the bond markets. So the bond market’s getting bid through all of this, aggressively bid, yields are down. Just in the past week, since all of this started happening. And don’t you think that some of that is just the fixed income community, just front running further central banking actions like aggressive central bank brring into the market?

Luke Gromen (00:19:56):

I think it’s probably primarily safety at this point, because I still I think the big aha moment or the big oh shit moment coming for Wall Street that hasn’t hit most of Wall Street yet is, they’re going to go brr into an inflation spike. They’re going to go brr into $100 oil. They’re going to go brr into $5 copper. And they’re going to do that to contain yields. I mean, the yields we’ve seen so far, particularly in the long date of treasury market, that makes sense, right? There is still a reflexive response. The question will then get to be when the inflation numbers get worse because of the supply chain disruptions. When-

Preston Pysh (00:20:33):

Just think about the fertilizer. The food prices this fall are going to have to be astronomical.

Luke Gromen (00:20:41):

Yeah. There’ll be an increase and there’ll be energy… Like I said, the reason the part of the bond market that has a decision to make about inflation is where it is because it believes that inflation is transitory. They believe that seven and a half percent CPI is going to two over the next year and a half. If I went to, although that discretionary bond buyer, we’ll call them, people with a choice with how they want to allocate their capital and said, “CPI’s going to be eight for the next five years.” And if this thing goes on, it might be, it might be eight or 10. It might be 12. I don’t know. You’re taking the world’s biggest energy supplier. You’re taking the world’s factory. And we’re in a fight with them. And [crosstalk 00:21:32].

Preston Pysh (00:21:32):

The only way you don’t have that is if they just let the markets really sell off, is that what would prevent us from hitting those kind of numbers or do the numbers still manifest themselves?

Luke Gromen (00:21:43):

No, you could, but that gets then to, I think the calculus that Putin has made in regards to this action, which is, you can have the markets sell off to create a bid for bonds, and it will, it will work. We’ve seen it in the last week, two weeks. With that said, as we saw in March of 2020, it can only work for so long until yields actually start rising, right? Because ultimately there’s a supply demand problem without the central bank there. The thing that is so different now that Wall Street still by and large does not understand, that most investors still do not understand is, treasury spending, which is interest plus some of the other stimulus they’re doing to juice tax receipts, to juice GDP, treasury spending plus the entitlement PAYGOs are 100% of tax receipts with tax receipts at all time highs.

Luke Gromen (00:22:35):

I mean, people say, “Oh, we’re not spending that much on interest. We have tax receipts of $4 trillion last year. Just the entitlement PAYGOs are 2.7 trillion. Before we spend another dime on anything else in the U.S. government, they’re spending 65% of tax receipts, record tax receipts boosted by a 12% nominal GDP, which was boosted by 8% inflation, 4 trillion bucks, 65% entitlement PAYGOs, then you’re going to have… I mean, if you add up treasury spending, entitlement PAYGOs and defense, which I categorize as the big three, that’s 120% of tax receipts. And tax receipts are highly sensitive or highly sensitive to consumption, and consumption because consumption’s 70% GDP, and consumption’s highly sensitive on the margin to asset prices, stocks.

Luke Gromen (00:23:24):

So that’s why I say they can let stocks fall for a bit to drive money back in the bonds, but if they let it go too far, they’re going to end up making the problem worse, not better, because what ends up happening is tax receipts start falling. And then you either have to let rates rise into a recession, to drive more capital into bonds, because there’s not enough capital to go into the bonds or you have money printer go brr, or you cut defense in the middle of a pissing contest with Russia, not going to happen, or you cut 2.7 trillion in entitlement PAYGOs in the middle of a midterm election for the boomers, not going to happen. Or you cut treasury yields below what they are. You can’t go below zero with the reserve currency. Option four is money printer go brr.

Luke Gromen (00:24:13):

I really think that’s the bigger game, right? You say it’s always know the game you’re playing, which game you’re playing. I don’t think Western strategists fully appreciate the game they’re playing. I think they are playing the Ukraine game. And I think what Russia and China are going is like, “Let’s just cause chaos here.” This is like the U.S.’s Afghanistan strategy, right? Like, “Let’s just throw a Molotov cocktail in there. We’re going to take some casualties. We’ll get bogged down. Maybe we win. Maybe we don’t. But the bigger game is the resulting chaos. The energy market can’t take it. The bond market can’t take it, the Western sovereigns and the U.S. and EU specifically, their fiscal situation, they are in no position to do anything.

Preston Pysh (00:24:59):

What do you say to the person who would look at Putin and say, “Well, he might not make it.” Because internally in their country, I would imagine it’s just rife with a populace that really isn’t too excited about all this. I would suspect, but I don’t know.

Luke Gromen (00:25:16):

I don’t know either. I saw a Western polling ahead of time that said… That I was reading the other day, I forget which media, I think it was U.S. mainstream media that said it, but the Western polling ahead of time was that Russian citizenry was in favor two to one to going into Ukraine, which if that’s the case, who knows? We all know that polling is… But no, I think that’s right. But again, that then if you have chaos in Russia, chaos in Russia was in ’98 when literally the economy was perfect. Nothing was going wrong. We were running surplus as we were… The biggest problem the United States had in 1998 was Monica Lewinsky. Think about that. That was the big crisis in 1997/1998. And in that environment where Russia was smaller, where oil was $20 a barrel, Russia was like hanging on. Russia [crosstalk 00:26:20].

Preston Pysh (00:26:20):

We were trying to define what is was, or is is.

Luke Gromen (00:26:25):

Well, that’s a separate discussion. I saw someone the other day saying, “Well, we signed this agreement with Ukraine to defend them and to be harsh.” I’m like, “You signed it with Bill Clinton who was debating the meaning of the word is.” That’s dangerously close to politics. I won’t… We’ll stop there.

Preston Pysh (00:26:47):

So two things for me that just makes this very concerning, the direction that this is going is, you had Belarus shooting what appear… And again, this is, who knows how valid all of this is? But it appears that they were shooting munitions from their territory into Ukraine obviously supporting Russia. And then you had Turkey cutting off the access to the Black Sea, to the Russian Navy. So here you have two countries that are supporting… One supporting Russia, one supporting Ukraine, that are now actively involving themselves into this fight. And I’m looking at this and saying to myself, “Oh my Lord.” I suspect that this just is not going to go over well, as far as just looking at historical implications, when you start getting active participants that are outside the two nation states that are at war, it has an ability to spiral out of control very quickly.

Preston Pysh (00:28:05):

You have Chechen fighters that are now coming into the Ukraine, who knows where else they might be deployed, depending on some of the other actors that are involved? And I’m just looking at all this, and I’m saying, “This just does not seem like it’s going to work itself out in a quick way, unless something that’s just unforeseen happens, like an assassination or something that is just not in the… or doesn’t appear to be in the cards.

Luke Gromen (00:28:38):

Yeah, I don’t disagree. And for me, it goes back to the point of, when Russia was a lot smaller, a lot less significant, when the system was much more stable, Russia collapsing was enough to nearly collapse the financial system. It required a Fed bailout of long-term capital to keep the U.S. banking system from collapsing, the global banking system from collapsing. And so to me, when you then factor in the China angle, there was a white paper that China put out right at the end of last year that not a lot of people paid attention to called export controls.

Luke Gromen (00:29:18):

And it read to me like a veiled threat basically of, we will weaponize supply chains. We have to start prioritizing exports based on our own domestic use. So that’s punchline being that, best case from the financial, I don’t know on the kinetic side. I agree with you 100% what we’re starting to see with some of these other nations getting drawn in has the risk of things spiraling. But I only say that based on historical analogs or reading, I don’t have any particular expertise in that. So I’m not the right guy to ask about that. But what I do know is when you look at the relative size, the relative leverage in the system and these events, it just goes back to that point of, like disinflation? No, it’s over. Supply chain improvement? Yeah, no. Inflation’s going to get better? No.

Luke Gromen (00:30:31):

And to be clear, I think what we saw from the U.S. and EU, I didn’t realize this till today, but apparently central bank FX reserves historically had enjoyed sovereign immunity. So the fact that the U.S. and EU central banks did that to the Russian central bank is a violation of international norm, arguably, an act of war on some way, shape or form. It is likely to elicit a response. What is that response? Does Russia slow steam or slow pump the natural gas into Europe? That’s probably a pretty good bet. Do they mess with the LNG terminals from a hacking standpoint? Because if those things go down, the Liberty boats they are going to all pile up in the Med or in the North Sea looking to get the gas in, and they’re not going to be able to offload it.

Luke Gromen (00:31:27):

Are they going to mess with electric or cyber warfare here? Gosh knows we’ve heard plenty of warnings about that. I mean, when I saw what I saw last week, I told my wife, “Go get some extra cash out of the bank, we got to go to the grocery store this weekend. We need to make sure we’ve got plenty of stuff in the freezer.” Because I don’t think people in the West are thinking of, listen, what happens if your credit card goes down for two weeks? And Pippa Malmgren wrote a great paper, a great Substack, I think last week. I think it was called Electrons are The New Bullets. But I would highly encourage listeners to read that. I think it’s very… Pippa, brilliant woman, but not just a brilliant one, but she served in the Bush administration. She knows of what she speaks. And of course her father, Harald Malmgren served with Kennedy, Johnson, Nixon, Cold War veteran at the highest levels.

Luke Gromen (00:32:23):

And the point of her paper is that electrons, the internet, that all of this can be weaponized. The exchanges are on a chip basically, is what she says, right? And this is her question, not mine. What happens if markets stop functioning on a regular basis? Not if they go down permanently, that’s not the issue. What if they’re just intermittent, right? Where you start questioning capital allocation, you start these… And that’s where too, I think in addition to the kinetic stuff that you just referenced, I think the Western populace is totally unready for anything like this, mentally, physically, anything.

Preston Pysh (00:33:14):

Absolutely.

Luke Gromen (00:33:16):

I mean, my kids today, my boys… And I got a 20 year old and 18 year old. And my 18 year old goes, “Dad…” Going around on Instagram or whatever they’re looking at, Columbus, Ohio is number six on the whatever list they were looking at of nuclear targets for the Russians. So we’re in Cleveland, Ohio. Columbus, they’re like, “Oh my God.” Now, who knows if it’s even true or not? But from three months, we’ve gone from the prison of the United States saying the unvaxxed are going to… At risk of hospitalization and death over this cold winter, to today, the president going, “Don’t worry about nuclear attack. It should be fine.” And it’s like, “Holy cow, is that how fast everything went?” I just think there’s this… When I saw the reaction of my boys, I don’t think mentally as a country, I don’t think physically we’re prepared for any type of retaliation. I mean, my whole life, everyone’s whole life, it’s always been over there.

Preston Pysh (00:34:09):

We’re not even talking about Canada shutting down bank accounts for people that made $50 donations to a crowdfunding protest. We’re not even talking about a massive convoy that’s enroute to Washington, D.C. right now to the tune of thousands of trucks. I don’t even know what the number’s up to right now, but I think this is going to be a major story in the coming week or two weeks.

Luke Gromen (00:34:39):

I think the banks in Canada had a very short, very one-sided and very loud conversation with Trudeau. That’s what I think happened. It was what we-

Preston Pysh (00:34:48):

But the trust is breaking down every… To your point-

Luke Gromen (00:34:51):

Agreed.

Preston Pysh (00:34:52):

Yeah. Of getting money out of the bank. I just don’t think people… I think they’ve been so lulled to sleep, expecting that I can just go out and this is just how the world functions. And I think we are in a situation where there is something massive brewing. I don’t know what the hell it is, but there is something really massive brewing. It just feels like that. I hope I’m wrong. I hope I’m wrong.

Luke Gromen (00:35:18):

I do too. And I hope… And that’s something to think about too. And who knows? This might have even factored into Putin’s calculus, right? Maybe he’s desperate. Maybe he’s what, maybe any of those things, but the Russians are no strangers to currency collapses. This is not their first rodeo. This is actually, 30% in the ruble? Eh. I have friends that grew up there. They had two hyperinflations in the ’90s. The currency collapsed again in ’08 and it collapsed again in ’14. So it’s not like America where everyone’s just has all their cash sitting in a bank. Everything’s fine. Right. I mean, you hold your currency in dollars, there’s record purchases of gold last year in Russia by the citizenry. There’s an understanding that fundamentally in Russia, that currency collapses, number one, it’s not safe. And number two, having lived through that, there’s much more robust just experience, right? You store food, you have a garden. There’s these angles that once you live through that kind of thing, it’s a little different than, hey, we’ve been running just in time for 30 years. What can possibly go wrong kind of a thing.

Luke Gromen (00:36:32):

And I’m reminded too, as we get into this, with Russia and China, I’m reminded a little bit of the stories of World War I, where going into World War I, number one, there was global. That was at the end of globalization 1.0. And there was… I forget who wrote the book, but basically it was irrational to go to war because everyone was intertwined with trade. And the guy said, “Listen, I didn’t say impossible, I said irrational,” in the aftermath. And he was right. He didn’t say impossible. He said irrational. But the other point to that was, every combatant going into World War I thought they were going to go in and be home by Christmas because they had all served in Africa and India. And these colonies of the great European powers in the 10 to 15 years prior, and they had been using machine guns against guys with old rifles or spears in some cases, and just mowed them down.

Luke Gromen (00:37:27):

And so they figured, all right, we’re going to go there. We’re going to mow down the Germans. And to your point about the defensive positions, when they got machine guns and they got machine guns, it was a very, very different story. And my point is that when you have two near peer adversaries, it’s a very different story. And it’s a very different story for us versus recent conflicts in the United States. And it’s a very different story for the Russians versus near term. So there’s this desperation, I think, to some level on the Russian side, this frustration on their side. And I think some probably overconfidence on their side and on our side, all feeding into what you described earlier, combined with all this other.

Luke Gromen (00:38:11):

So I don’t disagree. It’s a very discomforting cocktail. And then when you talk about the domestic side, which again, I don’t know who gave of Trudeau that advice. It was terrible advice, because now they opened Pandora’s box. There’s no going back. It’s been revealed. It’s the same thing as when we used Swift on Iran. I think in hindsight, we will see that to have been a very penny-wise pound-foolish decision, right?

Preston Pysh (00:38:39):

For $50.

Luke Gromen (00:38:42):

Right. I mean, if you’re Alabama and you’re playing St. Mary’s of the Blind, you don’t put your best trick play on film so that LSU can see you. You save that. So why are we using Swift against Iran? It made little sense. We should have, because had we not used that against Iran, then when we deployed it against Russia, they’d have been like, “Oh my God.” There’s no surprises now. I mean, you saw Jamie Dimon at the end of today say, “There are workarounds, and this is now a threat.” Obama talked about this in 2015, that the reason we pulled back on some of the unilateral sanctions against Iran was because there was a threat to the U.S. dollars reserve status, said, “We couldn’t sanction, we can’t dictate the economic and energy policies of every nation on earth, because it will threaten the dollars reserve status.”

Luke Gromen (00:39:32):

And so there’s this direct game, there’s the threats within this direct game. And then there’s this big meta game that I think is ultimately the real goes like, “Hey, maybe we get Ukraine, maybe we don’t. We don’t think we’re going to lose tremendous amount. We’ll get in a scrap.” But that scrap in a peak cheap energy world with U.S. sovereign debt and fiscal situation, and the EU debt and fiscal situation, as precarious as they are, that should be more than enough to trigger money printer go brr into a energy spike and inflation spike. And that should be enough to trigger basically a systemic reset.

Preston Pysh (00:40:15):

So you had mentioned China a little bit. One of the things that I hear just tons of people talking about, maybe just because it gets more sensationalized when you do this bit, everybody’s just saying, “Taiwan, Taiwan, this would be the chance for China to go after Taiwan.” And I’m just curious what you think the probabilities of something… I think the probability is higher than what many that are just writing it off saying, “Ah.” I think the probabilities are higher than that. I’m just curious whether you think that’s an opportunity for them, if they are colluding together, Russia and China, is this the moment where they then go in that direction to really lay the one two punch?

Luke Gromen (00:41:03):

I don’t know. The people that I really respect on that say that, like you said, it’s basically a low chance of happening. The thing that’s caught my attention as it relates to Taiwan and China is for example, I saw a chart from David Goldman a few weeks ago, showing that Taiwanese exports to mainland China since 2019 are up nearly 2X. By way of comparison, Taiwanese exports to the United States since 2019, according to whatever U.S. agency tracks it, are up 45%. And the United States is having a semiconductor shortage. So you tell me, it sounds to me like Taiwan’s voting with their checkbook or Taiwan is actually writing… They’re playing both sides, which is what I would do too. Their economic future is clearly in China, but they want to maintain their political independence, which is clearly with the United States.

Luke Gromen (00:42:08):

And so to me, it looks like they are… The shipment numbers, the growth rates, since 2019 would suggest that they are giving preferential treatment to the Chinese while benefiting from our umbrella. Which to me sounds like maybe there needs to be a conversation there, but again, when I say this rerating of political relative power standings, this is another measure. What exactly are we going to do? Let’s say I’m right. Let’s say that the Taiwanese, they are giving Chinese preferential treatment and they are doing so under our military and protection umbrella from the Chinese, what are we going to do, back away? No, we can’t. Because if they go with them, then we’re worse off, right? So there’s this, so you look at the game theory of it. Taiwanese relative power is gaining relative to America. And by virtue of that, Chinese’s relative power is gaining relative to America. And at the moment, there isn’t a darn thing we can do about it, as far as I can tell.

Luke Gromen (00:43:15):

Now, I’ve been very encouraged to see in the last six months, we have seen three semiconductor fabs announced in the U.S., right? We’ve seen Taiwan semi in Arizona. We’ve seen, I think, a Samsung facility in Texas, and we’ve seen Intel come here to Ohio where they’re talking about making the Columbus, Ohio region one of the biggest semiconductor production regions in the world, which sounds awesome. And I think it’s the right thing to do. I think it’s very good for Ohio, it’s very good for the U.S. That said, it’s all of this is still on the come. We’re still probably several years from this. There’s probably some generational in terms of technology issues, whatever. But for my purposes, again, it ties back to the initial statement. This isn’t disinflationary. This is not transitory. This is so inflationary. It’s so non-transitory.

Luke Gromen (00:44:06):

And again, the way the world worked for 50 years was, as you guys make the semiconductors, send them to us. We send you the dollars and then you take the dollars and you send them back into treasuries. And now we’re saying, “We’re out, we’re just going to make them ourselves.” And so here too, there’s a message to the Taiwanese. I think it’s the right thing to do to them to say, “Listen, you’re benefiting from our protection. You’re taking care of China. Okay, great. We’re going to start making stuff here.” Which is the right thing to do, but then it also communicates to the Taiwanese. All right. I don’t know if the Americans are going to be here in 20 years, 15 years, 10 years. How does that start to change strategic thinking? I don’t know, but these are the types of conversations that have to be happening around the world. And these are conversations that were not happening five years ago, 10 years ago, 20 years ago, 25 years ago.

Preston Pysh (00:44:57):

So the Russian minister says, “We are working on digital one world currency for trade.” Came out of the local media, I think yesterday.

Luke Gromen (00:45:11):

Yep. Saw it.

Preston Pysh (00:45:12):

What are your thoughts on that one?

Luke Gromen (00:45:16):

I think this ties back into the relative power situation revisions. And I think it ties into something I tweeted today, which was, nominally, the Russian currency is the ruble and it’s getting killed, but functionally, the Russian currency is oil and gas and it’s rising against everything. And it has been rising against everything. And that leaves them with some unappreciated or underappreciated options potentially. So if we are willing to completely cut off their oil and gas, and you could never completely, but mostly cut it off. And again, I don’t think we can do that with [crosstalk 00:46:00] our system.

Preston Pysh (00:46:01):

Can China and India consume their production?

Luke Gromen (00:46:06):

Yes. But the logistics are problematic for a decent chunk of it. So there’s some pipeline consumption issues, some displacement, some grade stuff. And again, that’s above my pay grade, but the little bit I’ve looked at is that there’s not enough pipeline capacity to do it today. The pipelines would take a while, because it’s not easy ground to build over. Presumably you could use tankers for a lot of it. But then I don’t know, the grade, medium, heavy, light, sweet, in terms of the different refinery needs and then who that bumps out in terms of the implications of that. So top down oversimplified, yeah. I mean, ultimately the demand for energy is infinite. I would love to take a G V, a Gulfstream V everywhere I want on vacation and consume a bunch of oil, if oil was free or very cheap, I would do that. It’s not, right? So the whole is there enough demand? What’s the price, right? There’s always enough.

Preston Pysh (00:47:09):

You’d first have to become a strong advocate of ESG before you did that, Luke.

Luke Gromen (00:47:17):

I literally just saw a headline on Bloomberg talking about that the Europeans are talking about reclassifying weapons makers as ESG so that they can get cheaper financing and like satire’s dead. No. So if we’re willing to completely sanction the energy out, they have energy, they have some options, right? This is the real currency. And so people say, “Well, how can they defend…” Let’s start with just basic and work our way up with their options. What if Putin came out tomorrow and said, “I’m only taking ruble for my energy”? Let’s just think about this mechanically. The Europeans are going to have to start selling euros to buy rubles. And the Americans are going to have to start doing the same thing because we import whatever, on net, I think 600,000 barrels a day from the Russians and whatever gas we get from them at that [crosstalk 00:48:03].

Preston Pysh (00:48:03):

I mean, Europe has no options in this. At least not in the interim. Whatever they would try to transition to, you’re what, two years out from whatever that is, which would be nuclear, I would imagine?

Luke Gromen (00:48:17):

Well, and they’re talking about delaying some nukes, closing some nukes. And again, there are guys out there that know what that would imply in terms of reducing natural gas demand, daily demand. But I’m not one of those guys. And it’s also important too. Europe is shutting down their biggest natural gas field, Groningen in the Netherlands this year. It was supposed to go be shut down in 2030, then 2029. Now it’s going to be shut down this year.

Preston Pysh (00:48:46):

But they have to be pivoting from whatever those decisions were at this point.

Luke Gromen (00:48:49):

They have to. The Groningen problem though, is some of it is geological. Some of this stuff is like peak oil stuff, peak cheap oil stuff, right? These fields all follow some version of a Hubbard’s curve or a bell curve. You find it, you produce more, you get to a peak and then you got to the other side. So there’s some geological issues associated with Groningen. And I think they could extend it. I don’t know how long they could, but it’s not simply, “Hey, this isn’t green and so let’s just stop doing this.” Some of it is like, this is causing ground issues, geological issues. It’s not there, water cut, whatever. Okay. So the options Russia has. Option number one, tomorrow Putin says, “Hey, I’m only taking rubles.” All of a sudden the Europeans have to sell euros and buy rubles.

Luke Gromen (00:49:36):

And this is why I say this relative power side, right? The sign that we can’t sanction his energy out because it’ll collapse our system shows that there’s some power there. There’s a card to be played. So now you would be in a situation where the Europeans and the Americans are defending the ruble for Putin because we need his energy. Okay. So that’s I think tier one. You go to tier two and these become more nuclear, right? New options. And that’s a digital currency. What if Putin comes out and says, “Listen, we have a gold…” And I know we’re going to set this discussion aside. “We have a gold blockchain token digital currency here, gold bag digital currency, and we are only taking through this. We’re only taking gold for our oil. Physical only. It’s got to be on this blockchain.” That’s physical only, this digital token.

Luke Gromen (00:50:30):

And the Chinese are on board and the Venezuelans are on board and the Iranians are on board. And the whole slew of usual suspects. Now Putin can control the ratio of gold to oil that he wants to transact that and use his oil to revalue gold. By revaluing gold higher using his oil he’s going to be creating dollar reserves for himself with his gold reserves, which he still has control over. And oh, by the way, he needs more of because the U.S. and European central banks just took two thirds of his reserves. I think I saw about 630 billion reserves and think 130, 150 billion is sitting in gold in Russia. So he needs to get that number back up based on what they just did. Again, because he has energy, all he has to do is say, and this is over simplification, “The Chinese and I are transacting at 1000 barrels per ounce.”

Luke Gromen (00:51:31):

And this to me is the nuclear option on the financial side, because now this throws it back into the lap of the Americans. It’s very poorly understood in the West that the Achilles heel to the dollar system is the Comax and the London unallocated global markets. They are very, in London in particular, highly levered, small sliver of physical underpinning the whole thing. And then the only way you can take the bottom Jenga block of physical out is if you are a sovereign with nukes. I mean, a reasonable size hedge fund could create a run on Comax if they wanted to, but they don’t. There’s a message there, right? So Russia says, “Okay, 1000 barrels an ounce, and this is where we’re doing deals at as a result of sanctions, because we need to make the gold market big enough to handle the oil market because you’ve kicked me out of Swift and you’ve hurt my reserves.”

Luke Gromen (00:52:27):

Okay. And China’s happy with that deal. And the Venezuelans and Iranians are on board too. Now you have a big chunk of the global export oil market transacting in gold at 1000 barrels an ounce. Well, the law of one price says you can’t have the same price for the same… or two different prices for the same commodity. And in America, the gold-oil ratio is give or take 20. And so the Americans are going to have a choice at that point, right? If he’s doing it at 1000 barrels an ounce, if we cannot… Basically if we don’t stop trade with China and all trade with Russia and everybody else, there’s going to be leakage through that whole system. 1000 barrels an ounce means the Americans have to decide if they want $2 oil, $2,000 gold divided by 1000, $2 oil, in which case, the entire shale sector’s gone.

Luke Gromen (00:53:14):

And now we need to start importing probably about 10 million barrels a day from the Russians or the Venezuelans or the Iranians who are only taking gold. Or we have to write up gold to his number. Again, this is simple math. This is not where I think it’s going, but 1000 barrels an ounce, $100 a barrel, $100,000 an ounce gold, you have a new currency system. Treasuries are no longer primary reserve of the whole thing. Gold now is, and oh, by the way, let’s re-mark Putin’s gold in $100,000 an ounce. Does he need any more dollars? No, he does not. He’s got all the dollars he needs and people say, “Well, he can’t transact them. What’s he need from us? I know I give him everything he needs.”

Preston Pysh (00:53:55):

And Luke, so you’re saying that this blockchain-based gold backed system, so the digital currency would be then traded globally? That it’s-

Luke Gromen (00:54:06):

This is purely hypothetical. But if you had maybe not globally, maybe just for energy, maybe just for energy between them. I don’t know, because to your point, to Bitcoin advocates’ point, the problem with gold is you got to audit it. If it’s on a blockchain, that is-

Preston Pysh (00:54:28):

He’s controlling the ledger.

Luke Gromen (00:54:29):

It’s auditable.

Preston Pysh (00:54:30):

Yeah. And I mean, that’s my whole… You already know where I’m going with my [crosstalk 00:54:35].

Luke Gromen (00:54:36):

Right. And ultimately, I think that kind of outcome would be tremendous for Bitcoin too, to be clear, because this is the fire that the Western banker, that the Western policy makers have now started, that they are playing with. And I don’t think they realize they’re playing with this. And this is to me when I see like… My Twitter feed is probably 99%, Russia’s screwed, we’ve got them down. Russia has no cards to play. You’re talking about one of the great strategists at the senior political level in the world. Yeah, maybe he’s just lost his mind and it’s that simple, and this is a bad gambit. What if it’s not?

Preston Pysh (00:55:26):

I think the way to go about this is to give him the benefit of the doubt so that you can sharp-shoot and think through all the different scenarios that could potentially play out.

Luke Gromen (00:55:34):

I think you have to. I think you have to, and people just aren’t. They have this energy production. And as long as they have this energy production and he remains in power, I think your point there is very astute. Because if you can get a Yeltsin in there and you can basically start to do what you did in the late ’90s, which is… There’s a great article, The Harvard Boys Do Russia. So Jeff Sachs and Larry Summers and Stan Fischer go over there. And they start selling off the pieces of the Soviet empire for pennies on the dollar to Western interests. Then this can all work out, but it’s interesting when you red team things, you got to put yourself in the other guy’s shoes. And there’s none of that being done.

Luke Gromen (00:56:23):

I mean, there’s a book called Genocide: Russia and the New World Order. And it’s written by a guy named Malcolm… I think it’s Malcolm, Malcolm Glazyev. And Glazyev, at least as of a couple years ago was one of Putin’s senior economic advisors. And this book is fascinating because he lays out in great details, great economic analysis, the case that the IMF’s shock therapy under the leadership of Larry Summers, former secretary of the treasury and Stan Fischer, former vice chair of the Fed, he names both gentlemen, specifically. IMF shock therapy in the Russian’s case did as much economic damage to Russia as Hitler did in the ’40s, as Napoleon did when he invaded Russia. And as the white revolution did in whatever, 1917, 1918.

Luke Gromen (00:57:18):

And so do I believe those numbers? I don’t know. But do I know that a senior Putin economic advisor has run these numbers and believes these numbers? Yes. And this book was written nine years ago. So my read on this the whole time is not, I believe these numbers, I think they’re right. My read on this book is, numbers might be right, might be wrong, but they believe these numbers. And if they believe these numbers, what are the odds that Russians are going to roll over and let a NATO country next to them? They are going to go to the mattresses at some point on this, and they finally just did.

Preston Pysh (00:58:04):

So I just want to go back just briefly because I think the Bitcoin community would be very upset with me if I didn’t go back and readdres the gold comment.

Luke Gromen (00:58:13):

Yeah, I got off topic there a second.

Preston Pysh (00:58:14):

No, no, no, this is good. But for people who are listening to this, that really want to understand why a Bitcoiner would be looking at the scenario that you outline, I think that it’s plausible that they could go down that path with a digital currency that they’re saying is backed by gold. They obviously don’t have to prove anything as to how much gold they actually have. I’m sure that they would generically try to provide some type of audit of how much they’re starting out with that would supposedly back this digital currency that could then be shot all around the world in “trustless way” even though we clearly know that they’re managing whatever ledger they’ve got.

Preston Pysh (00:58:57):

In my humble opinion, blockchain, the term blockchain is thrown around so liberally as if it’s actually decentralized today that most, and when I say most, probably 95% plus just hear blockchain. They’re like, “Oh, well, it’s decentralized. There’s not anything anybody can do to shut it down.”

Luke Gromen (00:59:21):

Good point. Yeah, yeah. Yeah.

Preston Pysh (00:59:22):

When in reality, I really think that the only thing out there is literally Bitcoin, that’s actually decentralized because anybody who runs a full node like myself and many others out there, know that you can’t shut that down when the memory to run one of these things is so small and so decentralized, and we’re the gatekeepers of what the ledger is. You get into any of these other blockchains, the requirement to house these things, it’s like AWS, like you have to have a web server to host, which makes it not decentralized.

Luke Gromen (01:00:02):

It beats the purpose.

Preston Pysh (01:00:04):

That’s right.

Luke Gromen (01:00:05):

Yeah. Let’s rerun that scenario. Let’s say he does that scenario with Bitcoin, just for… Let’s just say scenario C. So it’s, “Hey, you better pay me in ruble.” B, “I’m going to gold.” C, “I’m going to Bitcoin.”

Preston Pysh (01:00:22):

I just can’t even imagine what that would do.

Luke Gromen (01:00:24):

Right. Think about the implications of that. Right now it is truly decentralized. Now you’ve got oil bidding for Bitcoin, and there’s nothing the West can do to stop it. There’s nothing the East can do to stop it. It’s-

Preston Pysh (01:00:45):

I know one thing, Bitcoiners would be villainized real fast.

Luke Gromen (01:00:49):

They’d be villainized real fast. Quite frankly, everyone would probably go into hiding because the number would be so big, you wouldn’t want anyone to know you owned any.

Preston Pysh (01:00:59):

Yeah. Which I clearly don’t, there’s many others like me that have just lost our coins, but we like talking about it.

Luke Gromen (01:01:08):

We like talking about it.

Preston Pysh (01:01:10):

We love talking about it. Yes.

Luke Gromen (01:01:11):

Yeah. No. And this is something else I’ve talked about a little bit. I don’t think China would want that though, because I think we talked a little bit about this on our last show, which is, I think China kicked out Bitcoin miners not because they dislike the competition. I mean, they probably did, but I don’t think that was the main reason. I think the main reason is they have a power issue and they have a power issue because they have a water issue and-

Preston Pysh (01:01:37):

But Luke, okay, so let’s pull the thread on this. I’m sorry to interrupt you, but what if-

Luke Gromen (01:01:40):

That’s okay.

Preston Pysh (01:01:42):

What if China says, “Well, we’re going to peg our central bank digital currency to Bitcoin, but all of our citizens have to use the central bank digital currency”? I think over there, most of them would just be like, “Okay, sure. We’ll just use it.” I don’t think you have as many people in China that are just freedom zealots like myself and many other people inside of this country that understand the privacy implications and the damage that can be done with the central bank digital currency.

Luke Gromen (01:02:18):

Yeah. Right. Politically, they just want shit to work. As long as the system works and then they’re… And that would not be dissimilar to what the U.S. ran with gold from whatever, ’46 through ’71. It was illegal for Americans to own. We couldn’t own gold technically, but we were settling. I mean, there was a 737 flying gold discs to Saudi Arabia every frigging week for a number of years in the ’60s for the Royal. And so it’s interesting. I think that would make sense. And that would again be another… It would be a huge Trump card that the Russians could play. But again, they have the option to play that because they have this energy.

Luke Gromen (01:03:03):

And when you look at what he’s doing, in my opinion, it has always been, I think he understands the math is very clear, right? He doesn’t need to report monthly numbers. He does not need to report quarterly return numbers. He just needs to look out and go, “The Americans have the reserve currency. The Americans have 70 million boomers. They owe them $100 trillion. They’re going to print it all. And when they do, they will have effectively stolen all the oil I ship to them for dollars over the years, via inflation. And so I am going to stop storing their bonds. I’m going to store gold.” And then Bitcoin came along and has arguably done a better job. But I think that’s his whole game. What’s that?

Preston Pysh (01:03:48):

He stopped doing that in 2018 when he sold all the bonds he had. I would argue maybe that’s when the premeditation of all of this maybe was initiated, was in 2018 when he sold all the bonds he had.

Luke Gromen (01:04:02):

Yeah. I think that’s very possible. I think they and China both have been under the gun, right? China has been running into increasing water issues, which means they’re running into less food security. Russia can help address that. The Chinese in the first half of 2018 ran their first current account deficit in 20 years. So that I think spurred them to accelerate yuan oil, yuan commodity pricing, which we’ve seen a significant acceleration of since then, because that gives them flexibility around their current account. I mean, people don’t understand when I say that. Here’s what it means. In 2018, if China would have imported 100% of their commodity imports in yuan instead of dollars, it would’ve increased their current… Excuse me, their trade surplus by $800 billion. So China’s dollar supplies would’ve gone up by $800 billion if they had paid in all euros… Or excuse me, in all yuan.

Luke Gromen (01:05:06):

So when I say there’s another lever, they’re never going to do 100% yuan. It’s not really in their interest. And I don’t think anyone would ever take it all per se. However, do 10% of that, that’s $100 billion, right? And commodity prices are way lower than they were today. So you just do 10% of your commodities in yuan, you free up $100 billion. China yuan currency frees up the risk or ends the risk of a Chinese currency crisis.

Luke Gromen (01:05:34):

So I think they and the Russians were both working together on that. The Russians were very early in selling oil in yuan. They started doing it in 2014. The Holy Grail gas deal was signed in may of 2014 between the two, that the terms were rumored to be yuan. It was a 30-year massive deal. So I think this thing’s been… I think they’ve realized they’ve needed each other and I think why they feel like they need each other is I think they know the currency system is screwed. I think they see the reserve currency issuer owes its boomers 100 billion or $100 trillion, and it’s going to print it all. And when they do, the dollar reserves, the dollar bonds these countries hold will be made worthless in real terms.

Preston Pysh (01:06:17):

I think you’re exactly right. And I think most of the West, Europe, U.S., don’t see it that way. At least a lot of the political figures that are in charge. I think some of your central bankers understand that this is coming off the tracks, but I think a lot of your elected officials in all of these countries have no clue that-

Luke Gromen (01:06:41):

They have no idea. They have no idea.

Preston Pysh (01:06:43):

That any of this is happening.

Luke Gromen (01:06:44):

No. And I think ultimately that ties back to initial point of, okay, what’s the game they’re playing? And I think there’s the game and then there’s the meta game. And I think the meta game is this system is screwed. There is no [inaudible 01:06:58], this thing is going… And post-COVID is really done. That’s where the reserve currency issuer can’t cover his true interest expense out of tax receipts. It’s over, it’s done. He’s got to print the vague, the game’s over. Okay.

Luke Gromen (01:07:18):

The game is, “Hey, let’s try to grab some territory and create some chaos. If we get some territory, great.” I think it was Putin who said it. I remember seeing an interview and I think it’s him. I may be misquoting, but it was basically like, “If you know there’s going to be a fight, pick the spot where the fight’s going to happen, because that will give you the advantage, so pick the spot where and when.” And I think it was alluding to a street fight. You never want to go into somebody else’s country to fight if you can avoid it. But mentally, I think that might be what the meta game is, which is, listen, system’s done. We don’t know what the trigger’s going to be, let’s do it now.

Preston Pysh (01:07:59):

Let me talk about one more thing that I found really interesting was the weaponization of finance against all the high-net-worth individuals in Russia. I actually think that this might actually be one of the most powerful tools against Putin that could potentially cause a lot of this to transition more peacefully than the path that it currently appears to be going on. How powerful do you think that that force is? I think that you’d start turning some of these billionaires, you’d start collecting their yachts, you’d start shutting down all their payments and things like that. You’d start taking their mansions in all these various locations all over the world. I think he’s got an absolute disaster on his hands internally with those actions. What are your thoughts?

Luke Gromen (01:08:54):

Yeah, I think that’s right. I think it’s a smart way of putting pressure on him and making him uncomfortable. To me, it’s unknowable. I don’t know his relationship structure and status with these people, how much he’s met with them before saying, “Listen, this is going to get messy.” That’s to me, the unknown. If he met with these guys and they are sworn allegiance in a suicide pack to, “Listen, we’re going down with the ship, we’re winning, or we’re burning the boats.” If they swore together to burn the boats, but then again, you can swear to burn the boats, but then when it’s time to light them, that’s a that’s a different animal entirely.

Luke Gromen (01:09:36):

So I think they make sense. It’s targeted. It’s interesting, I told you something the other day as a side note, if you say that the small number of people get together and control things and plan things, you’re a conspiracy theorists. Yet, what are we doing with sanctions? Targeting a small number of people to actually change something, right? One or the other is true, but not both.

Preston Pysh (01:10:03):

Luke, is there anything else that you think is a really important piece to this that I haven’t asked or that we haven’t covered? And before you do that, say the name of the book again, you mentioned a book there that I wanted to write down.

Luke Gromen (01:10:18):

Oh, by Glazyev?

Preston Pysh (01:10:19):

Yes.

Luke Gromen (01:10:20):

It was called Genocide: Russia and the New World Order. And it delves into the shock therapy from their side of things.

Preston Pysh (01:10:29):

Anything else that we’re forgetting?

Luke Gromen (01:10:32):

No, I think the big thing is really just, what’s the meta game here? And there’s just no consideration that there even is one. And I think that’s actually the real goal here is just-

Preston Pysh (01:10:44):

Totally agree with you. All right. Thank you so much for making time to come on and chat.

Luke Gromen (01:10:49):

Absolutely.

Preston Pysh (01:10:49):

And I learn so much every time I talk to you.

Luke Gromen (01:10:51):

Likewise.

Preston Pysh (01:10:52):

Give people a hand off, definitely highlight your book. They’re back behind you there for people that are watching this on YouTube, but highlight your book. And your macro thematic research that you do is just phenomenal.

Luke Gromen (01:11:06):

Thank you.

Preston Pysh (01:11:06):

Give people a hand off to some of this stuff.

Luke Gromen (01:11:07):

Sure. If you go to our website, fftt-llc.com, give you an update on different research product offerings, what we’re up to, et cetera. You can find me on Twitter as well @Luke Gromen. The books over here to my left or right, wherever it is on the screen, wrote those, they’re fictional. Mr. X is a fictional sovereign creditor of the United States and the books are written in a Socratic method with me interviewing him. And so Mr. X is a glamoration, if that’s a word, of a number of different actual people in my mind. And so they’re actually probably pretty helpful for these days in terms of understanding some of the motivations of potential motivations of what some of the bigger games on the financial side, in particular, but geopolitics as well in terms of what might be afoot.

Preston Pysh (01:11:59):

Luke, thank you so much for coming on the show.

Luke Gromen (01:12:02):

Thanks for having me on. It’s great talking again, my friend.

Preston Pysh (01:12:05):

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. So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening, and I’ll catch you again next week.

Outro (01:12:38):

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