194. The Debt Bubble with Luke Gromen

Join Luke Gromen and Saifedean in a conversation unpacking the theory of dedollarization. They delve into the implications of negative real rates, the gold market, the impact of oil on the global economy, and potential future actions by the Federal Reserve.
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Saifedean’s first book, The Bitcoin Standard:
saifedean.com/thebitcoinstandard
Saifedean’s second book, The Fiat Standard:
saifedean.com/thefiatstandard
Enjoyed this episode? Join Saifedean's online learning platform to take part in weekly podcast seminars, access Saifedean’s five online economics courses, and read his writing, including his new book, Principles of Economics! Find out more on saifedean.com!

[@Luke-cj7gz]

Yes!!! Saife and Gromen! Today is going to be a good day 😊 Thanks

[@stopper90004]

Luke is so frickin smart. He is amazing.

[@muaddib7685]

One of the most enjoyable vids I've seen in a a while. Luke is one of my favorites 👍

[@gaeldesmontagnesnoires1711]

I understand all of this but couldn't explain it .. Prolly means I need to watch this an other 3 to 6 times to REALLY conquer these subjects!!! Thank you very much for this respectful conversation, full of insights and conservative estimates.

[@Tenebrousable]

To learn it, it helps to write it down, trying to explain it to others. It's a way of organizing thoughts. Like diary.

[@gaeldesmontagnesnoires1711]

​@@TenebrousableThank you..!!! I likely will do just that!! 👍

[@user-tw2oe6zi6q]

My Father used to say he was a Smart man. He said if he didn't understand something it was probably 3 parts Bull Shit and another part Honey to make the Bull Shit go down easer.

[@gaeldesmontagnesnoires1711]

@@user-tw2oe6zi6q I think it's my general disinterest in these subjects and inexperience in them that preclude me from being able to verbalise them eloquently as presented in this conversation .. That's not to say that I couldn't use a good grasp on them to expresse myself to whom ever I may try to help understand how much of a slave they are to unpalpable forces that are none the less very present. Sitting on y laurels is getting boring TBH .. However convinced I am that Bitcoin is salvation through financial sovereignty , it is nice to visualise the different tsunamis barreling down on us all.

[@jamesbowman1767]

The dollar had the purchasing power of $1.00 in 1913. The dollar now has the purchasing power of $0.03. There is a numerator and a denominator. That's all you need to know.

[@jsmdify]

I think Safe makes some serious assumptions in regards to our ability to find increasing amounts of oil at “cheaper” prices. As Luke points out more oil yes but assuming it will be less expensive is unfounded in fact given the total lack of investment and exploration not to mention refining by the US, future costs will be higher in real terms not lower in price.

[@moralhazard1]

I love him, but Saif seems to do that a lot lol

[@moneyglitchjon]

Agreed, peak cheap oil not peak oil

[@io3213]

I think Saif looks at what oil prices could be in a free market where exploration would be less cartelized.

[@nick-oi1xf]

Trading real energy for a melting ice cube (treasuries) makes no sense, especially when there is counterparty risk. Luke is correct and it's playing out

[@Wanderer1]

Saifedean & Luke Gromen dropping absolute truth bombs in this one 🔥 Bought all 5 books from Saifedean, currently reading the Bitcoin Standard, mind blowing knowledge in here.

[@garoldunit]

Thanks for making me laugh, while helping me understand this ridiculous situation. Here's to the "the analog sh!tcoin...debt"

[@anzori2002]

Thank you Sirs!!! And a big bow to both of your parents!! Pleasant to watch! The signal to noise ratio and rent to value ratio is unprecedented with both you! Thank you and all the best!

[@weaverlance]

@Saifedean I'm a geologist for the Utah Geological Survey. I wish we could have a conversation to clear up your understanding of the formation of oil & gas. There's no qualified geologist who thinks it comes from 'dinosaurs'. And there's debate as to whether the source rocks are marine planktonic organizations or terrestrial vegetative matter (like coal). And there's certainly arguments to be made of trapped methane from >2 billion year old strata which formed when earth's atmosphere was largely methane (or deeper mantle sources). But that doesn't change the physics of source rock/trap/reservoir rocks. In other words, VERY SPECIFIC geologic conditions must exist for oil & gas to be trapped in the subsurface, and many parts of the earth simply do not house those conditions regardless of technology or how deep you drill.

[@redman6790]

So its a combination of resources, conditions and technology being present for the trapped o&g to be explored? Also, could you further explain what type of conditions are needed

[@user-ko3vb3di2t]

Luke gromens view of economics and insights....have startling clarity,,...and creativity...

[@safeasbtc]

Fantastic discussion gents, and I appreciated the bit of push back and fourth on a couple of issues to help flesh out the points of view. I don't think I've seen Luke 'paint the full picture' like this before, in a manner I could grasp (even if just barely). I'll be watching this again with confidence that some of the more nuanced concepts will *click*. Thank you both!

[@Diego-fb5fq]

Rare to hear host and guest "debate" their viewpoints. 35 minutes in, I'm excited to hear how this works out. And maybe learn something myself.

[@gaeldesmontagnesnoires1711]

LOVE sweater weather !!!! Sweater weather .. sweater weather!!!

[@IaintTheHerb]

51:20 inflation was nowhere near hyperinflation when Volker acted. He did it to favor the bondholders and crush labor unions.

[@robertgross9580]

"gold is not a dietary thing!" -- Saifedean

[@musicarroll]

Absolutely fantastic. Will need to watch this again.

[@b_tang]

Amazing discussion. Lots to think about.

[@io3213]

I wonder to what degree the prospect of peak cheap oil is simply the result of decades of global cartelization of the oil producers with the help of the regulators. If there had been no obstacles to prospecting for oil in one's own garden as well as anywhere that hasn't been homesteaded yet (eminent domain wouldn't apply here), then who is to say what the oil market would look like today?

[@Mohammed_125]

Always interested in hearing Luke’s thoughts because it’s usually original and not mainstream.

[@TheGreenleaf247]

Was just listening to Luke yesterday on his last interview. Good analysis from him.

[@stevem5580]

Thank you Luke and Saify!!

[@gloriamariadc7757]

Fascinating discussion.. & super well presented by both sides. 👍🏻👍🏻👍🏻

[@youknowkbbaby]

Luke Gromen lays the smack down ❤🎉.

[@Reotha]

love lukes clear thought in this macrospace

[@jbwentworthe6082]

Roof installed Solar Panels, for an average 3 bedroom FL house costs run about $20,000 with many being financed and needing replacement every 10 + yrs - assuming no storm damage. FL is currently facing escalating insurance premiums that require new roofs every 12 - 15 yrs. to have the home owners insurance renewed. Roof replacement quotes - for a 3 bedroom, ranch house are regularly coming in the he $30,000 range - for asphalt, not Tile. Many people are having to sell and leave the state. It is an inflation crisis.

[@kirstinstrand6292]

Insurance costs will force changes for many in FL and coastal regions everywhere...soon.

[@digaum]

I'd just argue that real estate is A LOT easier to confiscate than bitcoin. Otherwise, absolutely brilliant conversation. Thank you.

[@gloriamariadc7757]

Love it!!!⚡️⚡️⚡️

[@cryptoemcee]

Thanks, gentlemen!

[@davecorley5514]

Gromen for Treasury Secretary. He gets the major issues including the BIG ONE: peak hydrocarbons. Peak usable oil supply is flattening across the world. Shale oil deposits and rig counts are shrinking slowly but surely. There are no usable hydrocarbon reserves available after this source is exhausted. That won’t be for several decades, but it’s gonna happen. Our biggest energy problem has nothing to do with climate change. It has to do with shrinking usable hydrocarbon reserves. How does the US fight a war without oil? How are products shipped across the world without oil and its derivatives?

[@bcarras]

In the realm where currencies sway and spin, Stands Luke, with prophecy deep within. He foretells fiat's destined doom, As debts and doubts begin to loom. With eyes that pierce the shrouded haze, He warns of fiat's fleeting blaze. In Luke's stark words, a truth revealed, A caution bell, for wounds to be healed. Oh, Luke, thy vision, clear and stark, Illuminates the path from light to dark. Though Cassandra-like, your voice may ring, In your foresight, wisdom's song we sing. For fiat's reign, you boldly declare, Its end draws near, in the turbulent air. In Luke's forecast, a lesson to learn, Before the tide of fate takes its turn.

[@geoffgjof]

If people don't understand Luke, they need to re-examine the fractal nature of measurements based on the scale of the measurements. Luke is so good at looking at specifics that his measurements are way nore precise and why he's on another level above other people. And if you have no idea what I'm talking about, go read the hard copy or listen to the audiobook for "The Midbehavior of Markets" by Mandelbrot and Hudson.

[@Nanakwamefrimps2024]

Great interview by all standard

[@jethro_Jr]

Love it love it love it. Top drawer

[@GionnyChannel]

I know oil can only be sold in dollars, is not that true anymore?

[@ericjames7819]

This guy is Huckleberry Finn convincing other kids to work for him for "gratisfaction" instead of money.

[@DonDurrett]

Only 75 comments? This interview rocks. Great info.

[@geoffgjof]

Seriously. This is one of the best conversations I've seen in the past few years. Would love to see you, Don, have a conversation with Luke on his channel. I think it could be just as good as this one. I always enjoy hearing your perspective on mining stocks that are actually producing, or nearly there, which will be huge in the upcoming shift into that area of the market once the Magnificent 7 fall out of trend.

[@richardkossow5574]

Here's a question for Saife: Russia gets frozen out of the dollar market for its oil. So what does it do? It sells for Rubles, of course, but no one outside of Russia is interested in transacting with that currency. And it sells for GOLD, and if you buy in gold, you get a 20% discount on the price. What it doesn't sell for is Bitcoin--not even a suggestion of that happening in future. Now, why is that, Saife? And what do you think prevents Russia from being interested?

[@RobWilliams007]

Luke you are one of my faves but I think in some ways you too are saying the same thing about oil but for different reasons: you say that the rising prices de-monopolized OPEC. This would reduce oil prices - overall. He is making the argument that it is abundant and technological advances help reduce the cost.

[@hussainhaider2818]

These three observations seem at odds: 1. Time value of goods/services has dropped significantly - 50% in 50 years. 2. Inflation is significantly understated by CPI. 3. Wage growth has lagged inflation. If time values have dropped that should mean the average hourly wage has risen much faster than inflation, ie twice as fast, much more than making up for loss of purchasing power. Unless the averages are thrown off by huge gains for the top few percent of earners, in which case point number 1 is not really true for the majority of people.

[@fusion9619]

That's a good observation. Could it be explained by "hard assets" like real estate going up in price faster than the inflation in the CPI?

[@overbuiltlimited]

​​@fusion9619 Think you're onto something here. Dont have the numbers in front of me, but I believe that traditionally, real estate has kept up with PCE, which is higher than CPI.

[@fusion9619]

@@overbuiltlimited I don't know, but that would be nice to see on a chart - PCE vs average real estate price or monthly mortgage payments. I'd bet they move together, but what leads and what has more pronounced swings could be telling.

[@saifedean]

This is a very good observation. I wouldn't say wage growth has lagged inflation for commodities and basic economic goods. I think wages have risen more than these things. But wages have not risen more than the most desirable economic goods: houses in a safe desirable neighborhoods, elite health care, etc. Returns on stocks and bonds likely don't beat real inflation, even if they beat the CPI. So your productivity goes up more than inflation, and you can afford more basic things with your wages, but you are unable to buy the house you want, and your savings and investments decline in real value, so you need to keep working. I discuss this in more detail in The Fiat Standard.

[@RWROW]

I don't buy the superabundance argument. This is because the amount of energy we need to use to extract new energy is going up. Obviously we can't use 1 unit of energy to extract 1 new unit of energy, but we'll hit a practical limit well before this.

[@edgeman148]

With regard to "peak" oil I would suggest your listening to Art Berman who has been in the oil business for decades and consider, how much more difficult oil is to extract. Also the the BTU yield per barrel is also dropping; then we have matter of climate change which is causing untold suffering and costing $ billions.

[@brettteeter3461]

Nope

[@johnhackney180]

Climate change is a hoax. How many catastrophic climate change predictions have come true? Or close to true? Or 10% true? Zero.

[@nick-oi1xf]

Luke is sharp 👍

[@jbwentworthe6082]

Other than Jerome Corsi, this is the only place the idea of " fossil oil" has been challenged. We were being told we had hit "Peak Oil" 20+ yrs. ago.

[@kirstinstrand6292]

He is likely incorrect. Geologists are not stupid. (Not implying new thinker are.)

[@jamesburke3803]

The world hit peak conventional oil in 2005. Almost all global oil increases since then have been in unconventional oil, 80% US fracking, 20% Canadian tar sands. The fracking revolution was heavily dependent upon zero percent interest rates. Now that interest rates have skyrocketed, frackers are not increasing production. And since fracked wells have ferocious depletion rates (up to 60% the first year!) drilling has to be constant. A slowdown in drilling very quickly translates into rapidly declining production.

[@ssuwandi3240]

Russia still holds world's 80% commodity provider. She's pretty well isolated from warmongers economy

[@greymulder62]

Much respect: BUT Julian Simon is so detached from reality as to be indistinguishable from "insane”

[@JosiahGarber]

I'm not yet convinced by Luke Gromen's thesis, but I'll keep exploring it.

[@TheBitcoinGiraffe]

The Bitcoin Giraffe loves Safedean! Listen to this guy and buy his books!

[@sewnsew6770]

Hmm houses are unaffordable for most Americans and Canadians. We have real inllation. A house is a good measure of inflation as it involves everything It’s hard to believe prices are going down

[@tlebryk]

Electromagnetic machines can test for the molecular signature of .999 gold bars. Very hard to fool and the largest bullion sellers use it when buying coins and bars. Very large bars would need a larger machine which seems like a worthwhile thing to develop. It is a fixable problem.

[@elonmuskox4305]

Gold is money. Cash and treasuries are a fiat gold substitutes.

[@gzsg1]

What you know about solar wouldn’t fill a thimble. Tony Seba.

[@beerkegaard]

They will shut off the on/off ramps but keep the spot ETFs so that you can buy a Blackrock Bitcoin IOU for exposure.

[@jmwSeattle]

Some of Luke’s statements could use more explanation as they rest on a lot of assumptions.

[@geedoubleu641]

Finally at 1.44.00 I understand the root of the hosts dogmatic positions; he thinks BC solves all problems. Just hodl.😂 Dood is a hack!

[@XxChuyoxX]

I like bitcoin but people like him can be pretty unbearable. Luke isn't a maxi like him

[@sirluciussquigglesworthlll6503]

🔥

[@johnhackney180]

BTC will outperform everything because it just... will? Brilliant.

[@geedoubleu641]

This is the first time I've watched this channel and based on this interview I wouldn't waste my time with books written by the host.

[@krtolic1]

Drill Baby Drill.....Oil is infinite according to S.A....maybe a physics course to each economist would not hurt

[@gloriamariadc7757]

❤❤❤

[@chintandobariya472]

Bitcoin ETF will be first come (means legally more people adapting it). Then countries across world will come in to accept Bitcoins.

[@davecurtis86]

This is an interesting conversation because each side is trying to convince the other. Compare this with Peter McCucks recent "interview" with Luke

[@jackgoldman1]

What is the 4,000 year track record of bit coin? None. What is the bit coin track record globally? None. Reality matters more than bit coin or any other crypto fake Digital ledgers.

[@Handle35667]

Debt to GDP is at 150% not 120%. Is this an old recording?

[@davecurtis86]

It's 120%, fallen from a high of 130%

[@banzobeans]

36:39 no dinos? 🦖

[@josephfriday2661]

Luke has solar panels, so he can offset his carbon footprint caused by the wood burner.

[@RobertGremillion]

So many gold bugs still in the Bitcoin space. Why haven't they fully adopted Bitcoin? Do they believe 1 to 2% supply inflation is required in a modern world? Do they believe the gold system will return in a digital age?

[@geoffgjof]

It's about diversification. Diversification is about having different asset classes so that at any point in time, you own something that is trending for investment/speculation. Being prepositioned at a good price means you can sell into the trend and realize larger gains to balance out investments that are not in trend, so you always have liquidity in case something happens where you need capital, but you don't have to sell assets at a loss (which keeps your wealth stable or in an upward trend).

[@RobertGremillion]

@@geoffgjof Michael Saylor just posted today about gold being dead money. Gold is down 3% since August 10, 2020 while Bitcoin is up 215%. (This is the date $MSTR started buying.) Di-worsefying is also a strategy many people utilize.

[@jamesburke3803]

Gold has kept its value as money for 5,000 years. A $5 gold piece (1/4 oz.) minted a century ago is now worth $500. So paper money has lost 99% of its value in a century. However, that 1/4 oz of gold was a days wages for a top industrial worker both then and now. What do central banks hold? Gold. What are they buying hand over fist right now? Gold. How much bitcoin do they buy or hold? None. Gold will hold its value in a century or a millennia from now. Bitcoin is an imaginary asset, that is unlikely to have value a century from now. And if you lose your codes for it, it vanishes without a trace.

[@5280ryan]

Luke’s points are nuanced. Saif’s points are more like sledgehammers in my opinion. He basically says humans are smart - they’ll figure it out - there will be enough oil…the Earth will be fine. People like Alex Epstein agree w this sort of point - and there are plenty of them - but it’s totally unrealistic in my opinion.

[@meddlehedd1194]

still waiting for a bitcoiner to explain why some programmer just cant create bitcoin 2.0 thereby diluting my bitcoin 1.0. in effect, inflating the bitcoin supply by printing bitcoin. i see bitcoin as a different kind of fiat

[@youknowkbbaby]

32:20-37:55 = This is about how the host interrupted the guest😅.

[@74achilles]

1 BTC is 1 BTC. With shitcoins I can turn 1BTC into 50BTC. Haha

[@marinatinseattle]

1:46:30 nails my threat vector thesis...would love to hear more discussions around this topic. Too often I hear naive responses from the Bitcoiner community

[@Stone881]

Saife needs to reexamine his assumptions after this discussion , Luke schooled him.

[@redman6790]

@37:00

[@RealKingkong9888]

You are wrong about energy.

[@Luke-cj7gz]

Oil is not dinosaurs and a naturally occuring mineral... 😂🤯 never even heard anyone say this. Sounds untrue but my mind is open

[@sionnach.1374]

A soviet scientist offered this theory Can't remember his name, some subscribe to it Apparently they've detected hydrocarbons in asteroids. Which leads some to accept this theory

[@moralhazard1]

Heard Alex Jones say (so take that however you will lol) that the term "fossil fuel" was basically marketing to make it seem more scarce, like how diamonds being scarce is complete marketing.... worth learning more, I've just never felt like digging into it lol ...I think people on either side thinking they KNOW FOR SURE what's true is a problem, and, I love him, but Saif does that quite a bit lol

[@bogdanlevi]

Well, it's certainly naturally occurring and certainly not dinosaurs. Regardless of wether or not it's biological in origin.

[@stevem5580]

One word .. ‘collagen’. We keep finding dinosaur remains with collagen that science states does not last even close to 2,000 years; let alone 65 million yrs. Is the earth really billions of years old? Or was there really a great catastrophic flood 6,000 yrs ago? Is the world producing oil if we adjust our world age timelines based on real science? 😊

[@AllNighterHeider]

​@stevem5580 You ever heard of the Hovind theory from Kent Hovind. Seems very plausible to me

[@johnneal4097]

You should get Luke to help you write your books.

[@municipalplumbing1717]

while I like bitcoin I believe what luke is trying to tell us is gold is the money of players ,central banks and government entities and has been for a long time

[@user-tw2oe6zi6q]

Wow very complicated and very troubling for the working class. Luke's solution is to inflate away the Sovereign debt bubble with 3 to 5 years of 15 to 20 percent inflation "OUCH" I guess Luke wants the working man and woman to pay the bill again. I have a better solution. Though its just an academic discussion because in the US would NEVER implement it. Use Fiscal Policy. A 1 to 3 years tax enhancement/increase with a sunset clause after 3 years. On unearned income and earned income over $200,000 a year and profits over $1,000,000 a year. This will decrease the inflation with out the need to raise interest rated. (Lower interest rates means less expensive capital for oil producers and less incentive to take oil revenue and invest in treasures). It will decrease the deficit and prevent the debt from rising by not having to issue new bonds at higher interest rates. Killing three birds with one stone. Given what I am seeing in Russia (to much to go into here) I truly believe the hammer and sickle dinosaur is not long for the world and Russia will once again be able to play in the western countries economic rain deer games. Saudi Arabia is like a woman whos man has left her and she wants to make him jealous and come back to her. The Saudis want the US to return to the Persian Gulf and give them a formal defense guarantee. Once the Israelis finish mowing the grass in Gaza and this settles down the US needs to practice Real Politic and return to the Persian Gulf and give the Saudis the formal defense guarantee they want. Once this happens the Saudis will crawl back into bed with the Americans and play the treasury debt games the Americans want them to play. Luke Response??? Also

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[@Jefferyadams210]

I'm surprised you know her. I've been making a lot of profits investing with her for a few months now.

[@oliverparker1862]

Mrs Reyes changed my life because of the high profits I got from investing with her.

[@melissagreen2727]

You invest with Mrs Reyes too? Wow that woman has been a blessing to me and my family.

[@JackWalter-wh3vh]

I'm new at this, please how can I reach her?

[@Kareenwood8738]

I was skeptical at first till I decided to try. Its huge returns is awesome. I can't say much

[@petergonzalez3209]

When it comes to peak oil you should let your guest speak. You don’t know what you are talking about.

[@XxChuyoxX]

Luke is too smart and humble for this guy.

[@HollywoodRpi69]

Eh.

[@Ryukung-vt8iw]

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[@kristianscout]

Finding her name here is unexpected. As a beginner, she guided me, teaching essential trading principles and sharing her daily strategies. Her courses are excellent, and I'm now earning daily in cryptotrading , thanks to her.

[@osuboone]

I just looked up her name on Google and saw her impressive result. I will write her an e-mail shortly.

[@agiaco]

Investing has proven to be an incredibly beneficial decision. My cryptocurrency profits continue to play a substantial role in growing my overall wealth, reducing my reliance on my salary

[@andrewtrapp]

investing through the assistance of a mentor/coach can be really advantageous when outperforming the market, I personally got in touch with Cheryl last year, and through her supervision, I was able to get into the right assets and raised $827K from late January till now

[@emamede1234]

Nice to see this here, I have worked with her also for months now, she simplifies matters, whether it's a market surge or drop; her approach consistently achieves profitable outcomes

[@hansvetter8653]

What an economic bla bla ...

[@geedoubleu641]

This host should be learning from this interview but he seems too dogmatic. I usually subscribe to any channel that can get Gromen as a guest but I'll pass on this one.

[@tipuuu6749]

Lol true but I do like his analysis he got data

[@fsaldan1]

I couldn't get past the initial ads, even though I like Luke Gromen's thought.

[@johns5256]

Terrible job kai. Unsubscribed. You ask when, he answers what. No follow up, Lots of hacks kissing butt to ensure they come back for more dribble. Embarrassing.

[@ul8732]

luke gromen very confused mind IMO, intellectual masturbation