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In this episode of the “Fed Watch” podcast, due to popular demand, I welcome Tom Luongo back on the show! Luongo is one of my favorite writers due to his entertaining prose and deeply refreshing insight on global macro, geopolitics and currency markets. He is also a long-term Bitcoiner, discussing it for many years in his writing and podcasts.
“Fed Watch” is the macro podcast for Bitcoiners. In this episode, we start by getting a big picture view from Luongo on the global situation, then dive into some specifics about Europe, the U.S., the Federal Reserve, Ukraine and much more. We wrap up the show talking about what Luongo sees for the U.S. in the short to midterm, so, the next three to 24 months. Below, I’ll provide a little more detail on what was said, but this is a must-listen episode!
The Sick Man At The Table
The first question I ask Luongo is, is he as bearish as everyone else? It seems everywhere we look, people are screaming about bear markets and collapse, from macro to geopolitics to bitcoin. However, I think this collapse narrative is overdone, especially for the United States. I ask Luongo to give us his broad picture of the state of the markets.
He starts in by identifying the sick man at the table, that being Europe. Europe is hit the hardest by the forces that have been unleashed right now: rising commodities prices, rising inflation, loss of confidence in institutions, etc. As Europe struggles and begins to cannibalize itself, all the capital in investment portfolios in Europe will eventually have to flow somewhere, and it’ll flow to the United States.
The conflict that has started in Ukraine is on Europe’s doorstep and, specifically, on the doorstep of the best economy in Europe over the last decade: Poland. Luongo asks rhetorically, “Is Warsaw [Poland] or New York closer to Ukraine?” As investors realize that this new conflict is not going away — and then fight it with economic weapons as they have been — they must destroy their own economies. Money will rapidly flee Europe to the U.S. I believe that it will also flow into bitcoin.
The Federal Reserve Is Serious
I ask Luongo if he thinks the Fed will go through with uber-hawkish rate hikes. His answer eloquently lays out that Jerome Powell’s plan to raise rates back in 2017 was interrupted by COVID-19, and now Powell is going scorched earth to raise rates to break the back of every other central bank and rival currency.
The reason the Fed will do this, according to Luongo, is that the Fed, owned by Wall Street banks and U.S. monied interests, is trying to wash out the decade of malinvestment that’s built up since the Great Financial Crisis. He also frames it as a fracture in the relationship between U.S. monied interests and the globalists in Europe. We can’t understand the Fed without understanding the Davos crowd’s intent to rule the world or burn it down.
According to Luongo, the Federal Reserve will raise rates continually until 2024, to break the back of Davos and the radical globalist/communist objectives. I tend to agree with him. Perhaps I wouldn’t put it as colorfully as Luongo does, but the globalists are “global communists” and will burn the global economy down before they admit defeat.
Bitcoin And U.S. Fates Are Intertwined
In the last part of the episode, I ask Luongo what he thinks about my theory: What is good for the U.S. economy is good for bitcoin, at this moment in time. A majority of the bitcoin supply is likely held by U.S. entities, the U.S. has the largest share of mining, the largest share of bitcoin interested people, the most venture capital money and some of the most lax regulation. So, if bitcoin is to thrive in a major economy, it will thrive in the U.S.
Luongo tends to agree with me on this but breaks it down in more detail, saying there is a segment of Wall Street that likes bitcoin, and those are the same people fighting Davos. They are planning a SWIFT replacement and are friendly to proof-of-work cryptocurrency because they have money in it now, with mining taking off in the U.S.
I can’t cover all his comments in detail because what is great about Luongo is he takes threads from many different topics and weaves them together into a refreshing perspective.
After the above exchange, we get into Bitcoin’s future in regards to Europe. While we both are relatively bullish on the U.S. economy over the next 10 years — and that will be good for bitcoin — we are also both very bearish on Europe — and that, too, will be good for bitcoin — as it gives European capital a reason to flee into bitcoin.
Again, this is a must-listen episode, with deadly serious topics mixed with Luongo’s entertaining storytelling ability.
That does it for this week. Thanks to the readers and listeners. If you enjoy this content please subscribe, review on iTunes and share!
This is a guest post by Ansel Lindner. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.