Interview with a Macro Analyst: AI Is Draining All Liquidity from U.S. Equities; Bitcoin’s Bottom Is $40,000
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Interview with a Macro Analyst: AI Is Draining All Liquidity from U.S. Equities; Bitcoin’s Bottom Is $40,000
While the S&P 500 index repeatedly hits new highs on the surface, in reality it is being propped up by just seven AI-related stocks.
Navigating Web3 tides with focused insightsCompiled & Translated by TechFlow
Guest: Luke Groman, Founder of FFT LC and Institutional Macro Strategist
Podcast Source: Coin Stories
Original Title: The $40K Bitcoin Bottom Coming?
Air Date: June 5, 2026
Key Takeaways
Over the past decade, U.S. long-dated Treasury futures have depreciated 90% against gold—while GDP continues to grow. That means 90% isn’t enough. This is the blunt wake-up call Luke Groman, founder of FFT LC and a macro strategist with 30 years on Wall Street, delivers to all investors.
In this episode, he presents a stark yet internally consistent analytical framework: while the S&P 500 repeatedly hits new highs on the surface, those gains are driven almost entirely by just seven AI-related stocks—and Bitcoin, “the last functional liquidity smoke alarm,” is sounding the warning.
If you want to understand why Groman sold most of his Bitcoin near the top and still hasn’t bought back in, why he believes dollar-denominated equities will keep rising while gold- and Bitcoin-denominated valuations continue falling, and why technical indicators point to a potential Bitcoin retest of the $40,000 level, this podcast is essential listening.
Key Insights Summary
Why Hasn’t Luke Groman Re-entered Bitcoin?
- “I bought a small amount, but essentially the answer is no—I haven’t meaningfully bought back in. I didn’t sell everything, but I sold most of it.”
- “I’m watching closely. Bitcoin has recently gone through a rather difficult period.”
The Divergence Puzzle: Equities Hit New Highs While Bitcoin Liquidity Dries Up
- “Bitcoin is the liquidity smoke alarm—possibly the last one still functioning—and it’s telling us something troubling.”
- “AI is sucking all the oxygen—and all the liquidity—out of the room. I believe the same is happening to Bitcoin.”
The Illusion of Value: How Accounting Practices Inflate AI Valuations
- “The faster you build and the less cash flow you generate, the higher—and faster—your reported earnings rise—but you’ll be critically short on cash.”
- “Once construction slows, revenue growth decelerates, and the lagging amortization effect catches up—then the situation reverses.”
Dollar-Denominated Gains vs. Gold- and Bitcoin-Denominated Losses
- “My base case is that equities surge in dollar terms—but fall sharply when priced in gold and Bitcoin.”
- “Over the past 10 years, U.S. long-dated Treasury futures have fallen 90% against gold—even as GDP grew—meaning 90% still isn’t enough.”
China’s Dominance Over Rare Earths
- “Dozens of trillions of dollars in U.S. equity market capitalization—not just tech stocks, but far beyond—are built on rare earths, an ultra-small commodity by volume.”
- “China dominates this space. They achieved it first by working at it for 30 years—and second by deploying more engineers than anyone else, under looser environmental regulations.”
- “The U.S. government has now explicitly intervened in this sector. Historically, when governments intervene in corporate affairs, those companies rarely make good investment holdings.”
The Strait of Hormuz: America’s ‘Suez Moment’
- “My base case is like someone jumping from a 100-story building, passing the 40th floor and saying, ‘Hey, this feels like flying—it’s amazing!’ What kills you isn’t the fall—it’s the sudden stop.”
- “When you face this degree of complacency, this degree of inventory drawdown—why hasn’t it reopened? That’s what continues to surprise us ‘tail-enders.’”
Why Is Iran Keeping the Strait of Hormuz Closed?
- “Rationing demand via price means recession—that’s its definition. And simultaneously, inflation follows—a stagflationary recession.”
- “If I were Iran—I’ve been bombed, I’ve held out this long, prepared for this day for 40 years, dug countless tunnels, and they destroyed far less than they thought.”
Surge in ‘Non-Monetary’ Gold Exports from the U.S. to China
- “In five of the past six months, non-monetary gold has been the single largest U.S. export.”
- “Many Trump supporters have issued statements claiming, ‘Trump reduced the trade deficit by X!’ Yes—the trade deficit is shrinking, and the largest marginal contributor is gold exports.”
Building a ‘Receipt-as-Clearing’ Proof-of-Work System
- “The world is moving toward a ‘no ticky, no washy’ system. What does that mean? It means: the U.S. wants rare earths—pay in gold, or the next shipment won’t arrive; China wants oil—pay in gold, or the next shipment won’t arrive.”
- “No one trusts anyone anymore. In such a world, where does the world go? To ledgers you can’t trust—you need trustless clearing mechanisms.”
When Debt-to-GDP Hits 130%: What Happened in All 58 Cases
- “Over 150 years, 58 countries reached a debt-to-GDP ratio of 130%. So far, all 58 defaulted—primarily through a significant inflationary episode.”
- “If AI doesn’t eliminate jobs, it’s not the greatest innovation since the internet—and doesn’t deserve these valuations. If it truly is the greatest thing, and those valuations are justified, then white-collar employment faces mass displacement—and U.S. employment contributes half of all tax revenue.”
Do Technical Indicators Point to a $40,000 Bitcoin Bottom?
- “If you actually buy back in the $40,000–$50,000 range, you’ll become a legendary figure—because you’d have sold near the peak.”
- “They’re forecasting a bottom around Q3/Q4, roughly in the $40,000 range. I genuinely think we may see that level.”
Why Hasn’t Luke Groman Re-entered Bitcoin?
Host Natalie Brunell: Let’s start with everyone’s burning Bitcoin question: Have you started buying back in—or are you waiting for further downside? Because Bitcoin hasn’t exactly been shining lately.
Luke Groman:
It’s dropped hard lately. I bought a tiny position as a test—but essentially, the answer is: I haven’t meaningfully re-entered. I didn’t sell my entire position, but I sold most of it. Bitcoin’s recent move—especially over the past three or four days—has been quite brutal.
The Divergence Puzzle: Equities Hit New Highs While Bitcoin Liquidity Dries Up
Host Natalie Brunell: Can you unpack why this is happening? We’re seeing equities surge relentlessly, hitting record highs. It reminds me of 2021—new highs every other day. Back then, Bitcoin also performed strongly—we were deep in a bull market. So what explains today’s divergence?
Luke Groman:
I’m not certain—but my working hypothesis is that the underlying foundation of this market rally isn’t healthy. Indices keep making new highs, new highs, new highs—but really, it’s just seven stocks. Yesterday I saw a chart showing that the S&P 500, excluding AI-related names, is actually slightly lower than before the Iran war began. I saw another chart comparing U.S. MSCI versus ex-U.S. MSCI emerging markets—and if you remove TSMC, Samsung, and one other large AI or memory-related company from the emerging markets index, it looks like emerging markets are crushing the U.S. But once you strip out those three or four AI-linked names, emerging markets are actually getting crushed. That’s the breadth issue—and there’s been much discussion about market breadth. I believe current headline index levels reflect extremely poor breadth. Ultimately, AI is sucking all the oxygen—and all the liquidity—out of the room, concentrating it in one area. I think this is happening to Bitcoin too—it’s a victim of the same dynamic. I believe Bitcoin is the liquidity smoke alarm—the last one still functioning—and it’s telling us something troubling. Meanwhile, oil is also absorbing liquidity—or rather, the Trump administration and the U.S. are doing everything possible to suppress oil prices, mainly through verbal intervention and releases from the Strategic Petroleum Reserve. Yet oil prices keep rising. Since the war began, even at today’s relatively low levels, oil is up ~50%. So oil is absorbing liquidity, commodities are absorbing liquidity, AI is absorbing liquidity. From a liquidity perspective, any asset that isn’t one of those three—or directly tied to them—is performing poorly, flat at best or declining.
The Illusion of Value: How Accounting Practices Inflate AI Valuations
Host Natalie Brunell: Regarding AI companies, it’s interesting—some call it a bubble, others don’t. Their P/E ratios aren’t especially high, unlike the dot-com bubble—and believers say there’s still huge upside. But I recall you wrote about accounting issues—something about front-loading demand, with all investment happening now while real revenue generation lies years ahead. Those data centers won’t generate meaningful growth until many years later—but all the investment is happening now.
Luke Groman:
The issue isn’t that real growth isn’t occurring—it’s more about accounting methodology. Because accounting treats front-end construction expenditures as capitalized assets, with revenue recognized upfront and expenses amortized over longer periods. This accounting method impacts reported earnings such that the faster you build and the less cash flow you generate, the higher—and faster—your reported earnings rise—but you’ll be critically short on cash, because you’re constantly spending, even as your books show strong profits.
You can expect continued upward revisions to earnings expectations and corresponding stock price rallies. You can also expect them to shift from financing via cash to borrowing—and then borrowing more. And indeed, we’re already seeing that happen. Where things get tricky is when this construction cycle slows for any reason—whether due to shortages of physical materials, chip supply disruptions, or permitting delays across global data center sites—regardless of cause, once construction slows, your revenue growth decelerates, and the lagging amortization effect catches up—then the situation reverses. Earnings growth slows dramatically—or turns negative—but much of that decline is non-cash, while you actually see cash flow improve.
So the question becomes: how will markets react? Will they interpret this as “earnings slowing but cash flow now healthy”? On one hand, valuations aren’t stretched, suggesting this may not be catastrophic. On the other, these stocks carry enormous momentum and are vacuuming up all liquidity. So if earnings slow, why hold them instead of reallocating to other assets previously starved of liquidity? Will capital begin rotating out of this sector? I suspect the latter—leading to a period of underperformance.
But that raises a tough question: when does the slowdown hit—and what triggers it? Many factors could drive it. And there’s another complication absent in 1999: back then, we had free markets. Government involvement was minimal—this was the apex of American unipolarity. Today, government is deeply involved. Then we were unipolar; now we’re in a new great-power competition. So while the dot-com bubble collapsed under its own weight, I believe this cycle will also eventually reverse under its own weight—but it won’t be allowed to collapse freely, because AI has been designated a critical battleground in great-power competition. That’s the complication—governments are highly likely to step in, taking whatever actions they deem necessary to sustain this build-out. Which means it will continue extracting oxygen from every other asset class—creating more problems. Much reminds me of 1999–2000—but some elements feel different.
Dollar-Denominated Gains, Gold- and Bitcoin-Denominated Losses
Host Natalie Brunell: Many people say the stock market is about to crash—we’re near the top—but it sounds like this rally could persist for quite some time. I know you’re generally cautious on equities and have long focused on gold and infrastructure. Do you think gold and Bitcoin prices will remain suppressed? For Bitcoin holders, I recall you said it might trade sideways between $58,000 and $72,000 for an extended period.
Luke Groman:
That was partly tongue-in-cheek—but I do observe that the U.S. appears to be pushing for decoupling from China. Politically, that requires specific outcomes: a weaker yen and won to help shift production capacity out of China; a weaker dollar to boost domestic manufacturing. All of these should, in theory, benefit gold and Bitcoin. But domestically, powerful forces oppose this—because rising gold and Bitcoin prices signal globally, “You’re just printing recklessly.” That creates funding challenges in the Treasury market—especially given the 10-year yield moves we’ve seen since the war began.
I believe their approach will be to expand derivatives markets—as historically done with gold. Long-term, I doubt they can replicate this with Bitcoin; but short-term, amplifying derivatives works. Months ago, reports noted massive volumes of call options being sold—effectively passive shorting. You’re meeting demand: investors want Bitcoin exposure but buy call options instead of Bitcoin itself. Without these derivatives, holding Bitcoin meant only one path—buying Bitcoin. Now, derivatives offer a looser, fuzzier alternative. Long-term, none of this matters—but short-term, it does—depending on how policymakers wish to manage headline numbers. Short-term, they can manipulate appearances; long-term, they cannot.
Host Natalie Brunell: Does the stock market need to crash first before gold takes off—or could we see all assets rise together, with Bitcoin rejoining the uptrend? Or will it be zero-sum—one crashes while the other surges?
Luke Groman:
My view is: equities surge in dollar terms—but fall sharply when priced in gold and Bitcoin. In that world, 10-year yields settle around 4%–4.5%—perhaps 3.75%–4.5%—which I see as the long-term baseline equilibrium. We’ve effectively lived in this world since 2022—though Bitcoin performed terribly in 2022. But counting from when the Fed began hiking, equities priced in gold fell ~40%.
This is the medium- to long-term outlook. When discussing reshoring, a weaker dollar, and trade rebalancing—all require a sharp dollar depreciation against the RMB, which is already happening—even against the yen and euro. Of course, in a free market, these assets would trade this way naturally. But we’re not in a free market: the U.S. needs the yen weak to shift capacity out of China; it wants the RMB strong—and that’s happening too. So my medium- to long-term view is: gold rises substantially, Bitcoin rises substantially, equities rise substantially in dollar terms—but fall in gold and Bitcoin terms, while bond markets remain stable. Of course, bonds relative to gold and Bitcoin have already been devastated. Over the past decade, U.S. long-dated Treasury futures have fallen 90% against gold—while GDP grew, proving 90% still isn’t enough.
China’s Dominance Over Rare Earths
Host Natalie Brunell: You’ve also written extensively about rare earths—and China’s near-monopoly over processing. You’ve discussed applications across EVs, radar systems, smartphones, military hardware, etc. How big is this market? If investors agree with your view—that we need vast quantities of these materials, yet lack the mining and refining capacity—how should they invest?
Luke Groman:
“How big is the market?” is a tricky question. In monetary terms, it’s not large; in annual tonnage imported, it’s modest. But asking “how big is the market?” resembles an inverted Exter’s Pyramid. Dozens of trillions of dollars in U.S. equity market capitalization—not just tech stocks, but far beyond, even globally—are built on rare earths, an ultra-small commodity by volume. So it’s extraordinarily valuable—but not priced that way. The complication is that China dominates this space. They achieved it for two reasons: First, they’ve worked at it for 30 years. Second, they deploy more engineers than anyone else, under far looser environmental regulation. At least initially—though some regions have improved, regulation remains significantly lighter than in the U.S. or Europe. They’ve found excellent ways to produce these materials at extremely low cost. Their control extends beyond common knowledge—“they have reserves, they refine”—to innovations in refining machinery and processes, rarely discussed. We can take steps: e.g., building facilities on military bases avoids NIMBY hurdles. Even so, the gap between origin and destination remains wide—mines, refineries, engineering infrastructure, educational foundations, and refining machinery—much of which comes from China, who may not want to sell it. Finally, the U.S. government has now explicitly entered this space. So the question arises: Is this still a good business? Historically, government involvement in corporations rarely yields strong investment candidates. Though this rule has been broken repeatedly in the past 12 months—Intel and other Trump-backed firms have performed well.
The Strait of Hormuz: America’s “Suez Moment”
Host Natalie Brunell: Let’s discuss the Iran war. You’re among the few analysts who predicted the Strait of Hormuz would remain closed for so long—and I don’t think markets have fully priced this in. There seems to be consensus that we retain global military dominance. Yet the Strait remains closed. My confusion is: Why? Others suffer too—including Iran. So first, how have they sustained closure so long—shouldn’t global interdependence mean broad impact? And what did you mean by the “Suez moment”?
Luke Groman:
Let me clarify: My assessment of the Strait of Hormuz was correct—but my assessment of market reaction has, so far, been wrong. Around March 3–6, I said preparation should begin—it might still be closed on July 4. People thought I was crazy. And it will indeed remain closed on July 4. In fact, I suspect major brokers announced last night it may stay closed through Labor Day. Now, tell me—if on March 6 you knew with certainty it would remain closed on June 3, likely on July 4, and possibly through Labor Day—how should markets trade? Oil should be far above today’s WTI near $95, and equities far below current levels. Yields did rise—10-year Treasuries rose 50–60 bps since the war began; Japanese and Korean yields surged; we saw massive Treasury selling to manage current-account imbalances from pricier oil imports—but it’s not yet catastrophic.
It’s like jumping from a 100-story building, passing the 40th floor and saying, “This feels like flying—it’s amazing!” But what kills you isn’t the fall—it’s the sudden stop. Here, the sudden stop is hitting the bottom of the storage tank. ExxonMobil and Chevron—and multiple Middle Eastern energy officials—have warned, “We’re reaching an extremely dangerous point.” ExxonMobil and Chevron say within the next two to three weeks… similar warnings came from regional authorities. It won’t be evenly distributed. Supply issues are already visible in Asia. Yet market complacency remains shocking. A meme I posted recently showed a bell curve—idiots on one end, geniuses on the other, everyone else in the middle—and the middle was filled with analysts’ heads (mine included, as I made similar remarks). But looking at the numbers, you can’t help thinking: This doesn’t add up. Something’s off. The extremes of the curve say: “Oil doesn’t matter.” And “The Strait of Hormuz closure doesn’t matter.” Yes—so far, it hasn’t. When facing this degree of complacency and inventory drawdown—I think this is the biggest surprise for all of us ‘tail-enders,’ including myself: how much inventory can be consumed—and how fast.
Why hasn’t it reopened? To me, that remains a massive surprise—precisely the question tail-enders keep asking—because insufficient ground-level information is flowing back. It took eight weeks for leaks to reveal: we were nearly bombed out of all Middle Eastern bases; our air defense systems underperformed; only two weeks ago did a Congressional report disclose actual aircraft losses far exceeding earlier disclosures. You could ask: What does Occam’s Razor suggest? Its answer is that Iran’s artillery control over the Persian Gulf exceeds what people are willing to admit. That’s what’s happening. Insurers are involved, but their logic is simple: they dislike having their ships blown up.
This connects to your mention of America’s “Suez moment.” Again, when I first wrote this in early-to-mid March, I did so nervously—I called it a risk, possibly materializing late March or early April. Later, I revised it to: This is now the base case. Last week, Robert Kagan—the founding director of the Project for the New American Century, hawkish on Iran and Israel, enthusiastic about regime-change wars—husband of Victoria Nuland (Obama-era Assistant Secretary of State, involved in Ukraine’s regime change, famous for “F*** the EU”). Kagan wrote two articles in three weeks declaring this a major U.S. strategic loss. I agree. He’s no outsider—he understands war and strategy. He wrote twice, seeing that the U.S. will inevitably suffer a strategic defeat in the Persian Gulf vis-à-vis Iran—and he’s trying to front-run the narrative: “This is all Trump’s fault—not neocons’—we didn’t want this war.” What are you talking about? This is neocons’ 40-year ultimate fantasy. Now you’ve got your dream fight—the car you chased for 40 years is finally caught—and you don’t know how to handle it.
What does this mean for markets? After Britain’s Suez moment in 1956, its median annual inflation over the next 20 years was—nearly 20 years at ~7%. It signaled a loss of status—a recognition, in U.S. terms: the U.S. security umbrella. “Why pay Americans for protection?” I think this actually gives the U.S. real strategic options—look, if we no longer need to provide this umbrella, we can invest more domestically; if those bases are damaged, we can leave and let others resolve it. Of course, “let others resolve it” likely means China dealing with Iran, Iran retaining control over the Strait, and multi-currency energy pricing accelerating away from the dollar. That’s what it looks like—and why I believe it’s structurally inflationary and dollar-negative. Fundamentally, if you can buy energy and commodities in your own currency, you don’t need to hold as many dollars in global reserves. And if you don’t need as many dollars, you need more gold. Simultaneously, someone must buy those U.S. Treasuries. We truly can’t sustain 10-year yields above 4.6%–4.8%. So at some point, that “someone” will be the Fed—printing money—or banking-system agents, however implemented. Long-term, that’s inflationary—just as the Fed’s balance sheet expanded from $800 billion to $6 trillion over 20 years, consistently inflationary.
Why Is Iran Keeping the Strait of Hormuz Closed?
Host Natalie Brunell: But doesn’t prolonged closure hurt Iran too? Or do they bypass it via the rail system you mentioned—through China?
Luke Groman:
This is a battle of endurance—a contest of stamina. Closure doesn’t serve their interests—but context matters: Russia supplies them partially via the Caspian Sea; China supplies via rail—neither suffices to offset all losses, at best providing morphine. On the other side sits a world shorting oil—supported by SPR releases and global inventory drawdowns. So you’re stuck in a painful race: one side depleting inventories, the other sustaining supply via backdoor Caspian and rail routes to avoid internal political and economic collapse. The common refrain is: “Once we hit the bottom of the tank, we’ll ration demand via price.” Correct. But those saying “ration demand globally via price”—either refuse to acknowledge, or simply don’t realize: rationing demand via price means recession—that’s its definition. And simultaneously, inflation follows—a stagflationary recession, and no Western nation can withstand income contraction (inevitable in recession) alongside rising rates (inevitable in inflation). So hitting the tank bottom and forcing demand rationing puts us in a bind: Western interest expenses head in the wrong direction, while fiscal revenues—Western government revenues—also head in the wrong direction, both lines exploding apart. In the U.S., and similarly in the UK, welfare plus interest expenses already approach or equal nearly 100% of fiscal revenue. So your revenue falls, your interest expense rises—and the situation becomes extremely precarious. That’s the essence of this painful race.
If I were Iran—I’ve been bombed, I’ve held out this long, prepared for this day for 40 years, dug countless tunnels, and they destroyed far less than they thought. Now I have negotiation leverage—not “tolls,” but “environmental fees.” Look—suddenly Iran cares about the environment. Who’d have guessed?
Host Natalie Brunell: I’ve seen reports about them building some Bitcoin payment system. Is that true?
Luke Groman:
I saw those reports—but haven’t seen follow-ups. I saw Treasury Secretary Bessent boasting last weekend about seizing all their crypto assets.
Host Natalie Brunell: Theoretically, unless held on an exchange, they can’t seize Bitcoin.
Luke Groman:
If they’re conducting meaningful-scale Bitcoin operations, I doubt Bitcoin would still be hovering near $68,000—it’d likely be $168,000. So who knows? Another area seeing explosive growth is CIPS—the Chinese Cross-Border Interbank Payment System. Since March, transaction volumes have exploded, indicating massive trade conducted in RMB via CIPS. And in practice, that implies gold’s involvement.
Surge in “Non-Monetary” Gold Exports from the U.S. to China
Host Natalie Brunell: Before we wrap up, glad you brought up gold again. If gold is used to settle trade, why call it “non-monetary gold”? Doesn’t that make it monetary? Regardless, can you explain how we’re shipping our gold abroad—and presumably, it ultimately flows to China, whether via Switzerland or London?
Luke Groman:
We imported massive amounts of gold in Q1 2025—Trump’s re-election year—followed by a gold price bump. Then, starting around last October—coinciding with the U.S.-China Busan meeting—we saw that in five of the past six months, non-monetary gold has been the single largest U.S. export. Larger than aircraft, larger than pharmaceuticals. The one month it wasn’t #1, it was #2—behind pharmaceuticals. One view says: “We’re just re-exporting gold we imported.” Some gold was indeed imported due to tariff concerns. But I don’t think all was tariff-driven—gold is a political metal: if players call the White House asking, “Will you impose tariffs?”—even if you distrust the answer, you wouldn’t move so much gold from London and Switzerland. Why? And anyway, tariff issues were resolved in July—yet exports didn’t meaningfully ramp up until October—modestly rising in Q2, dipping, then surging sharply in Q4 and beyond. So this is net trade settlement. We can track its destination—it flows primarily to Switzerland, minimally to China; Swiss and UK portions are exported mostly to China or Hong Kong. So regardless of arguments about Q1 inflows’ nature, the fact is—it flowed to China, reducing our massive trade deficit with them—reducing our trade deficit, incidentally. Many Trump supporters declared: “Trump reduced the trade deficit by X!” Yes—the trade deficit is shrinking, and the largest marginal contributor is gold exports. That’s fine—it’s precisely what should happen. It just needs to occur at a higher gold price, otherwise we’ll exhaust our reserves. But theoretically, Bessent is smart—if the world sells him gold at $4,500, and he negotiates with China to acquire $6,000 worth of rare earths for it—that’s a good deal. Prices will rise long-term, but such management is feasible. Why “non-monetary gold”? Non-monetary gold must be declared—I believe IMF trade reporting mandates it. Monetary gold need not be declared. If a central bank buys non-monetary gold and reclassifies it as monetary gold, it never appears in reports. So it’s entirely possible non-monetary gold bears no direct sovereign link—purely satisfying China’s gold demand—while still net-settling the U.S. trade deficit, or at least net-reducing the deficit with China, via gold. And it’s highly probable we’ve shipped massive amounts of monetary gold to China—undetected, unrecorded.
Building a “Receipt-as-Clearing” Proof-of-Work System
Host Natalie Brunell: Honestly, whom to trust is unclear. Data from the People’s Bank of China—how do you verify its accuracy? Why would a hostile nation say “Yes, we have this”—but how do we know the truth?
Luke Groman:
Where does all this lead? I believe in today’s world, no one trusts anyone anymore. In such a world, where does the world go? This phrase is outdated—and politically incorrect—but I’m from Cleveland, so let’s be blunt. My grandfather used to say: “no ticky, no washy”—no receipt, no clean clothes. The world is moving toward a “no ticky, no washy” system. What does that mean? It means: the U.S. wants rare earths—pay in gold, or the next shipment won’t arrive; China wants oil—pay in gold, or the next shipment won’t arrive. You can see China has spent years building a system perfectly suited to this reality.
In every major global gold trading hub, there’s an offshore RMB clearing bank—London, Switzerland, Dubai, Singapore, Hong Kong, Shanghai. What does that mean? If you run a trade surplus with China—almost no country does, except occasional oil exporters and occasionally South Korea—you receive net RMB positions. Other countries don’t get net RMB positions. You run deficits with China—they hold your currency, you don’t hold theirs. But if you do get RMB, what do you do with it? China makes great products—you can buy excellent BYD cars, Huawei devices, etc. If you have leftover RMB and don’t want to buy more Chinese goods—you buy gold. Then you withdraw it from that gold trading hub and store it in your own vault.
Again, “no ticky, no washy”—no trust required, no proof needed. This is old-school “proof of work.” It’s inefficient, it’s not instantaneous—but it’s genuine proof of work—because people must physically load gold bars into trucks, hire security, transport them to airports, and coordinate aircraft loading. So when you see news two weeks ago: China’s largest courier—its equivalent of FedEx—opening a 2,000-ton gold vault at Hong Kong Airport. Would China pursue “paper gold” or “credit gold”—like the West? Why would its largest courier need a vault? Especially at an airport—a massive vault beside an airport. Why build this? They’re constructing a global “no ticky, no washy” system because no one trusts anyone anymore.
I believe gold and Bitcoin can fulfill this role. But real concerns exist—foreign governments worry about exchange backdoors. Ultimately, though, 70-year-old Putin, 70-year-old Xi, 70-year-old Polish President—they’ll trust Bitcoin more? Or “Send me the gold—I’ll store it here, beside all my tanks and missiles”? They choose the latter. So yes, today’s world lacks trust—but I believe people still trust what’s in each other’s vaults. In a sense, the world moves toward: “Fine, I don’t trust you. I won’t accept your IOUs for settlement. At settlement, I’ll take your paper currency—but immediately convert it into something that holds value, not your promissory note. Give me gold—or give me something I can actually use.” I believe that’s where all this leads.
When Debt-to-GDP Hits 130%: What Happened in All 58 Cases
Host Natalie Brunell: Every interview I’ve seen with you carries an “apocalyptic” tone. Remember our last chat—you said, “I’m a bit nervous about where things are headed.” I know you paid off all your debt, etc. So people have slotted you into the “doom-and-gloom camp”—do you see yourself there?
Luke Groman:
A quote attributed to William Arthur Ward (I believe he’s the author): “The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.” I consider myself a realist. We have 150 years of history to reference. Over 150 years, 58 countries reached a debt-to-GDP ratio of 130%. As of about three years ago, 57 of those 58 ultimately defaulted—mostly via significant inflationary episodes. I’ve done this for 30 years—I can count on one hand how many times I’ve faced odds approaching “57 out of 58.” Incidentally, the sole exception three or four years ago was Japan—now Japan is experiencing inflation, and its debt is collapsing materially. Japanese bond market values are plunging, inflation is rising, rates are climbing—and yes, equities are soaring, but in gold terms, Japan’s stock market has fallen ~20% over five years.
The U.S. crossed the 130% line in summer 2020. Since then, U.S. long-dated Treasuries have fallen ~60% against gold. Another area that often brands me “doom-and-gloom” is AI. On AI, a cohort of major tech leaders tells you: “This is the most revolutionary technology in history—bigger than the internet.” And valuations match. I refer to valuations relative to total U.S. equity market cap—they’ve soared into the stratosphere. Yet the same people tell you: “Don’t worry—AI won’t disrupt jobs.” Only one can be true. Yes, over sufficient time, both could hold. But for AI’s commercial logic—to justify its valuation share of total economic market cap—it must eliminate jobs. It must utterly destroy white-collar employment—that’s the only mathematically coherent outcome.
You look at this and ask: Won’t it eliminate jobs? Then it’s not the greatest thing since the internet—and doesn’t deserve these valuations. Once that becomes clear, it creates problems in private credit—and for all lenders funding these projects. And if it truly is the greatest thing—and these valuations are fully justified—then white-collar employment faces mass slaughter. At this juncture, U.S. employment contributes half of all tax revenue—and we barely cover tax revenue, or tax revenue barely covers welfare plus interest. Which is true? Every time I pose this to tech titans, silence ensues. David Sacks said on X just days ago: “AI isn’t causing unemployment.” We created only 95,000 jobs last month. 95,000—like Ben Stiller in Zoolander: “That’s employment growth for ants.” 95,000 jobs in a 350-million-person country. In my youth, a solid month meant 200,000–300,000 new jobs—back when the population was 20%–30% smaller. So I just look at reality and ask: Long-term, we can have thriving AI and thriving employment. But between now and then—with our debt burden—mathematically, it’s impossible. That’s the fact. They know it—they’re too smart not to. So why do they say otherwise? Think: If they said what I said, what would politicians do? We’re already seeing it—you saw Bernie Sanders’ comments the other day: “All Americans should share in AI companies’ profits—because AI stole their jobs.” So you see Andreessen, Sacks, etc., rushing to deny: “There won’t be any unemployment. These aren’t the job losses you’re looking for. AI won’t take your jobs. Everything will be fantastic.” So am I doom-and-gloom? I don’t see it as doom—I see it as realism.
Do Technical Indicators Point to a $40,000 Bitcoin Bottom?
Host Natalie Brunell: The eternal challenge is timing—that’s always the hardest part. Timing is the biggest hurdle. I’m even dubbed “doom-and-gloom” now—because I don’t think Bitcoin has bottomed. Northstar Bad Charts—a technical analysis firm—forecasts a bottom around Q3/Q4, roughly in the $40,000 range. I genuinely think we may see that level.
Luke Groman:
Yes, they’re exceptionally skilled technically. If you buy back in the $40,000–$50,000 range, you’ll become a legendary figure—because you’d have sold near the peak.
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