A top financial expert is warning investors that holding US Treasury bonds could be a risky move. Luke Gromen, a veteran macro investor, believes the value of the US dollar will eventually crash, making those bonds worth much less.
The Problem with US Manufacturing
Gromen argues that the US’s lack of domestic manufacturing is a major problem, especially in times of conflict. He points out that Russia, despite having a much smaller economy, can produce essential goods like oil, while the US relies heavily on services and “flipping” assets like houses and digital art.
“We might have 10 times the GDP Russia has, but Russia produces oil and stuff,” Gromen says. “And some big chunk of our GDP is flipping monkey JPEGs back and forth at ever higher prices and flipping houses back and forth, which is fine in peacetime, but in wartime they’re useless. And so the Russians are outproducing us with one-tenth our GDP.”
The Real Value of US Debt
Gromen believes the US’s $35 trillion debt is a “big short,” meaning its value will significantly decrease. While investors will technically get their money back, the purchasing power of that money will be much lower.
“You’re going to get every dime back in Treasury bonds you own, but it’s going to go from buying you a diamond necklace to a cubic zirconia necklace to crackerjacks on a string,” Gromen explains. “That’s what Treasury bonds are going to do and that’s just how these things work out. The boomers are going to pay for their healthcare one way or another.”
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research before making any investment decisions.
/p>
