GDP to Debt Ratio

[Music] [Applause] [Music] [Applause] [Music] [Applause] [Music] [Applause] [Music] hello everybody Luke growman fft hope you are well well and having a great week it’s been certainly uh an interesting exciting adventurous one uh with the election now in the rearview mirror so let’s Jump Right In as always thank you very much for the questions really appreciate them I’m going to jump right in first question is from KP Luke you get a few minutes to sit with President Trump identify Financial economic issues and provide your

https://www.youtube.com/watch?v=bZanFzdZtOw

specific recommendations on how to address them go I would sit down and I would say you need to devalue the dollar and or get us debt to GDP down significantly first very fast right away in the first 3 to six months of your Administration or else you will risk running into the worst economic downturn in decades turn yourself possibly into a Herbert Hoover in the history books if you try to cut spending or or Implement tariffs into debt that has not been reduced as a percent of GDP you would then risk losing Congress

in a landslide to the Democrats in 2026 and you would that would make you a lame duck president for the final two years of your final president uh term presidential term and you would risk handicapping or kneecapping a presumed Vance 2028 presidential run before it even starts there must be an order of operations to implementing tariffs reshoring cutting government spending you have to get debt to GDP down first I would equate it to being a debt restructuring if you have a debt restructuring and too much debt and a 20% to

30% of your business is unprofitable uh unprofitable sales but you’re barely covering your interest expense that’s how high your debt is that’s the case the United States if you cut the most unprofitable 20 or 30% of your sales you need that cash flow forget about the profitability of it you need that cash flow just to make sure you can service your debt you cut that those sales you fire those sales you cut those sales before you restructure your debt now you don’t have the cash flow to cover your interest you’re done

bankruptcy thank you for playing however if you do the same two things you just do them in an opposite order if you respect the order of operations you re go to your lenders you restructure you term out your debt you reduce your interest rate now you have a much lower monthly net to cover now you can go to your unprofitable 20 or 30% of your sales cut that part of your business improve your profitability now you’ve improved profitability and since you don’t need the cash flow from those sales just to

keep the lights on you’ve restructured the business now the value of your business is going to rise get stronger you have to respect your order of operations same thing here you got to get that the GDP from 125% 120% down closer to 70 to 80% in a big hurry before you start cutting government jobs spending before you start implementing tariffs Etc because you’re going to send the dollar up and once the dollar goes up with thatb to GDP this High we know how it goes we saw 2022 we saw 3 q23 dollar up everything else down wash

rinse repeat until you get debt to GDP down dollar down so that’s what I would tell them from GF hi Luke happy subscriber here can you explain the Dynamics of a gold revaluation how that would work with buying treasuries with the proceeds wouldn’t they have to keep buying gold in the open market to say to maintain the price and and therefore borrow more and uh additionally uh on gold repricing wouldn’t the effect be similar to QE uh in theory yeah it would essentially be like QE except there would be wouldn’t be a debt swap as

Bernan I believe called it it would be straight cash printing creating creating money over the back of the gold buying back uh treasuries with the dollars so it would be straight money creation much more inflationary in my so so the way to do it mechanically is provided for in the financial accounting manual for federal reserve banks section 210 uh you can find it online it’s a public document treasury secretary instructs fed to revalue the gold every $4,000 per ounce in Gold puts about a trillion dollars into the treasury

general account free and clear straight money printing treasury secretary can whatever they want with it uh if you do that you can buy back uh treasuries reduce debt to GDP fast for my prior Point uh you can use it to fund stimulus reshoring uh whatever at any rate uh I don’t know if that they’d have to keep buying gold in the open market number one because I think every Central Bank in the world would be happy to follow the US in doing this uh because it would recap the Chinese consumer for example

it would recap Chinese Banks it would recap the European balance sheet create a bunch of money for them to do the industrial policy that dry has said they need uh so I think you’d have a lot of central banks around the world going me too me too me too we’re we’re doing the same thing we’re creating money with it too so number one I think that that’s that would do the trick they might ultimately have to uh um maintain a market or bid for gold but that’s there’s a couple ways you can do that the first is

straight again all these countries have a printing press so you can print money and buy gold like that’s you know there’s nothing mechanically stopping that maybe politically maybe there’s some esoteric Central Bank rules preventing that high IMF rules I’m not sure uh the other way you could do it is maintain a ratio in the you know the gold oil ratio where um you know you get some sort of international agreement where gold is now worth 100 to 400 barrels an ounce um and with oil production you know if the major oil

producers you’re uh uh EU EU sorry OPEC uh uh Russia and the US agree to it there’s your new market that’s your new market in Gold then okay you based B 100 to 400 barrels an ounce I don’t think oil is going to go down a whole lot because we need 65 70 minimum to keep Shale where it is so uh that’s another way you could do it uh from BS with all the recent us administrative support for Bitcoin as a strategic holding and the concomittant price rise do you expect gold to stay equal to Bitcoin in percentage rise in price or

will gold get left behind uh support or no support from the government I I would expect Bitcoin to rise versus gold uh over time on face peeling volatility uh that needs to be accounted for by most investors on a position sizing basis uh and that’s that’s precis what’s happened if you call up a chart this isn’t speculative you call up a chart Bitcoin over gold Bitcoin has crushed gold uh on face peeling volatility um and so that makes sense uh Bitcoin has a higher stock to flow ratio um it has an energy

tie like gold does and bitcoin’s got a growing Network effect so as long as that growing Network effect continues apps Etc then I don’t see any reason that that would change regardless of whether uh administrative support continues or or not uh let’s see hi Luke happy subscriber here thank you how would Bitcoin higher price lead to more tether and therefore more treasury demand from tether Holdings when Bitcoin goes up it shouldn’t mean more tethers printed or are tethers printed than used to buy

Bitcoin treasuries at the same time I would point you toward uh two things number one US Treasury report that came out two weeks ago uh supplemental report two with the uh quarterly refunding announcement and treasury borrowing advisory committee report it shows clear as day a positive correlation between bitcoin’s market cap the number of stable coins out there and the amount of stable coin demand slh Holdings for US Treasury T bills and so uh chicken and egg question I don’t know in terms of tether Bitcoin what have you

I can show you clear as day Bitcoin up tether up t- Bill Holdings up and so in theory um and not even in theory we can point to the treasury report talking about these kinds of things we can point to Wall Street Journal oped from former vice presidential candidate Paul Ryan who in I think June or July highlighted that a source of demand for T bills to finance us deficits which are problematic uh could be uh stable coins and what do you need for stable coins you need more market cap in in uh in Bitcoin so you could have a very uh

we’ve been kind of talking about this for a bit but this virtuous cycle the higher Bitcoin goes it’s not bad for the US it’s actually good for the US uh it’s inflationary but look inflation’s in the cake at this point that’s you know barring some miracle productivity solution inflation’s coming we’re just busy figuring out which inflationary solution uh we’re going to get and how to keep the long in of the bond market from revolting once that solution is implemented from Jesse are you still quote print to Oblivion and onshore

Manufacturing to solve the interest expense issue uh ultimately I guess in a nutshell I wouldn’t say print to Oblivion I would Nuance it a bit to say you tell me what the level of the dollar is and I’ll tell you what the level of the deficit is dxy 107 us deficit is probably going to be $2.5 trillion dollars and the US has a fiscal problem now today you’re going to have treasury market dysfunction you’re going to have higher rates on weaker growth Dixie 90 you’re going to have 800 billion trillion dollar de deficits I’m guessing

uh based on sort of the the relationship and 800 billion 800 billion to a to a trillion dollar deficit that’s that’s downright manageable that’s Dixie 90 given the current debt load and Etc Dixie 70 or 65 we could run a surplus like Clinton did now what’s the release valve the release valve is inflation and and and the price level in this country and then again Dixie said you’re going to need some measure of regulatory Financial repression yield curve control to keep bond yields below the rate of inflation implied by that