Key Takeaways
Luke Gromen argues China’s effective cutoff of rare earth inputs to U.S. defense systems marks a tipping point where material constraints collide with America’s debt-driven model and the post-1971 dollar order gives way to a new regime. He says China spent years building leverage, dominance in key supply chains, industrial capacity, and gold accumulation, while the U.S. hollowed out manufacturing and shifted to short-term financing. A hard U.S.–China “divorce,” he warns, would crack Treasuries in days, while China could endure for months. In parallel, BRICS- and Shanghai-led gold settlement is forming an alternative monetary rail; gold now functions as the primary reserve asset even if the dollar remains the primary currency. Washington’s “stablecoin gambit” is, in his view, near-cash deficit financing by another name. The U.S. needs a Manhattan-Project push for metals, refining, and skilled trades, but politics and high-time-preference culture slow everything. Practically, he urges individuals and businesses to adopt hard-money balance sheets, gold and especially Bitcoin, as a market-led path to regain sovereignty.
Best Quotes
“There’s nothing more inflationary than an insolvent sovereign printing money to keep the nominal value of its debt high.”
“They’re done selling rare earths into U.S. weapon systems. That’s the end of the post-’71 dollar structure.”
“When the dollar system is coming to the end of its life, you’ll see the dollar and gold rise together.”
“We literally can’t go to war without Chinese components.”
“If America wants to compete, the dollar has to go down 85% against the yuan.”
“The stablecoin gambit is just printing cash to pay for deficits.”
“Deflation is the midwife of hyperinflation in highly leveraged societies.”
“The fix isn’t political, it’s monetary: Bitcoin or gold.”
Conclusion
Gromen’s bottom line: China’s rare-earth squeeze exposes the fragility of America’s debt-based power and accelerates a shift toward collateral-backed settlement. The dollar likely persists as unit of account, but Treasuries’ supremacy as reserve asset is fading in favor of gold, with Bitcoin emerging as the free-market challenger. Reindustrialization is necessary but slow; in the meantime, households and firms can protect purchasing power and rebuild resilience by steadily accumulating and self-custodying hard money, letting market incentives, not policy wishful thinking, drive the transition.
Timestamps
0:00 - Intro
0:59 - Tariffs and rare earth weaponry
9:50 - China wants recognition
13:02 - Alternative settlement in gold
18:48 - Bitkey & SLNT
20:36 - Stablecoins, reshoring
27:02 - Weimar parallels
30:10 - Obscura, Crowdhealth & Unchained
32:18 - War is not an option
39:45 - Western industry weakness
49:16 - Fixing the currency
1:00:23 - Bitcoin is fixing this
Transcript
(00:00) There's nothing more inflationary than an insolvent sovereign that is printing money to keep the nominal value of its sovereign debt high. When the dollar system is coming to the end of its life, you will see the dollar and gold rise together. I think it signals that China has a lot more leverage than a lot of the Western commentators are admitting.
(00:19) They're done selling rare earths into weapon system for the US defense department. Historically, if you messed with the monetary side of the rules-based global order, US would send the military over and kick your head in. I think you'll come in and you'll see the price of gold up on every day that ends in Y. The Treasury market will blow up in 5 to 7 days.
(00:37) China probably would would be able to hunker down and and be all right for 5 to 7 months. End of the post71 structure of dollar reserve status. And I don't think it's ever going back unless Rathon was quoted in the Financial Times saying we literally can't go to war without Chinese components. If we want to compete, people say, "Well, we need to split China." Great. The dollar's got to go down 85%.
(00:59) Look, I have to I have to start by saying I can already tell that the uh the comment section is going to be elated for this catchup because this is the first one where you actually have a a mic. [Laughter] Yeah, I got a lot of feedback on that. So, yeah, the um Mrs. FFTT was finally she's uh she took care of me here.
(01:22) So, I've got I've got a very It's apparently a good one. I wouldn't know if it's a good Well, it's the same one you've got, so it must be good. So, yeah, it's um it's it's here. So, that's that's good. It's uh it's this the sound quality is 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.
(01:46) 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 uh his statements.
(02:14) " And that's exactly what happened. For those who are unaware, Trump uh came out and said that we're going to put 100% tariffs on China's rare earth metals um because they weren't cooperating in negotiations. And then Sunday he said, "Hey, President Xi was just not in a good state of mind. We're back into a good spot.
(02:41) " What is what is this geopolitical volatility signal to you? Um I think it I think it signals that that China has a lot more leverage than a lot of the western commentators uh are admitting. And maybe this might have been the first time where they finally admitted like oh like reading between the lines. Uh I think China retaliated for um the the the latest semiconductor high-end semiconductor related sanctions and and basically my view was like all right well we're not going to you're not going to be allowed to have this stuff.
(03:18) That was the initial read. And it's interesting, uh, Trump came out with what they said with what he said Friday, right, which is 100% tariffs and, you know, markets threw a fit. And then the Chinese came out and clarified either a Saturday or Sunday, I don't remember exactly when it was, but and it was kind of like the most Chinese statement ever.
(03:44) 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 uh uh best uh 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 the that's how the Chinese negotiate. So, but when you really read what they said, apparently it's it's about the weapons.
(04:07) You know, it's a ban on weapons. We're not going to supply rare earth to the US Defense Department to make weapons to point missiles at us and our friends anymore. And you know the rest of and and it was interesting because the US 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 tacoed China tacoed or China China backed or deescalated is spun as mutual deescalation um 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
(04:46) everything which yeah we've known that all along if you were honest you know if people are honest about the things and not that not that that wouldn't hurt them too it would uh but I think the most important thing is is they're done selling weapons to the US defense department they're done selling rare earth um uh selling rare earths into weapon system for the US defense department which is enormous and I think still not fully digested um you know might being digested by the gold market this morning, which is up 110 bucks as we speak, over $4,100 on the futures. Um, but that's got a lot more
(05:24) to go in my opinion to properly digest that message. So, um, I 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 earth. Yeah, and it seems like China feels like it is in a good position.
(05:55) 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 Lansancy 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 6 8 months have really been uh greasing greasing the wheels getting the the slopes ready
(06:32) 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, the US would send the military over and kick your head in.
(06:56) Like that's that has a big part of why Saddam was invaded, a big part of of of what Gaddafi was doing, as we know from Hillary's emails um once upon a time. And the Chinese have been doing this. And so they've they've seen the 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 um l