Gromen argues that the US must eventually choose between saving the dollar or saving the Treasury market, and that every time push has come to shove since 2019 (five to seven times), policymakers have chosen to weaken the dollar. His core evidence is a two-sided ledger in which foreigners owe $13 to $14 trillion in dollar debt but hold $22 trillion net ($65 trillion gross) in dollar assets, combined with a “true interest expense” (interest plus Medicare, Medicaid, Social Security and VA) that already equals 105% of federal receipts. He concludes that bonds will be saved nominally but lose heavily in real terms, the post-1971 dollar system will end with the dollar tied back to gold, and gold must be the “release valve,” supporting a 60/20/20 portfolio with 20% in gold for the average investor.
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The NIIP two-sided ledger: The US net international investment position went from +10% of GDP in the mid-1980s to roughly -80% to -85% today, which Gromen calls “selling the family silver” to keep consuming. A rising dollar forces foreigners to sell what they can, meaning Treasuries, agencies and mortgage-backed securities, which is why “dollar milkshake” analysis misses the forest for the trees.
True interest expense above receipts: The metric rose from 80% of receipts in 2018 to 110-120% during COVID, fell to about 85% after the Fed pinned rates at zero and let inflation run 8-12% in 2021-22, and is back to 105% even though no Treasury tenor yields above 4% yet. Two veterans once told him the game is over once interest exceeds receipts and must be printed.
Why austerity is too late: Argentina could do draconian austerity because foreigners did not owe $13-14 trillion in peso debt, but US austerity would send the dollar “screaming higher” and trigger a debt death spiral of foreign selling and rising rates. He blames 50-60 years of inaction on the 70 million boomers and 25 years of wars in Afghanistan and Iraq that he says achieved nothing.
Losing money in a bull market: Real returns on long bonds were -1% per year from 1901 to 1981, and he expects a similar long real bear market now, possibly enforced through unofficial capital controls such as requiring 25% of 401ks in Treasuries. Since 2000 the Nasdaq is still down 40% in gold terms, the S&P is down almost 20% in gold since 2021 despite a roughly 100% total return, and homes are at their cheapest in gold since 1980.
AI as an accelerant: AI competes with the Treasury for borrowed money while eroding the employment tax base that supplies over half of federal receipts. A 10% default on the $10 trillion of consumer credit held by Americans 49 and younger would equal $1 trillion against total US bank equity of $2.6 trillion, and he argues that the more deflationary AI proves, the more money printing it will force.
