Macro expert Luke Gromen says the winner of the November US presidential election can do something to effectively tame soaring inflation rates.
In a new interview on the What Bitcoin Did YouTube channel, podcaster Peter McCormack asks Gromen what the next US president can do to strengthen the dollar and reverse the trajectory of “massive inflation.”
[adinserter block="1"]Gromen says one way to combat inflation now is to offer long-term Treasuries that come with low yields. According to the macro guru, investors will flock to the offering even if the interest rate is low if the participants are rewarded with Bitcoin (BTC).
“We’re going to cut 30-year Treasury yields, we’re going to issue $5 trillion of 30-year Treasuries at 2.5% and each one of them is going to have a Bitcoin kicker…
You can go by the percentage of par struck at the day you issue them.
There’s no credit risk to these securities. There’s never ever going to be credit risk to these securities. The only risk to holding a long-term Treasury, [or a] long-term sovereign bond in any country really is the value of the currency.
And I do that, I’ve taken away all the inflation risk.”
A 30-year Treasury at a 2.5% yield suggests that interest rates are stable over a long period of time.
Gromen explains that big businesses rely on interest rates to determine the cost of capital. If interest rates change from time to time, these businesses would have to adjust their prices to cover the additional cost of borrowing capital.
According to the macro expert, the stability of interest rates allows big businesses to plan years ahead knowing full well that the cost of capital will not significantly change. He notes that an unchanging interest rate would enable corporations to compete and become very productive.
Gromen believes the scenario would eventually lead to stable prices of goods and services.
“For so many years, Wall Street has controlled the policy discussion in Washington… But the real economy that really for most of us that when the lights come on, it’s this real market that needs to have some semblance of the real cost of capital for 10 and 20 and 30-year projects…
That cost of capital needs to be solid [and] well understood for us to do strategically what we are trying to do and it’s not being allowed.”
At time of writing, Bitcoin is trading for $66,289.
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