Tom Luongo: The War for the Dollar is Already Over
Tom welcomes back our other favorite Tom, the Tom Luongo, to discuss the recent banking crisis and the Fed’s involvement in it. Luongo believes Jerome Powell is trying to return to a classic regional banking model. He explains how the Fed is betraying the Eurodollar system by having SOFR at odds with LIBOR.
Luongo believes Powell wants to undo the damages of the last 15 years and feels it is important to understand the motives of the Fed and globalists.
He also suggests that the Fed took out Silicon Valley Bank due to its involvement in crypto, which could have created an escape velocity for trust in those systems, and challenged the Federal Reserve’s control of monetary policy and fiscal policy.
Powell’s move to guarantee the hole in the regional banks’ balance sheets has had a positive impact on the local credit unions, which can now start offering positive savings rates again. Additionally, the Fed has created a sump pump for US Treasury demand here in the US banking system, which transfers risk overseas and helps protect credit spreads. Christine Lagarde has been attempting to manage credit spreads, but is running out of bullets.
Mr. Luongo discusses the recent shift in monetary policy by the Bank of Japan, which saw the appointment of Ueda as the new head of the bank. Tom suggests that this signals the end of Quantitative Easing in Japan, and that this could lead to the unwinding of the low-yield carry trades that had been supported by the BOJ’s yield curve control. He then explains how this could impact Christine Lagarde’s efforts to maintain credit spread stability, as the BOJ’s yield curve control had been supporting her efforts. Finally, he speculates that this could lead to a weakening of the Euro, potentially leading to its breaking the parity with the Dollar and going as low as 60 or 70 cents.
Tom explains the differences between Janet Yellen and Jerome Powell and why Yellen is seen as a political animal. He then explains the differences between the East and West in terms of their monetary systems – the East is moving towards a commodity-backed system, while the West is trying to maintain the old system. Tom concludes by discussing the speed of capital flows, and the need for trust in order for a new system to work.
Lastly, the Toms also discussed the importance of reading widely and steel-manning your own arguments to have a strong foundation for forming opinions. Luongo also encouraged listeners to be cautious but avoid panic, and to understand that Davos and other powerful players are still making moves on the board.
Time Stamp References:
0:00 – Introduction
0:50 – Banking Crisis & FED
6:36 – Targeting Inflation
14:46 – Eurodollar & Crypto
17:26 – Bail-Outs & Capitalism
22:10 – Spreads & Domestic Mkt.
29:25 – Rate Risks & Europe
34:20 – Japan & BOJ & Europe
45:10 – LIBOR vs. SOFR
52:33 – Yellen Vs. Powell
58:10 – New Monetary System?
1:02:00 – Dollar & Global Trade
1:10:46 – Remonetizing Gold?
1:18:28 – Picking Rates?
1:20:00 – The Bigger Picture
1:23:42 – Learning & Growth
1:31:14 – The Anti-Info Age
Talking Points From This Episode:
- How Davos and other powerful players still making moves on the board.
- The importance of raising interest rates to 6-7% and focusing on balance sheet and dollar flow reduction.
- The potential de-dollarization of the global economy due to US policies.
- The need for a gold-backed currency to solve the US’ unfunded liability problem.
Tom Luongo is a Former Research Chemist, Amateur Dairy Goat Farmer, Anarcho-Libertarian, and Obstreperous Austrian Economist whose work can be found on sites like ZeroHedge, Lewrockwell.com, Bitcoin Magazine, and Newsmax Media.
Professionally, he has spent a lot of his waking hours inside various analytic laboratories testing your water and soil for contaminants. He watched an industry be created by government fiat and destroyed in the same manner.
He ran for Florida House once and got 2.7% of the vote on Guy Fawkes Day and says, “I’ve since grown up a lot.”
Then he spent 5+ years solving the puzzle of an electroless Nickel-Boron coating that has intriguing wear-resistance properties. Too bad, the coating was better than the company’s business model.
Today, he is the publisher of the Gold Goats ‘n Guns Newsletter, in which he attempts to connect the false narratives of geopolitics to viable long-term investment theses.
As for politics, his position is well-known through his past writings at Lewrockwell.com, Seeking Alpha, and the aforementioned erstwhile blogs.
To sum up:
“Individuals are the only people with enough knowledge about their own lives to have a hope of making the right decisions for themselves, and no amount of guidance or central planning can help that process along.”
He built the house he lives in and raises goats and milks them.
In short, he says, “I’m a libertarian who distrusts all human organizations larger than a two-handed game of poker.”
Lastly, He states, “I own a few guns.”