Summary of "U.S. Has Reached ‘Choose Your Poison’ Moment: Save the Dollar or Save Treasuries | Gromen & Makori"

Finance-focused Summary (Markets, Macro, Strategy, Numbers)

Core thesis: “Choose Your Poison” for the US Treasury / Dollar regime

Luke Groman argues the US is approaching an inflection point where policymakers may have to choose between:

Supporting/saving the US Treasury market (through liquidity, intervention, yield management), or
Allowing Treasury yields to rise (which would strengthen the dollar, but worsen the debt spiral).

He frames the trigger as the Iran conflict, specifically the closure threat/continued closure of the Strait of Hormuz, interacting with already-stressed sovereign debt dynamics and high inflation risk.

Macro mechanics & risk chain (Debt spiral)

Closing Hormuz → inflationary pressure (energy + supply chain disruptions)
Higher inflation → upward pressure on sovereign bond yields
Heavy debt burdens reduce rate tolerance:
- Groman claims the US “true interest expense” is ~100% of receipts
- Rising rates push interest/entitlements above receipts, worsening fiscal sustainability
Feedback loop risk from large offshore dollar borrowing:
- Higher yields + stronger dollar
- Foreign dollar borrowers sell dollar assets / defend currencies
- Growth weakens → further pressures → yields rise again
- (“wash, rinse, repeat”)

Market evidence cited

10-year Treasury yield: ~3.94% → 3.9%, then “ripped” to ~4.5%
S&P 500: down about 9% from late February to late March
Three straight “terrible” Treasury auctions (March 23/24/25)
Treasury volatility index:
- Rising to about 115
- He interprets 120–130 as a threshold for intervention

Expected policy tools (“all of the above” approach)

If authorities try to keep yields manageable, Groman lists/mentions multiple tools and maneuvers:

Dollar liquidity injections / reserve management
- Not “QE” by name (he cites actions akin to RMPs / reverse repo management)
Treasury buybacks via TBAC
- TBAC = Treasury Borrowing Advisory Committee
- He suggests buybacks expanded under a successor/administration change (he says “President Bessant”)
- He says these tend to remove duration longer bonds in favor of shorter duration issues (supporting liquidity/yield control)
Swap lines
- Example discussed: UAE demanded dollar swap lines
- He says “Bessant” responded
Yield curve management / “jawboning”
- He notes markets respond when yields approach ~4.4%
- Mentions “peace deals” / reopening headlines potentially influencing yield levels
Regulatory easing / SLR adjustments
- Reduce how Treasuries count against bank capital ratios (supplementary leverage ratio treatment)
- Goal: enable banks to hold Treasuries and continue lending
Outright QE (as a last resort)
- He calls it possible, but believes policymakers “don’t want to do it” first

Key timeline / risk horizon

Lagged effects: energy/supply disruptions impact inflation and expectations with delays of about 4–8 to 12 weeks
Host’s near-term “deadline” question:
- Groman doubts resolution within a week is sufficient
- Even if reopened shortly, some supply chain/input effects may already be “baked in”
Broader base case horizon:
- 5–6 years for the gold reserve re-rating thesis to play out broadly

Market Implications Described

Equities vs gold (relative purchasing power framing)

Groman describes a repeating pattern since early 2022:

Equities up in USD terms, but down in gold terms
Host cites:
- S&P 500 down roughly 40–45% in gold terms since 1Q 2022 (while up in USD terms)
Similar framing applied to NASDAQ

Implications

Higher volatility expected in sovereign bond markets
Potential for a “whoosh down” (sharp equity drawdown) if yields spike
But longer-run equities could “rally” in USD terms as liquidity appears—while real purchasing power shifts toward gold

Inflation & yield management conflict (“Sila and Karibdus”)

Worst-case risk:

Further Iran escalation keeps Hormuz closed longer, making yield repression harder without weakening the dollar

Balancing act:

Weaker dollar supports Treasury stabilization but risks higher inflation
Higher inflation still pressures yields upward
Policy must “stay between” constraints

Oil-energy trade and sector effects

If yields are repressed and oil is also pressured downward (e.g., via reopening/settlement):

“Risk-on” may favor tech/AI-linked sectors, especially those benefiting from lower oil costs

Concrete inflation / commodity examples cited

PPI: cited around ~6%
Fertilizer shortages:
- Claim: 48–78% of US farmers can’t get enough fertilizer
- Wheat planting constraints; wheat limit up tied to lowest crop since 1972
Copper:
- Issues via sulfuric acid constraints
- Import constraints tied to China export bans

Groman argues these demonstrate inflation persistence even if Hormuz reopening headlines arrive.

Gold + “Neutral Reserve Asset” Thesis (with numbers)

Gold re-rating mechanics & targets

He argues gold must rise substantially relative to foreign-held treasuries to return to historical norms:

Current ratio (market value of US official gold vs foreign-held treasuries): ~13%
Historical range: 40–60%
Implied move:
- Gold up ~3–5x from current levels

Target range (rough example framework):

If current implies ~$3,000–$5,000, then end-of-cycle target becomes:
- ~$15,000 to $22,000
Timing: end of cycle / ~5–6 years

He distinguishes scenarios:

Base case: “reversion to mean”
Dollar crisis: could be ~10x
- Example cited: 1980 gold-to-treasury ratio ~130%

“Gold vs oil” end-state / proposed framework

He discusses a speculative but concrete end-game:

Peg gold to oil (fixed energy unit)
Revalue gold such that:
- ~500 barrels of oil per ounce of gold (and up to ~1,000 barrels in another example) define a stable energy-backed unit of account
Concept: nations can set energy policy under that structure while stabilizing purchasing power

Gold vs Bitcoin competition

Gold and Bitcoin “compete” for neutral reserve asset status
In this regime, Groman says gold is the “written-in” reserve asset more likely to be central
Bitcoin behavior is described as more like a software/tech growth stock correlation (NASDAQ-like), not a durable emergency reserve asset

Bitcoin Stance (explicit changes)

He says they turned bearish on Bitcoin in mid-November 2025
Personal action:
- Sold most Bitcoin around ~$96,000
- Around 23–24 ounces of gold per BTC
Later:
- BTC fell to ~12 ounces per BTC
- Then bounced to ~16–17 ounces per BTC
Price view:
- Still expects long-term Bitcoin can reach prior levels (host references $200,000)
- Near-term: less “runaway” behavior due to lack of a “real big print” (liquidity shock)
- Also because Bitcoin hasn’t “separated from software”

Base-case Global Macro Numbers (explicit forecast set)

For roughly 5 years, he outlines:

DXY (US Dollar Index): in the 60s
Gold: over $10,000
10-year Treasury yield: ~3.5%–4%
Chinese yuan vs USD: around 4–5% weaker down from today
- Reference: ~6.78
Euro: stronger
Pound: weaker
Oil: around $80/bbl

Theme outcomes

Stronger US industrial base
More robust Chinese consumer
More balanced trade

Investor Positioning & Explicit Recommendations

Groman provides tilts (not a full portfolio construction):

Overweight cash
Overweight T-bills
Overweight gold bullion
Overweight gold miners
Overweight US electrical infrastructure equities (“shovel and pick” for AI power demand)

Valuation / rationale signals

Equities are described as in “La La Land” valuation terms
- Uses an “adjusted Warren Buffett metric”:
  - (Equity market cap − federal debt) / GDP
- He claims this historically implies ~60% upside when valuations are low
- But says current conditions resemble past “bad times” where equity allocations were contrarian
Mentions a “kryptonite” combination:
- TNX (10Y yield) × oil
- Only higher twice since the 1970s/55 years
- Implication: don’t chase equities in a financialized economy

Tickers / Instruments / Assets Mentioned

US Treasuries (focus on 10-year yield)
S&P 500
NASDAQ
Gold (bullion; gold miners)
Bitcoin
Oil (implied WTI/Brent; not specified)
T-bills
Cash
IGV (software ETF mentioned as a chart comparison for BTC)
AI / electrical infrastructure equities (no specific tickers provided)
Policy/infrastructure tools/terms:
- Yellen / Fed / QE (conceptually)
- RMPs / reverse repo (policy tool reference)
- TBAC (Treasury Borrowing Advisory Committee)

No other explicit equity/ETF tickers (e.g., GLD/AAPL) were stated in the subtitles beyond IGV.

Disclosures / Disclaimers

The host includes a framing along the lines of “not investment advice per se”
The discussion later becomes partly positioning-focused
No explicit formal “not financial advice” quote is provided beyond the host’s “not investment advice per se” framing

Presenters / Sources

Michelle McCrory (host; “The Real Story”)
Luke Groman (top macro strategist; founder/president of Forest for the Trees (FFTT))
Other referenced sources (non-presenters):
- Jeff Curry (Goldman commodities)
- Kubesi letter (used for dollar/payment statistics)
- Named corporate leaders (used to describe China trip delegation)

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