Economic News

Luke Gromen: Structure of US Dollar Reserve System Has Already Broken Down

Taps Coogan – September 11th, 2020

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Luke Gromen, founder and president of Forest for the Trees, recently spoke with MACRO Voices’ Erik Townstead for a somewhat technical, but very important discussion about changes to the mechanics of the US Dollar reverse system and why it’s likely to lead to dramatically more QE than currently expected.

The outline is that the cessation of net foreign treasury purchases have forced the US to domestically fund its deficits for the last few years, a major shift from decades prior when foreign investment funded the US deficit. We reached the limits of self-funding without Fed monetization in late 2019 during the Repo Crisis, and the Covid recession has made increasing Fed monetization of increasing deficits irreversible, pushing prices and eventually inflation higher.

Enjoy the full interview below:

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