TFTC: A Bitcoin Podcast - #672: China's Rare Earth Dominance and the End of Dollar Hegemony with Luke Gromen

Episode Date: October 18, 2025

Marty sits down with Luke Gromen to discuss China's rare earth leverage over the US, the structural shift from Treasury bonds to gold as the primary reserve asset, the challenges of reshoring American manufacturing, and why the dollar system must debase as these tectonic geopolitical and monetary changes unfold. Luke on Twitter: https://x.com/lukegromen FFTT: https://fftt-llc.com/ STACK SATS hat: https://tftcmerch.io/ Our newsletter: https://www.tftc.io/bitcoin-brief/ TFTC Elite (Ad-free & Discord): https://www.tftc.io/#/portal/signup/ Discord: https://discord.gg/VJ2dABShBz Opportunity Cost Extension: https://www.opportunitycost.app/ Shoutout to our sponsors: Bitkey https://bit.ly/TFTCBitkey20 Unchained https://unchained.com/tftc/ Obscura https://obscura.net/ SLNT https://slnt.com/tftc CrowdHealth https://www.joincrowdhealth.com/tftc Join the TFTC Movement: Main YT Channel https://www.youtube.com/c/TFTC21/videos Clips YT Channel https://www.youtube.com/channel/UCUQcW3jxfQfEUS8kqR5pJtQ Website https://tftc.io/ Newsletter tftc.io/bitcoin-brief/ Twitter https://twitter.com/tftc21 Instagram https://www.instagram.com/tftc.io/ Nostr https://primal.net/tftc Follow Marty Bent: Twitter https://twitter.com/martybent Nostr https://primal.net/martybent Newsletter https://tftc.io/martys-bent/ Podcast https://www.tftc.io/tag/podcasts/

you've had a dynamic where money's become freer than free if you talk about a fed just gone nuts all all the central banks going nuts so it's all acting like safe haven i believe that in a world where central bankers are tripping over themselves to devalue their currency bitcoin wins in the world of fiat currencies bitcoin is the victor i mean And that's part of the bull case for Bitcoin. If you're not paying attention, you probably should be. Look, I have to start by saying I can already tell that the comment section is going to be elated for this catch up because this is the first one where you actually have a mic. Yeah, I got a lot of feedback on that.

And so, yeah, the Mrs. FFTT was finally she's she took care of me here. So I've got I've got a very it's apparently a good one. I wouldn't know if it's a good. Oh, it's the same when you got. So it must be good. So, yeah, it's it's it's here. So that's that's good. It's it's the sound quality is impeccable.

And I think it's important that it's impeccable for this update, because as you were just saying the world is getting crazier and i think we had a stark reminder of how crazy and volatile it can get at least in markets over the last 96 hours with trump's friday true social post that sent markets into a tizzy and then predictable i recorded on friday with somebody right after the post went out and i said okay we can expect a post on sunday morning or afternoon sort of backing off from his statements. And that's exactly what happened for those who are unaware. Trump came out and said that we're going to put 100 percent tariffs on China's rare earth metals because they weren't cooperating in negotiations. And then Sunday said, hey, President Xi was was

just not in a good state of mind. We're back into a good spot. What is what is this geopolitical volatility signal to you? I think it signals that China has a lot more leverage than a lot of the Western commentators are admitting. And maybe this might have been the first time where they finally admitted like, oh, like reading between the lines. I think China retaliated for the latest semiconductor, high-end semiconductor-related sanctions. And basically my view was like, all right, well, you're not going to be allowed to have this stuff. That was the initial read. And it's interesting.

Trump came out with what he said Friday, which is 100% tariffs and markets through a fit. And then the Chinese came out and clarified either a Saturday or Sunday. I don't remember exactly when it was. And it was kind of like the most Chinese statement ever. It was like, you know, this is not a ban, which, you know, in my experience is, you know, is it a ban or is it not a ban? You know, one of my one of my best one of my best sources on China, a friend of mine goes, is it a ban or is it not a ban? Yes, that's the answer. That's that's how that's how the Chinese negotiate.

So but when you really read what they said, apparently it's it's about the weapons. You know, it's a ban on weapons. We're not going to supply rare earths to the U.S. Defense Department to make weapons to point missiles at us and our friends anymore. And, you know, the rest of and it was interesting because the U.S. spun it as, hey, they're shutting everybody off. And the Chinese said, no, no, no, no. And so then there was, you know, Trump taco to China taco or China, China backed or de-escalated. It spun as mutual de-escalation, which it was. And I think there is still not the recognition. There was a moment of recognition in the West of, oh, my gosh, they can shut down everything, which. Yeah, we've known that all along, if you were honest, you know, if people are honest about things and not that it not that that wouldn't hurt them, too, it would.

But I think the most important thing is they're done selling weapons to the U.S. Defense Department. They're done selling rare earths into weapons systems for the U.S. Defense Department, which is enormous and I think still not fully digested. It might be being digested by the gold market this morning, which is up $110 as we speak, over $4,100 on the futures. But that's got a lot more to go, in my opinion. to properly digest that message so um i think it's really important in terms of what just transpired because it's it's they're basically saying we're done we're done selling rare earths into western defense systems you know get your own rare earths yeah it seems like china feels like it is in a good position it seems like there's been some coordinating in the background to get to this

point where they feel confident to plant these these flags in the ground and draw these lines in the sand if you will and it pertains to the gold market particularly what they've been doing with the shanghai exchange putting the gold on warrant and it seems like i had a conversation with vince lancey on friday and he made a really good point is like they're essentially setting up this parallel settlement network that settles in gold and it seems like the last six eight months have really been uh greasing greasing the wheels getting the the slopes ready for that it's on and now they can posture geopolitically from a position of strength yeah i think that's exactly right and and you know historically if you messed with the monetary side of the rules-based global order

U.S. would send the military over and kick your head in. That had a big part of why Saddam was invaded, a big part of what Qaddafi was doing, as we know from Hillary's emails, once upon a time. And the Chinese have been doing this. And so they've seen the message, which is when we try to change, which they have to, because again, they're not doing it because they hate us. They're doing it because they will literally have a late 1990s Southeast Asia crisis where China collapses like you saw Southeast Asia do if they don't do this. And so they have understood the order of operations, which is if we're going to do this, we need to make it impossible for the US to come over here and kick our heads in. And that's what this is about. and to me the rare earth card being played in april and may whenever that was and we wrote

about it at the time is essentially we're done selling rare earths to the u.s military that was my interpretation of it then this institutionalized it this is basically it's now in black and white and if that's the case then the window's wide open for the system to be reset and i think sort of number 1A on the list of symptoms that you would see as the system is reset in a manner that China, Russia, the BRICS would like is, I think you'll come in and you'll see the price of gold up on every day that ends in Y. And that's what we've been seeing over the last month or so. Today, no exception. So yeah, I think it's a huge deal. I do think that Trump with his tweets, when he tweets impulsively or posts impulsively, he usually gives you something

that he probably shouldn't either, or that is incremental information. So last week, there's some very serious people saying, hey, we're hearing she had a stroke. We're hearing she's being deposed. Well, Trump just told you that she had a bad day and made a mistake. So she didn't have a stroke and did not get deposed, per the President of the United States and his post. And then the other thing is, is we have heard chapter and verse from Trump, Besson, Lutnick, over and over about how we have all the leverage. That post just told us, no, we don't. Now, again, that's not a surprise per se, but that takes us from denial of the denial stage of grief about who actually has what level of relative leverage into somewhere between anger

in bargaining right it's you know he he threw his fit then he's like well it'll be you know we're not we don't want to put shine in a depression and we don't want to put ourselves in a depression that's exactly right we put them both in a depression so you know let's let's de-escalate but again i think it masks like the number one key thing which is we got to find our own rare earths for our own weapon systems yeah it's it's either that or because i i had a somebody who's very well versed on china's lived over there for 30 years an american um and i asked him like what is the solution to this and the u.s and china gets to the table and the u.s basically acknowledges that china is an equal

apparently from a social perspective from a cultural perspective that's what china wants most just to be viewed as an equal and i think with the leverage you just described that china has over us that may be sort of the necessary pride swallowing that needs to happen to try to figure this out moving forward yeah i think it ends up being a really good thing for the world if if you know the two big powers stop fighting um and you know there's a version of this that can go really well aversion it can go really badly um but i i you know and again it's always it's not to say china won't be hurt by this china would be hurt by by that as well the challenge is that like we know the treasury market will blow up in five to seven days trading days if there's

a hard divorce whereas china probably would would be able to hunker down and and be all right for five to seven months. And we know that empirically because we saw it happen in April. Treasury market after Liberation Day went exactly seven trading days. And then, you know, that led to the first Trump taco. So it's all about that sort of relative dynamic. We also know from May and June, after 11 days of medium intensity combat, the U.S. chewed through 15 percent of its high air defense missiles, defending Israel from Iranian drones. And, you know, we've also heard that, you know, the Chinese can produce 4,000 cruise missile motors a week, which compares to 6,000, roughly, reportedly, Tomahawk cruise missiles in inventory total.

So they can produce our entire inventory every week and a half in a very automated fashion. So So and with rare earths, those supplies would be run, you know, would be run down even faster. So there is a. All supply chain bottlenecks are not equal, right? You can look at, you know, what's our GDP, what's their GDP, whatever those those metrics are interesting. But in the end and things like this, it's all about the marginal metric. Right. Think about this. There was a headline FT yesterday saying the U.S. is the U.S. defense department is out buying a billion dollars worth of critical minerals people like wow that's like four times what we use every year we're good but i think it misses a message one billion of

critical minerals 250 million a year of critical minerals of inputs which the removal of that shuts down a trillion dollar a year military most powerful military in the world right it's like the old poem you know for lack of a for lack for want of a nail right for want of a nail and that's the nail in this case is the critical minerals yeah well moving this back to gold at the price going up to it was another interesting thing that uh vince lancey brought up during our conversation on friday was that there's a lot of people in the western pundit space particularly finn twit that believes in the dollar milkshake theory that everything will fail up into the dollar in the U.S. Treasury market, but this situation in the gold market,

particularly creating this parallel settlement network via Shanghai Gold Exchange and other BRICS nations spinning up their volts, really throws a wrench in that thesis, which is that can potentially not happen if you have this alternative settlement network that people can leverage. and do you think the price going up up 110 today many people are focusing on china specifically but i think everybody in the geopolitical landscape is looking at what's happening right now and saying okay i gotta get i gotta get some gold i gotta get some silver there's apparently a silver shortage going on right now and i don't know how legitimate that is but at least the narrative's

out there. Yeah, I think like Brent's milkshake theory is absolutely correct around initially gold going up with the dollar. Something I posted a long time ago on X and people familiar with the FOFOA blog and the readings of monetary theorist another and friend of another will recall that in the late 1990s um another another a friend of another said that when the dollar system is coming to the end of its life you will see the dollar and gold rise together that will be the sign that the dollars because people will be getting squeezed into the dollar at one hand but they'll also be getting out and going into gold and so when those two things are rising together that's the symptom of the end of the dollar system that was said 30 years ago almost 25 years ago um and so yes

the milkshake theory will see the dollar squeeze higher i get it and gold as well and gold once it hits critical tipping point of price and i don't know where that price is um but you can see hints of it um you know albert marco on x has said hey above three thousand dollars on gold it starts to create a problem for the dollar he was right the dollar went down to 96 it says above five thousand dollars on gold it creates a problem for the dollar and for the treasury market he's probably going to be right and the point here or what he's saying when he says that is ultimately yes there is this you know we've talked about this you know 13 trillion dollar dollar denominated liability out there, right, in terms of foreign borrowed dollar debt,

that when the dollar goes up, it squeezes people into that. It forces them to sell treasuries. It forces them to sell U.S. equities to raise the dollars to get that. Well, once the price of gold gets high enough, it starts to fully collateralize their dollar liability on the other side. and suddenly it starts to provide the liquidity it starts to be the sink and that is how you circumvent the gold is how you get out of the dollar system and that's why another or a friend of another said all those years ago when you see them go up together that means the dollar is coming to the its end of life this dollar this present form of this dollar system is coming to the end life. Now, does it mean the dollar is going to die? No, I'll be using dollars and, you know,

you're in my grandkids and great grandkids will still be using dollars. It's just going to buy us a lot less. And certainly in gold terms, de facto, we can see gold with today's price move has overtaken treasuries in global central bank reserves, right? So there are now, there's now more gold in global central bank reserves than there are U.S. treasuries. How do you sit there argue and say you know it's not overtaking the dollar in the system like to me that's crazy now will people still use dollars of course why that's just gresham's law right i hear people say well it's still dominant 90 of currency usage that's dollar dominance great so you're spending yeah you're telling me it's the bad currency right i will i'll spend dollars late all day long because

there's a terrible store of value but if the whole change of structure we've been talking about for years and i mean if you watch all my posts all my podcasts everything ever said i've never said end of dollar reserve status it's end of the post 71 structure of dollar reserve status which is dollar as primary reserve currency treasury bond as primary reserve asset it happened it's happened the dollar is still primary reserve currency but gold is now primary reserve asset as of probably this morning with the hundred dollar move and i don't think it's ever going back unless you know she suddenly decides to be you know yeltsin and you know sell off his country for pennies on the dollar to american you know corporate and washington interests and putin

decides to do the same thing because we can't go to war to stop him. The rare earth thing ensures it. So freaks, this rip of TFTC was brought to you by our good friends at BitKey. BitKey makes Bitcoin easy to use and hard to lose. It is a hardware wallet that natively embeds into a two or three multi-sig. You have one key on the hardware wallet, one key on your mobile device and Block stores a key in the cloud for you. This is an incredible hardware device for your friends and family, or maybe yourself who have Bitcoin on exchanges

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it has free shipping as well so go check it out i guess i mean that begs the question like what does the u.s do in reaction to this i mean there was many that were surmising in the beginning of the year we're calling gold in kind back where we were calling gold from bolts internationally into the u.s seeing what china was doing and others in preparation obviously there was the the genius act getting passed here in the united states and the trump administration and the advisors around the administration are saying this is how we're going to save the treasury market we're going to take advantage of the fact that the u.s dollar is the preferred currency globally and try to flood markets with it with this new technology in stable coins and stable coin

issuers will have to buy treasuries but um it seems like we've got to also at the same time expedite this reshoring of manufacturing if we want to sort of inoculate ourselves from these external factors yeah and you know i think the stable coin thing can work um but let's call it what it is right this is this is like you know um operation iraqi freedom right well you know or um you know the affordable care act right or you know when when you whenever the government name something, you should sort of like assume it's the opposite of what it is. And you're usually closer to the truth. And so let's let's call let's call the stable coin gambit for what it is. They should have called it. We can't issue bonds at the long end of the curve

in sufficient amounts at prices that don't blow up our debt anymore. So we are issuing and we're refinancing all of our debt in near cash markets and that's what the stable coin thing's about but of course that doesn't roll off the tongue quite as nicely as the genius act does it so but that's what they're doing they are issuing they're going to finance right and you can see hints of it right when you see besant come you know get sworn in and immediately double the pace of treasury buybacks that yellen was doing which only started in was it may of last year april of last year he doubles the pace of treasury buybacks immediately relative to what she was doing and it's all it is heavily skewed and it's not i will say almost always but it's heavily skewed

towards issuing short-term paper to replace longer-term paper so he's bringing in duration and then i hear credible rumblings that you know the plan will eventually be once if you can get enough uh if you can get stable coins big enough right if you can if this can work, then you will do some form of what the US did in the 50s, which is make the T-bills that go into stablecoins non-marketable and say, eh, they're not 4%. All stablecoin T-bills yield 50 basis points, 30 basis points, whatever. Powell will have taken control of the short end of the curve from, or excuse me, Besant will have taken control of the short end of the curve from Powell, completely disintermediated him. But we will be financing massive deficits and

the cost of reshoring in near cash markets. Now, what would I want to own if Besson came out and said, we are going to reshore, and I'm just going to straight print the money to pay it? What would we see? We'd see gold up. We'd see Bitcoin up. We'd see stocks up. and we might not see the long end of the curve go up because if he's not issuing any bonds at the long end there's a mindless bid for duration this i don't know if it's 400 500 600 billion dollars a year from pensions and liability matching like they have to buy no matter what and as long as he keeps issuance out there below that number long end can be relatively well behaved as we've seen uh doesn't make me want to own it they're getting killed on a real basis but

if we saw that that's how we'd react if he said that that's what we'd react well stable coins to finance large amounts of the deficit. It's just like the kissing cousin of printing cash to pay for the deficit. Why is it happening? Because it has to. That's where we are in this. There's no mystery. You go through the history books and these great powers that get into debt and have these big seconds. You start at the long end and you see foreigners and then you stay at the long end and you plug domestic. And then when you run out of that, eventually, you end up basically printing money to finance your deficits. And we're not quite there yet. But we're, you know, that's what the stablecoin gambit is. Now, what else can they

do? Look, if he can get the price of gold up a lot, you know, at $20,000 an ounce, if they can do things that make the market bid gold to 20,000, and you know, people used to think that was insane. But I gotta tell you, at 100 bucks a day, it's looking less insane. You know, 50 to 100 bucks a moves on the upside. It's looking a lot less insane than it was, say, six months ago. But if he can get it to $20,000 an ounce, which, by the way, would only put it back to 1989, excuse me, it would only put it slightly above the long-term average of gold's price relative to the foreign portion of our debt, the market value of U.S. official gold relative to foreign debt. $20,000 an ounce would deposit roughly $5 trillion into the Treasury General Account, free and clear.

it's just straight money creation using gold it's an accounting entry wouldn't have to sell any gold whatever and then you could buy down a pretty big chunk of debt you go out into the market and say i'm gonna you know either he can finance the u.s you know the long end needs with that five trillion for five years at least probably more like eight years or he could just go in and immediately say hey i'm gonna buy back five trillion dollars worth of the 29 trillion out that's gonna take down 20 percent of the market so debt to gdp is under 100 right away assuming a money multiplier nominal gdp is probably gonna run friggin 15 20 percent for a couple years debt to gdp will be back to 50 60 percent in a very short period of time over the backs of you know the purchasing power of

stable coin holders around the world so they could they could do that but boy they gotta hurry because you know treasury you know interest doesn't sleep no it doesn't and i was telling you i've been watching some of your fftt videos over the last few days and uh you're mentioning a book i forget the name of the book author's first name is tobias talking about 1931 germany and the parallels that exists between today and then no that's exactly right yeah yeah yeah and so i think i think you said it in the video like history doesn't repeat but it certainly rhymes and it looks like we have maybe not a playbook but some history from 100 years ago that we could look at and say hey this is what's happening yeah absolutely and you know it's fascinating we between that book and the book

raven of zurich uh the memoirs of felix somery uh which i own which is which is great um you know there's a great passage from like 1912 uh because somery's writing a lot of it is his you know him it's his diary as the world was completely changing right like you came into 1914 with four empires and by 1908 and those four empires had run the world for like 300 years prior And within four years, three of the four were gone entirely. The fourth was wounded, and the British Empire had lost 6% of its working-age men in the war, had lost its power. Basically, at that point, it was a debt vassal of the United States, and so we overtook them as global reserve currency, as global – it was the first step in sort of becoming the global empire. And but it's fascinating. There's this passage where Solmarie says, you know, Europe, which was full in 1912, full of optimism and pride and power of looked at the Chinese, you know, in European capitals with curiosity because they always weighed their money, the silver and the gold.

they would weigh it they didn't go by denomination it went by weighing it and they thought the chinese were five generations behind the europeans they thought they were so many says but in reality they were a generation ahead they had the experience and the historical memory of inflation under mongol emperors who printed a bunch of paper billions and had to suffer through the consequences and so that's why the chinese weighed their silver and gold money in 1912 and the europeans thought they were you know they were they were hillbillies thought they were behind when they were actually ahead now stop me when this all starts to sound familiar right like uh how often for the last 15 years have we heard how backwards the chinese are and how they'll

never catch up and this and that like like here we are the chinese have been buying gold hand over fist for 15 plus years 18 years and what of the amer what is the american you know wall street state financiers, power, Washington laughed at them. They're not laughing now, are they? They're not laughing at all. I think something similar is going to happen. Sup freaks, this was brought to you by our good friends at Obscura. If you've been listening to the show long enough, you know we care deeply about privacy, particularly as you peruse the web. It is important to be using a VPN and Obscura is our VPN of choice. That is because it is a VPN built by a Bitcoiner for Bitcoiners is the first VPN that can't log your activity and outsmarts internet censorship. Obscura VPN works

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this is the event. Register now at unchained.com slash tftc. Unchained.com slash tftc. But I think the only thing you can call it is hubris too. That's right. That's exactly what it is. Yeah. It's like not only from a monetary and economic perspective, but from the military perspective, we've been beating our chests like we're the biggest, strongest military that's ever existed on the planet. China will never be able to catch up. But you threw that stat out earlier. They're able to build what is a 4000 Tomahawks per week. And that was well, not Tomahawks, but that's from David P. Goldman, who's a very good source on this stuff at Asia Times. He wrote two or three years ago.

He said that they can reportedly make 4,000 cruise missile motors a week. Cruise missile motors. But then you look at the advancements that they've had technologically with automation. I think many people in the United States are looking at the drone technology specifically and saying, oh, that's pretty scary. And you go back to they own the rare earths, which is the raw input of everything we need. And it's it's very perplexing that we are still beating our chests in this way, not showing a bit of humility like, OK, we messed up. And it does seem like the Trump administration has recognized, holy crap, we're behind in a lot of ways to China. But I think they're focused on energy in AI specifically, which rightly so I think they should be.

But militarily, things aren't looking relatively good for the U.S. right now either as it pertains to China. And it's just like, all right, when are we going to swallow our pride, take the hard medicine and recognize like, hey, we need to show these these Chinese some respect because you do not want to go to the kinetic warfare route with them. I don't think because Andrews CEO was on a podcast with the 16 Z guys last week and he was saying, I think he referenced this into the some of the missiles we supplied Israel earlier this year. Like we can have five days worth of depleting missiles in the war takes two years to build back that supply, which is astonishing to me. Yeah, there's a great quote from U.S. Marine Corps General Barrow, you know, amateurs study tactics, professionals study logistics. And we've been more focused on tactics and they've been arguably more focused on logistics, which we can say because, you know, two and a half years ago, the CEO of Raytheon was quoted in the Financial Times saying, you know, we literally can't go to war without Chinese components. and it will be many, many years to try to replace that. They know it. Who let that happen? Why did that decision happen? You start pulling on that thread, I think you're gonna get some really unpleasant conversations. And that gets into politics that quite frankly, I don't want to be

involved in. Because I, yeah, I'll just leave it at that. But the hints have been there. You really said the right word, which is hubris. There was, there was a, there's an author, a guy named Andre Martianov, who was a former Soviet engineer, I believe, I believe he was in the Soviet military when the Soviet Union collapsed. He came here and he advised the U.S. military on all sorts of missile technology, etc. And he began writing some books a few years back, The Real Revolution in Military Affairs. And most recently, he wrote one a year and a half ago that was published called America's Final War. And the overall thrust of these books was, number one, there is very much a science to military. Military sciences, I believe, is a thing. And you can run a calculation

of, okay, how much steel can you produce? How much iron ore can you produce? How much you know copper can you produce what is your aggregate btu output of your energy electrical grid uh how many engineers are you graduating a year what's your manpower all of these things you know can be put together into a calculation that it gives you some level of understanding of the ability to prosecute war it's a measure of power hard power and in the first book he laid out Like the Russians were so far ahead of the U.S. in that already that it wasn't even close. And I think people, number one, I don't even think he could get it published in the Western press. So he went with an independent publisher.

You can buy it on Amazon to America's credit, right? It's not censored. But you read that, you go, oh, interesting. And then we got a test of that in places like Ukraine, in places like Iran and Israel. And what you find then is what he lays out in America's final war, which is America doesn't have enough of an industrial base to prosecute a major war, and the industrial base and installed capacity it has is all in the wrong things because the nature of war has changed. Think about what technology and AI do. They allow smaller, less well-capitalized participants to do things just as good with just as broad a reach as big capitalists. You and I are sitting here talking. I was laughing. The whole Jimmy Kimmel thing, I was looking at his numbers. I have podcasts that had better numbers than he was getting every night.

I'm like, look at the commercial, the new Apple iPhone commercial, right? What do they have? They have an iPhone in a case with real filmmakers using it to film. This is what technology – and this is what Andrei Martanov was saying. is like the americans have all of this sunk cost into these weapons platforms that aren't the right weapons platforms they're not going to fare well in war eric prince a former ceo blackwater said it back in february in a speech he said if we sailed a carrier a carrier group over to taiwan to try to blockade it it would we would see it on the news smoking or worse because it has changed

the nature of warfare has changed, drones, hypersonic missiles, et cetera. And they've known this for at least, first time I heard about it was in 2018 at a private conference, which means they've known about this for at least 10 years, at least, and probably more. But the political reality, right, like the Philadelphia shipyards, right, historically a big naval shipyard, there's a bunch of ships being built there or that in theory could be built there that aren't the right things to build anymore, right? But you're going to go to the senator from, you know, from Pennsylvania and go, we're going to shut down the Philly shipyards and and turn it into some sort of missile works or drone works.

Come on. That's not how this country works. And that's the challenge is, is there's this inertia around the installed base where the incumbent has a disadvantage. And that's what we've been watching. yeah the philadelphia navy yard the it's the headquarters of anthropology now which is uh one of the favorite stores of uh oh is that right upper upper middle class uh white women in the united states but uh it's a far cry from where it was that might be the perfect metaphor for why we can't go to war we used to make we used to make destroyers there and now we out cute dresses it's cute dresses now it's uh well with this in mind i think there there has

been a recognition um you know a lot of people have their thoughts about the sort of silicon valley tech elite but i think if you look at companies like andrewl um and there there is a big focus on providing startup capital to industrial base focus companies um there was a company named base that just spun up um a factory in the center of austin uh in the old austin uh i forget the austin times um factory right right on congress ave that shut down obviously andrews focused on uh drone technology and anti-drone technology there's a sort of metal fabricating uh startup that's based out of michigan so it seems like um at least some part of the investment class here in the united states recognizes that we have this weakness in the

private markets trying to solve these problems like on that note like what if anything are we doing right right now and where do you think we should be focusing in in uh sort of deploying capital to to fix these problems what it's just it's just uh when you i think those things are the right thing to do and i think we also need to be subsidizing in a major way uh metallurgy trades you know metallurgy degrees rare earth refining degrees which doesn't even really exist in america i'm told 33 different chinese universities have them america has zero um engineering degrees skilled trades should all be being subsidized um majorly in other words like you don't pay to go to school and you know you come out you're going to be making i don't know

more than a first year more than a third year wall street banker something like that right guaranteed by the u.s government uh because you've got to get the labor there there's you know as an american why would i go like study really hard not get to drink a bunch of beer when i could go into you know finance and come out and trade crypto and make way more money than someone who's actually helped build stuff and i say this with being one of those guys that went to college and made the choice in 1993 to drink a bunch of beer and not have to study as hard as engineering guys and make more money like that's that's the that's what the dollar system as structure does that is 100 everybody else makes stuff and then they send the money here and we move the money

around and like that's that system is at the it's well beyond the end of its useful life uh and i say that because like we are doing some things right but now again go back to the first part we talked about if the chinese aren't sending rare earth stuff here that's like that's the hardest part that's the hardest part and it takes a long time um to sort of build the infrastructure for that so you know we need to we need to go to like manhattan project speed on that in terms of because you know it would be a good question for someone to ask palmer lucky dandrell the next time he's doing an interview is hey if the chinese cut off all batteries and all magnets and all rare earth inputs to what you're

doing how many things can you produce a year and i i think he's gonna i don't think people are gonna like the answer you know and i say that because we've seen stories over the last six to nine months of like hey we tried to build our own batteries for these drones not from uh andrew specifically but from other people in that supply chain in that world they said we couldn't do it we had to buy them from china they weren't as good and so it's not there i think there needs to be some reality around you know this right that right now i'm still seeing the bargain like well fine we'll just do it ourselves you know we're america we'll just do it ourselves yes but no one everyone's like we'll just take a year or two

i'm like so the chinese did this you know china launched you know we wrote on friday like China launched China 2025 and 2015. And most of Wall Street laughed at them. They're not laughing now. But it took the Chinese with all of the sort of things that they do that we have a hard time doing, right? Centrally planned, some level of, you know, forcing competition, massive subsidies, closed capital account, all the things you have to do to do that. And it took them 10 years. And we're trying to do something orders of magnitude bigger with less engineers, less workforce, and oh, by the way, an engineering and skilled trades workforce that is like a declining option.

In other words, it's a decaying asset because we got another six to eight years, and the last generation that was really in engineering and skilled trades, they're going to be aging out every year. so like we're on the clock and we so what else can we do we we have recognized the problem and we are taking some steps we aren't nearly aggressive enough we need you know i will say we are on the right path when i'm seeing stories in the wall street journal about welders making 500 600 000 a year coming out of welding school and being able and you know what it's gonna be inflationary. It's just so inflationary, which means, guess what? The Fed's going to have to put the entire bond market on their books. Great. That's how this has to go. That's what they have to do. And what's that going to do to the dollar? It's going to get waylaid. Guess what? We offshored

this stuff to support the dollar. Why do people think that bringing it back can be done without waylaying the dollar? It's astonishing to me. It's the most like... When you put it that way, it's very simple it's very simple it's very simple and it's i mean as you're describing that i'm just thinking in my mind of how polarized political landscape in the united states is here domestically and anything trump tries even if trump woke up he's like all right luke i hear you we're gonna go do it the amount of backlash you would get and he calls for and they call calling him like an authoritarian fascist that is that's the challenge i think too right because this is like an this is an orthogonal multidisciplinary problem and that's that's

we you know the politics of it right like half of this you know without getting into it like we can't agree on certain scientific facts half the country thinks you know you know dr what's his name is is a national treasure and half think he's not half you know half people you know the immigration situation is there there's there's no like we are so polarized um you know if you get you know if trump and the republicans lose the next election it's still going to be polarized it's just going to be in the opposite direction and so that's the other thing too right Like people say, we just need to do what we did in 1940. 1940? You had, like, number one, we didn't really have a bunch of foreign engagements. We didn't have a bunch of foreign influence running Washington. We had been basically like, we had just kind of come on the national stage, number one. So we didn't have a bunch of like, hey, you can't take that money away from the war you're supporting over here to build a factory base.

Right there with that, there was no such thing. It was all focused here. Number two, you had a huge skilled trade base. And oh, by the way, 20 percent of them were unemployed and had been for 10 years. So like if like they just needed the rallying cause and we were sort of a very much more unified country, you go, oh, yeah, let's go. we can build this now it's like apples and zebras how different all of that is on every angle politically domestically so you know again i think step one is you know okay we admit the problem but now you got to be realistic right it's like okay well i'm 500 pounds and i'm smoking and i have a heart condition and you know people like well we're america we're just gonna go you know we're gonna run an iron man next week you're like what are you talking about what are you talking about

like the first step is like get off the couch stop smoking like walk to the sink make yourself something healthy and walk back and then next week if you don't die of a heart attack then you walk to the mailbox and you come back and i mean there's just a time aspect to this that you know again if we don't have a time machine it has the time aspect has to be paid yeah and it almost feels like there needs to be a propaganda campaign a good propaganda propaganda campaign to really introduce the concept of low time preference and i think that's the very disconcerting about the current state of america is that we live in a high velocity trash economy where everything is what did you do for me

yesterday what are you doing for me today what's your quarterly financial stay saying um and basically reacting and then it gets even more distilled to the 24-hour news cycle um yeah i thought that what what best and announced about what was it six months reporting versus quarterly like a lot of people on wall street oh here comes more fraud and i actually thought that was a really good idea that's a really good idea like report every six months report every like the amount of effort having been on the sell side for 15 years investment research the amount of effort alone that is wasted on quarterly reporting is like mind-boggling you have like the most brilliant minds in america like reading the release getting on the call asking the comment

hey good quarter guys and then like rather than hey here's an idea for raising capital here's an idea for building a factory here's like it's insane so i thought like that's a good like that's a good little baby down payment but like you know it's like let's keep that going yeah No, as somebody who sits on the board of a publicly traded company, like the amount of sunk cost or opportunity costs that's spent focusing on quarterly financials, it's like you finish the financials for Q1 and then three weeks later, it's like, all right, let's start. Let's start getting the books ready for Q2 earnings. It's not conducive. It's not conducive to like, because, oh, by the way, as an exec, you know, you go to jail if you sign something that is that is fraudulent or wrong. and so like your first like i need to make sure i don't go to jail okay well if you're thinking i

don't want i got to make sure i don't go to jail you're not thinking about how do i compete to chinese how do i go into this market how do i do better in in brazil how do i like these are the real things you got to focus on and like we just haven't been for a long time and it's all like you said it's all high time preference society which is all around the end of the day it's the currency why build a factory why plan out building a factory and how do i allocate that capital when the dollar's moving around like this and the cost of that capital you can't you can't plan a factory come on you've got to have some sort of a real you know a better currency system no i think you did an incredible service to the world a few weeks ago really pulling on the the

debasement trade meme and sharing that chart of equities real estate uh and i believe or s&p nasdaq in real estate priced in dollars gold and bitcoin and i think if we were able to really distill that message like you did and make it popular and have company execs realize like you should be storing your your company's profits in these better currencies and bitcoin and gold oh yeah i replied to so senator sanders bernie sanders had something up probably about a month ago you can find it on my x feed about how you know like i don't know corporate greed and something else is you know the reason why you know since 1971 all of the profits you know all the gains from productivity have accrued to the to the one percent and not to the bottom 50 percent

And like I tagged him out. I'm like, with all due respect, Senator Sanders, in 1963, minimum wage in this country was five silver quarters. It was a dollar twenty five minimum wage, a dollar twenty five. It's five silver quarters. The melt value at fifty one dollars of those five silver quarters today is like eight bucks each. so if minimum wage in real money terms was today what it was in 1963 minimum wage would be five times eight bucks would be forty dollars what is national minimum wage actually seven and a quarter you want to know who stole the money senator sanders it's you and the politicians you guys change the currency system you've been there for however many years he's been there. Change a currency system back. Nixon said it was temporary.

That's where it all went. You go from having to pay people $40. Imagine if minimum wage was $40. What would wealth inequality be? Corporate profit margins would be a lot lower, sure. But corporate profit dollars would be way higher because we would be running an economy that would be essentially the version of what Henry Ford did initially, right? Which was pay his workers more than the market so that they could buy the model t's coming off the line so like that's that's the fix that like that's the fix if they ultimately unless you fix the currency you're not going to really be able to do a whole lot no and it's it's mind-boggling how many people don't recognize this at all and i'm looking for

a tweet but there's a guy nikita bear he uh he just joined twitter or x as some he's working on their their product i don't know exactly what he's doing but he tweeted out he's like oh wow all these all these golden uh bitcoin guys are are preparing for hyperinflation when ai is extremely deflationary i saw that i saw that post i i saw that post and it um the answer is very simple i actually think i replied to him and i think i just said deflation is the midwife of hyperinflation in highly leveraged societies you read the book 1931 the 1931 germany didn't hyperinflate again because they'd experienced the hyperinflation of 1922 and so they're like we're not doing that again but that was one of their choices it was either default or hyperinflate and like i don't

think the U.S. is going to nominally hyperinflate. Well, like, look, the dollar collapsed 90% against oil in 2001. Between 2001 and 2008, right, oil went from 15 bucks a barrel to 150 bucks a barrel. That is simply the dollar collapsing 90%. The dollar was worth one-tenth as much against oil in eight years. You know, the Chinese, we say we want to compete. China can make the same or better stuff for us, 85% cheaper than us, including things like Josh Crum, not Josh Crum, Josh Wolf testified to Congress three years ago about nuclear power plants. So the Chinese can build a one gig nuke plan for 85% cheaper than the Americans. A gig's a gig. A gig of electricity is a gig of electricity. It's not like there's some special yuan gig of electricity that gets

them more or less power it's they abide by the same physics so if their gig of electricity costs 85 cheaper than ours you know what that tells me dollars 85 overvalued against the yuan it's that simple it's the same it's the you know it's it's and that's that's where we're that's where this movie's going like some version of that if we want to compete if we want to break People say, well, we need to split China. Great. The dollar's got to go down 85%. That's it against C1.

That's fine. Whatever. Good. We'll be able to compete. Working class is going to get paid. Fed's going to have to buy a lot of bonds. But that's where this – like some version of that is where this is going. It's just – it's math.

It's double-entry bookkeeping. It's not like – it's not – the only mystery is if we decide to split with China and as everyone's saying we're going to do, we're going to divorce China and redo this. i don't know if it's 85 down or if it's 40 down or it's 60 down but it ain't friggin 10 down like we've seen this year not even close no no it's insane to go back to the nikita tweet it's like tech's been deflationary like we've had extreme tech deflation over the course of the last five six deck six decades specifically and it's like yes tvs are cheaper what we're doing right now is way cheaper than it would have been 20 years ago um it gets good information out to people and despite that the cost of living is rising and it there should there is just this disconnect

between that fact and the ability of people to recognize like oh if we paired this with a hard currency we would actually reap the benefits as as a global power and economy if we were able to store our wealth in a hard currency and we can let prices fall, but the purchasing power of our hard money is going up over time as we're being more productive throughout the economy. It's that simple, right? People are like, oh, well, gold wasn't so bad for America from 1860 to 1929. America had a pretty good friggin' run. You had this huge productivity, huge technology, right?

Technology is not just electric stuff, right? You had trains, you had planes, you had cars you had all this technology you had washing machines consumer great goods massive deflation and it was highly highly um productive and good for america good for americans uh we were on a gold standard and some of it a blended gold silver standard but that's the challenge like people say this tech is deflationary and it is but in the presence of a country with you know 7% fiscal deficits at the peak of the economic cycle and 120% debt to GDP and a hollowed-out factory base, you know, I've said multiple times, there's nothing more inflationary than an insolvent sovereign that is printing money to keep the nominal value of its

sovereign debt high, you know, to keep it nominally money good. And that's why inflation is where it is, despite all this inflationary, you know, deflationary tech, excuse me, it's just they have to keep growing money units because otherwise, you know, the debt implodes. And oh, by the way, the debt imploding is very hyperinflationary because the debt backs the currency. So the debt, if the backing of the currency goes to zero or is impaired, guess what happens? That's when you really get a hyperinflation of some description as people basically dump currency to just get me something that isn't backed by bonds so yeah bitcoin actually does fix this a gold standard would actually fix this and you can make the case bitcoin is able to

be um you know all the things in bitcoin start portable and verifiable and etc etc etc um yeah you need a deflationary currency or else you know we're going to kind of continue down this path we're on agreed in the wrap i will say like i think the free market bitcoin is a creation the free market is beginning to solve this but i think even any americans listening to this you look at things like square announced last week where anybody who's running a square point of sale system throughout the united states will be able to automatically convert a portion of their revenues into bitcoin right away and when i when i think about actually solving this problem um what is the what is the walk to the mailbox for the 500 pound smoker with heart problems it's like okay

just if you run a small business and you're using square maybe you start by funneling five percent of your revenues in the bitcoin and building a bitcoin treasury position for your small business and um you see what that does for you over the course of a year two years five years and then you go huh this is this is better money and you turn the dial up and eventually when i think about ways in which you solve this problem it's like all right let's not depend on the government officials and central bankers who sort of pushed us down this road to think that they're going to solve it themselves or feel the pressure to solve it without any external pressure uh is a bit wishful uh a bit of wishful thinking in my books we need

individual american citizens and businesses to adopt this better money and opt into it and i think that's how we get through this at the end of the day yeah i think that's exactly what's going to happen i think it's really encouraging to hear things like that square i mean it is it is quickly becoming a matter of utmost importance i won't go all the way to life and death but you know depending on events it could become a matter of life and death for businesses to do exactly what you just described which is just put a little and individuals put a little bit into into bitcoin because you can see what you know the corollary to the genius act and the stablecoin gambit to support the treasury market that we talked about

earlier is like you're not going to support the stablecoin mark or the stablecoin market's not gonna be big enough to support the treasury market with bitcoin at 200 000 or 500 000 like He needs like million-dollar Bitcoin, two-million-dollar Bitcoin to pull along the number of stablecoins, to pull along the T-bill issuance. It basically – we wrote it as the US, the treasury seems to be standing up Bitcoin de facto as a competing reserve asset to gold, and then they can duke it out. Gold and Bitcoin can duke it out. We'll see. um but that's exactly what has and that and that that will rebalance things that will take things away from the financialized guys that will take power away from the fed that will do all the kind

of things that you need to it's a mark to your point it's a market it will be a market driven incentive system um that will be really it will narrow wealth inequality it will but again the only way it narrows wealth inequality is if people start buying some every week and self-custody it because otherwise if you don't self-custody it you they're just going to rug pull you like they rug pull like you know you custody with you know you just you just have to custody it yourself you just you know learn you know it's so easy to do there's very good services that'll help you do it like just do it like just because otherwise you're just re-centralizing it elsewhere and you know you it opens up the risk for rug pull down the road yeah i don't want to glaze them

too much but that's why i'm extremely happy that square exists and they have the sort of mentality that they do you know obviously jack's been very vocal about this bitcoin is everyday money we need to use it and they're supporting many different areas of the the industry with uh they have bit key which is their hardware wallet they proto which is mining spiral which is open source development obviously square and cash app and i believe miles suitor is the product lead over a block a product lead over there said that you'll automatically be able to sweep funds that you accumulate via your square point of sale terminal to self-custody using pick key and other wallets so we need more examples of that of industry people leading and doing things

the right way because like you said it is not that hard uh and it is important that we do it the right way because that's how we actually structurally fix these problems yeah oh yeah like i'm a tech moron and so like if i can do it anybody can do it like i'm i'm like you know whatever the tech abduction curve i'm usually way past the big wave like i'm i'm literally a tech idiot so like if it's easy enough for me to do it just about anybody can do it yeah and luke i appreciate your time this is a great catch-up uh i think you've been completely valid that we've been talking on this show i think for probably five years now you've just been beating the drum consistently and it feels like we're hitting an inflection point that you've been uh you've

been pointing to for for many years now um so i think thank you for your time and educating the audience here no i appreciate that it's um it's it's it's been it's been it's been a great time It's been fun. It's been, you know, it's been, you know, the, the most fun work of my life. And, uh, you know, it's been happy to hear from, from clients and friends like, Hey, like this is, um, you know, this is good. There's, there's times in this business where you don't see the ball that well. And, and, you know, those are when you're trying to work walks and, you know, grind out singles and, you know, some, when you're seeing the ball, well, then, you know, those are the times when it's, when it's super fun. Um, and so, you know, hopefully we can

knock on wood um you know try to try to try to try to keep it going yeah highly recommend checking out forest for the trees uh we'll link to the website the youtube channel i mean your youtube video has been great the q a's uh if you're looking for quick hits uh just to get a peek into what luke is thinking from your week-to-week basis definitely go check that out as well appreciate it all right that's all we got today freaks peace and love okay thank you for listening to this episode of tftc if you've made it this far i imagine you got some value out of the episode if so please share it far and wide with your friends and family we're looking to get the word out there also wherever you're listening whether that's youtube apple spotify

make sure you like and subscribe to the show and if you can leave a rating on the podcasting platforms that goes a long way last but not least if you want to get these episodes a day early and ad free make sure you download the fountain podcasting app and go to fountain.fm to find that five dollars a month get you every episode a day early ad free helps the show gives you incredible value so please consider subscribing via fountain as well thank you for your time and until next time Thank you.