U.S. Has Reached ‘Choose Your Poison’ Moment: Save the Dollar or Save Treasuries | Gromen & Makori

Finance-focused Summary (Markets, Macro, Strategy, Numbers)

Core thesis: “Choose Your Poison” for the US Treasury / Dollar regime

Luke Groman argues the US is approaching an inflection point where policymakers may have to choose between:

• Supporting/saving the US Treasury market (through liquidity, intervention, yield management), or
• Allowing Treasury yields to rise (which would strengthen the dollar, but worsen the debt spiral).

He frames the trigger as the Iran conflict, specifically the closure threat/continued closure of the Strait of Hormuz, interacting with already-stressed sovereign debt dynamics and high inflation risk.

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Macro mechanics & risk chain (Debt spiral)

• Closing Hormuz → inflationary pressure (energy + supply chain disruptions)
• Higher inflation → upward pressure on sovereign bond yields
• Heavy debt burdens reduce rate tolerance:
  • Groman claims the US “true interest expense” is ~100% of receipts
  • Rising rates push interest/entitlements above receipts, worsening fiscal sustainability
• Feedback loop risk from large offshore dollar borrowing:
  • Higher yields + stronger dollar
  • Foreign dollar borrowers sell dollar assets / defend currencies
  • Growth weakens → further pressures → yields rise again
  • (“wash, rinse, repeat”)

Market evidence cited

• 10-year Treasury yield: ~3.94% → 3.9%, then “ripped” to ~4.5%
• S&P 500: down about 9% from late February to late March
• Three straight “terrible” Treasury auctions (March 23/24/25)
• Treasury volatility index:
  • Rising to about 115
  • He interprets 120–130 as a threshold for intervention

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Expected policy tools (“all of the above” approach)

If authorities try to keep yields manageable, Groman lists/mentions multiple tools and maneuvers:

• Dollar liquidity injections / reserve management

  • Not “QE” by name (he cites actions akin to RMPs / reverse repo management)

• Treasury buybacks via TBAC

  • TBAC = Treasury Borrowing Advisory Committee
  • He suggests buybacks expanded under a successor/administration change (he says “President Bessant”)
  • He says these tend to remove duration longer bonds in favor of shorter duration issues (supporting liquidity/yield control)

• Swap lines

  • Example discussed: UAE demanded dollar swap lines
  • He says “Bessant” responded

• Yield curve management / “jawboning”

  • He notes markets respond when yields approach ~4.4%
  • Mentions “peace deals” / reopening headlines potentially influencing yield levels

• Regulatory easing / SLR adjustments

  • Reduce how Treasuries count against bank capital ratios (supplementary leverage ratio treatment)
  • Goal: enable banks to hold Treasuries and continue lending

• Outright QE (as a last resort)

  • He calls it possible, but believes policymakers “don’t want to do it” first

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Key timeline / risk horizon

• Lagged effects: energy/supply disruptions impact inflation and expectations with delays of about 4–8 to 12 weeks
• Host’s near-term “deadline” question:
  • Groman doubts resolution within a week is sufficient
  • Even if reopened shortly, some supply chain/input effects may already be “baked in”
• Broader base case horizon:
  • 5–6 years for the gold reserve re-rating thesis to play out broadly

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Market Implications Described

Equities vs gold (relative purchasing power framing)

Groman describes a repeating pattern since early 2022:

• Equities up in USD terms, but down in gold terms
• Host cites:
  • S&P 500 down roughly 40–45% in gold terms since 1Q 2022 (while up in USD terms)
• Similar framing applied to NASDAQ

Implications

• Higher volatility expected in sovereign bond markets
• Potential for a “whoosh down” (sharp equity drawdown) if yields spike
• But longer-run equities could “rally” in USD terms as liquidity appears—while real purchasing power shifts toward gold

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Inflation & yield management conflict (“Sila and Karibdus”)

Worst-case risk:

• Further Iran escalation keeps Hormuz closed longer, making yield repression harder without weakening the dollar

Balancing act:

• Weaker dollar supports Treasury stabilization but risks higher inflation
• Higher inflation still pressures yields upward
• Policy must “stay between” constraints

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Oil-energy trade and sector effects

If yields are repressed and oil is also pressured downward (e.g., via reopening/settlement):

• “Risk-on” may favor tech/AI-linked sectors, especially those benefiting from lower oil costs

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Concrete inflation / commodity examples cited

• PPI: cited around ~6%
• Fertilizer shortages:
  • Claim: 48–78% of US farmers can’t get enough fertilizer
  • Wheat planting constraints; wheat limit up tied to lowest crop since 1972
• Copper:
  • Issues via sulfuric acid constraints
  • Import constraints tied to China export bans

Groman argues these demonstrate inflation persistence even if Hormuz reopening headlines arrive.

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Gold + “Neutral Reserve Asset” Thesis (with numbers)

Gold re-rating mechanics & targets

He argues gold must rise substantially relative to foreign-held treasuries to return to historical norms:

• Current ratio (market value of US official gold vs foreign-held treasuries): ~13%
• Historical range: 40–60%
• Implied move:
  • Gold up ~3–5x from current levels

Target range (rough example framework):

• If current implies ~$3,000–$5,000, then end-of-cycle target becomes:
  • ~$15,000 to $22,000
• Timing: end of cycle / ~5–6 years

He distinguishes scenarios:

• Base case: “reversion to mean”
• Dollar crisis: could be ~10x
  • Example cited: 1980 gold-to-treasury ratio ~130%

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“Gold vs oil” end-state / proposed framework

He discusses a speculative but concrete end-game:

• Peg gold to oil (fixed energy unit)
• Revalue gold such that:
  • ~500 barrels of oil per ounce of gold (and up to ~1,000 barrels in another example) define a stable energy-backed unit of account
• Concept: nations can set energy policy under that structure while stabilizing purchasing power

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Gold vs Bitcoin competition

• Gold and Bitcoin “compete” for neutral reserve asset status
• In this regime, Groman says gold is the “written-in” reserve asset more likely to be central
• Bitcoin behavior is described as more like a software/tech growth stock correlation (NASDAQ-like), not a durable emergency reserve asset

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Bitcoin Stance (explicit changes)

• He says they turned bearish on Bitcoin in mid-November 2025
• Personal action:
  • Sold most Bitcoin around ~$96,000
  • Around 23–24 ounces of gold per BTC
• Later:
  • BTC fell to ~12 ounces per BTC
  • Then bounced to ~16–17 ounces per BTC
• Price view:
  • Still expects long-term Bitcoin can reach prior levels (host references $200,000)
  • Near-term: less “runaway” behavior due to lack of a “real big print” (liquidity shock)
  • Also because Bitcoin hasn’t “separated from software”

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Base-case Global Macro Numbers (explicit forecast set)

For roughly 5 years, he outlines:

• DXY (US Dollar Index): in the 60s
• Gold: over $10,000
• 10-year Treasury yield: ~3.5%–4%
• Chinese yuan vs USD: around 4–5% weaker down from today
  • Reference: ~6.78
• Euro: stronger
• Pound: weaker
• Oil: around $80/bbl

Theme outcomes

• Stronger US industrial base
• More robust Chinese consumer
• More balanced trade

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Investor Positioning & Explicit Recommendations

Groman provides tilts (not a full portfolio construction):

• Overweight cash
• Overweight T-bills
• Overweight gold bullion
• Overweight gold miners
• Overweight US electrical infrastructure equities (“shovel and pick” for AI power demand)

Valuation / rationale signals

• Equities are described as in “La La Land” valuation terms
  • Uses an “adjusted Warren Buffett metric”:
    • (Equity market cap − federal debt) / GDP
  • He claims this historically implies ~60% upside when valuations are low
  • But says current conditions resemble past “bad times” where equity allocations were contrarian
• Mentions a “kryptonite” combination:
  • TNX (10Y yield) × oil
  • Only higher twice since the 1970s/55 years
  • Implication: don’t chase equities in a financialized economy

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Tickers / Instruments / Assets Mentioned

• US Treasuries (focus on 10-year yield)
• S&P 500
• NASDAQ
• Gold (bullion; gold miners)
• Bitcoin
• Oil (implied WTI/Brent; not specified)
• T-bills
• Cash
• IGV (software ETF mentioned as a chart comparison for BTC)
• AI / electrical infrastructure equities (no specific tickers provided)
• Policy/infrastructure tools/terms:
  • Yellen / Fed / QE (conceptually)
  • RMPs / reverse repo (policy tool reference)
  • TBAC (Treasury Borrowing Advisory Committee)

No other explicit equity/ETF tickers (e.g., GLD/AAPL) were stated in the subtitles beyond IGV.

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Disclosures / Disclaimers

• The host includes a framing along the lines of “not investment advice per se”
• The discussion later becomes partly positioning-focused
• No explicit formal “not financial advice” quote is provided beyond the host’s “not investment advice per se” framing

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Presenters / Sources

• Michelle McCrory (host; “The Real Story”)
• Luke Groman (top macro strategist; founder/president of Forest for the Trees (FFTT))
• Other referenced sources (non-presenters):
  • Jeff Curry (Goldman commodities)
  • Kubesi letter (used for dollar/payment statistics)
  • Named corporate leaders (used to describe China trip delegation)