On this episode, financial analyst Luke Gromen joins Nate to discuss how the availability of cheap energy has underpinned our current financial architecture and expectations – and what peak cheap oil implies for the future. A central part of this story is the rise of the US dollar as a global reserve currency tightly linked with the ability to purchase oil – subsequently leading to the US becoming a major exporter of debt. How have countries with economies based on natural resources and manufacturing differed in their response to geopolitical uncertainty in comparison to those who are based around finance and the service industry? What might the response be from countries holding US debt in anticipation of a declining oil supply? What does this mean for the future of global currencies in a simplified global economy and a finance system that will eventually need to be re-tethered to the finite nature of Earth?
About Luke Gromen:
Luke Gromen is the Founder and President of research firm Forest For The Trees, LLC, whose goal is to aggregate a wide variety of macroeconomic, thematic and sector trends in an unconventional manner to identify investable developing economic bottlenecks for clients. Luke founded FFTT to apply what clients and former colleagues consistently described as a “unique ability to connect the dots” during a time when he saw an increasing “silo-ing” of perspectives occurring on Wall Street and in corporate America. Luke has 25 years of experience in equity research, equity research sales, and as a macro/thematic analyst. He holds a BBA in Finance and Accounting from the University of Cincinnati and received his MBA from Case Western Reserve University. He earned the CFA designation in 2003.
For Show Notes and More: https://www.thegreatsimplification.com/episode/91-luke-gromen
00:00 – Episode Highlight
00:34 – Luke’s background
03:05 – Overview of Luke’s work
04:50 – Peak Cheap Oil: 3rd Oil Crisis
06:38 – Red Queen Problem
07:55 – Treasuries are more liquid than oil?
10:27 – Nate’s Wall Street background
11:51 – Cutting out the middleman
14:54 – China selling off US Treasuries
15:31 – Impact of freezing Russian Assets
16:24 – “Dutch disease”
18:39 – Does the financial industry understand the importance of energy?
20:31 – Why doesn’t the U.S. save our oil?
24:00 – BRICS+ and China
29:59 – Will currency reform happen?
31:15 – Will there be a World War in the next decade?
33:08 – What currency would replace the US dollar?
36:58 – How would the U.S. change how it manages debt if interest rates go up?
40:46 – How do rising interest rates impact emerging markets?
43:09 – Why hasn’t gold risen in price more?
44:27 – Will currency in the future be tied to something more physical?
50:01 – Is the U.S. and the West going to restrict use of gold?
53:49 – How would an energy productivity miracle help?
56:12 – Yield curve control
58:24 – How will the U.S. economy change in the next decade?
1:04:02 – Will people recognize we need to shorten supply chains?
1:07:53 – What advice would Luke give a leader?
1:14:33 – Will the U.S. middle and lower class be hurt by rising inflation rates?
1:16:56 – Luke’s thoughts on the environment
1:20:05 – Luke’s personal advice for viewers
1:24:09 – Luke’s advice to young people
1:26:51 – Luke’s biggest concern in the next decade
1:28:31 – Luke’s magic wand
#thegreatsimplification #natehagens #energy #dollar #finance #economics
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