The @nytimes Editorial Board says Donald Trump is "our national crisis", but Trump is just a symptom of our true national crisis:

Thanks to our post-71 USD system, it now takes 53 weeks of work to afford essentials...the crisis being that there are only 52 weeks in a year.
2/ The US's "national crisis" will continue til the structure of the post-1971 USD reserve status is changed; til it is, nothing will change. Essentials will continue to rise in cost while wages won't, as the US suffers from worsening "USD Dutch Disease" ftalphaville.ft.com/2019/03/13/155…
3/ "USD Dutch Disease" relegates US's role in world to producing the USD's that China needs to buy up the world's finite assets, sacrificing US middle- & wkg-classes to do so. This means there will likely be no de-escalation of political tensions til the USD status is changed.
4/ Do certain US officials know they need to change the US "money system" to fix this? The preponderance of the evidence says they do. Consider:

Paul Krugman to Bernard Lietaer: “Never touch the money system…NEVER touch the money system!” – 11/9/09
5/ “Now, Paul Krugman told me personally, that it was totally crazy to talk about the money issue. We were both from MIT, we graduated from the same school, we had the same professors, right? Here’s what he told me:
“Didn’t they tell you?! Never touch the money system!"...
6/ "NEVER touch the money system! You can touch everything else…never touch the money system…"
7/ "You will not be invited to the right places, and you can kiss goodbye the Nobel and anything else that is worthwhile getting. You’re killing yourself academically if you touch the money system.”
8/ To be clear, this is NOT about me telling people to vote for one party over the other. This is about me having 3 sons & knowing where this could lead unless we address the true root cause of what's happening ("the money system").

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More from @LukeGromen

1 Oct
1/ "It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something…
2/ "The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly. Debt jubilees have been going on for 5,000 yrs, as far back as the Sumerians."

-Fmr BIS Chief Economist William White, Jan-16
3/ Only question is whether the effective jubilee will come in nominal or real terms; if it is in nominal terms, today's sovereigns will be the 1st in history to default for lack of printed money. Only gold & BTC win either way.

Quote above from here:
telegraph.co.uk/finance/financ…
Read 4 tweets
26 Aug
How to get inflation > target in 2 easy steps:

1) US govt says: "The $864B deficit we ran in June is the new normal. That'll be the deficit EVERY mth from now on."

2) US Fed then says: "We will not allow 10y UST ylds > 60bps."

This is likely coming.

nytimes.com/2020/07/13/us/…
The world has long been gaming the USD system to its advantage; what I describe above would be the US gaming the USD system for OUR advantage for a change.

The world wants USDs? Fine...we'll MMT $10T per year of free stuff until the world adjusts the USD's value accordingly.
3/ "You want to threaten our Rx supply chain China? Fine. Executive order, $200 billion in 0% money 'loaned' to the US Rx industry to bring back mfg by 2022. Fed will hold the notes."

"INTC? Your turn. Here's $200B for you to build 10 new fabs in the US by 2023."
Read 6 tweets
23 Aug
@profplum99 @GreekFire23 @hendry_hugh @scientificecon 1/ China has a debt problem. W/finite rsvs & a non-convertible ccy, this means if China has a current acct deficit, it'll have a late-90s SE Asia ccy crisis (aka CNY crash & social unrest. China runs curr acct deficits in 2 places primarily:

1. Tourism
2. Commodity imports
@profplum99 @GreekFire23 @hendry_hugh @scientificecon 2/ Rising energy imports in particular mean as China imports more oil at higher USD prices, it's curr acct will fall closer to deficit & CNY ccy crisis = bad

China has 4 options to stave this off:

1/ Stop growing
2/ Produce more oil
3/ Buy more oil abroad
4/ Print CNY for oil
@profplum99 @GreekFire23 @hendry_hugh @scientificecon 3/ #1 isn't an option politically; #2 isn't geologically; #3 is what China's been doing w/their USDs for yrs; #4 began in 3q14 & is now accelerating meaningfully:
reuters.com/article/us-chi…
Read 10 tweets
23 Aug
@GreekFire23 @hendry_hugh @profplum99 @scientificecon 1) It's not a gold standard; it's a neutral reserve asset replacing USTs as primary reserve asset of the USD-centric system.

2) I'm not arguing for anything, I'm describing what's happening; MMT discussions are only accelerating gold replacing USTs as primary rsv asset:
@GreekFire23 @hendry_hugh @profplum99 @scientificecon 3) You cannot run MMT with USTs as primary reserve asset. The system will collapse.

Step 1 to MMT is the world moving to a neutral rsv asset to settle imbalances (which are primarily driven by commodity import/export imbalances.)

We are nearly a decade into this happening.
@GreekFire23 @hendry_hugh @profplum99 @scientificecon 4) The reason this is happening is b/c since 2008, UST's o/s have risen 8.8% CAGR, while UST ylds have averaged 2% across the curve.

Storing commodity surpluses in USTs under those terms is a guaranteed way to go broke in nations where the populaces don't deal well w/that.
Read 4 tweets
27 Jul
@PrestonPysh @RealVision @hendry_hugh 1/I agree. More likely, it will just be the world's 2-3 biggest oil exporters selling oil in CNY (already done), and the system (ie the gold market) adjusting, relative to oil (see the gold/oil ratio) & the USD (see the gold/USD ratio.)

No explicit pegs will be needed...
@PrestonPysh @RealVision @hendry_hugh 2/ Every nation will be free to print as much to finance their deficits as their political hearts desire, to be reflected in the valuation of their currency v. gold, and through the gold link, v. everyone else's currencies, a lot like what Zoellick said:

reuters.com/article/us-gol…
@PrestonPysh @RealVision @hendry_hugh 3/ "The former U.S. trade representative, who served in several Republican administrations, said such a move “is likely to need to involve the dollar, the euro, the yen, the pound and (a yuan) that moves toward internationalization and then an open capital account."
Read 7 tweets
27 Jul
THREAD: Many comments on "what gold is telling us." Here's a take I haven't seen yet:

1/ Let's pretend the currency system is a human body. The US says it wants to de-couple from China; 20 yrs ago, we could've de-coupled & it would've been like amputating a finger or a hand.
2/ Even 10-15 years ago, perhaps "de-coupling from China" would've been like amputating an arm, or a leg from our currency system.

However, after 20+ years of $200-400B surpluses (USD exports), & China's (generally) savvy reinvesting of those USD exports...
3/ "De-coupling from China" is no longer amputating an arm or a leg off the currency system; it is like cutting out some critical organ like heart, the lungs, or the liver out of the currency system...
Read 6 tweets

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