Last week, I shared a podcast featuring Luke Gromen discussing macroeconomic trends. After listening to it again, I realized how important the insights were, so I’ve put together this summary for those who may not have had time to listen to the full episode.

Toward the end of the podcast, Luke shared this story:

Like, you know, you know, I have friends that that grew up in Ukraine and, you know, they're American citizens now.

And, and they tell me a story about, you know, the mid to late 90s.

And they said, look, you know, we were the richest family in the village.

My dad was a doctor.

We had enough in the bank to buy 5 cars and they closed the banks on a Friday night and they reopened them a week or two later and we took the money out.

It was the same money.

We got every dime back and we bought groceries for the month with the amount of money that used to buy 5 cars.

Happens all the time.

Like the Americans are the only people in the world who don't think this kind of thing can happen.

And it's only because it's been 100, you know, 100 hundred thirty years since it's happened anywhere in America.

But this stuff happens all the time.

It happens all the time.

And look, I'm not saying you should live your life like assuming it's going to happen, 
But if you're living your life assuming it'll never happen, I think that's, I think that's folly.

This really resonated with me. As Americans, we’ve been fortunate compared to many parts of the world that have faced extreme inflation over the past several decades. While we’ve experienced persistent inflation—worse, in my opinion, than the government admits—it hasn’t hit us as suddenly or severely as in other countries.

As Luke points out, it’s wise to be prudent and prepare for the possibility of a rapid surge in inflation that could devalue our currency.

Here’s the podcast summary:

The USA’s Waning Leverage: Debt, Devaluation, and the Future of the Dollar

In episode #578 of the TFTC podcast, host Marty Bent sits down with Luke Gromen to dissect the shifting global economic landscape, the mounting US debt crisis, and the slow but steady devaluation of the dollar. Their conversation sheds light on why the US is losing its historical economic leverage—and what it means for investors and everyday Americans.

Debt and the Dollar: A Brewing Storm

One of the central themes of the discussion is the unsustainable trajectory of US debt. Gromen emphasizes that the US government has reached a point where servicing its debt—paying interest alone—requires an increasing share of national revenue. With rising interest rates and a growing deficit, the Federal Reserve faces a difficult choice:

• Allow rates to rise and risk a debt crisis, or
• Print more money and devalue the dollar to sustain the system.

Neither path is painless. If the Fed lets rates climb, markets could crash. If they print money, inflation erodes purchasing power, hitting savers and the middle class hardest.

De-Dollarization: A Shifting Global Order

Gromen and Bent also discuss the growing trend of de-dollarization—the move by other countries to reduce dependence on the US dollar in global trade and reserves. Historically, the dollar’s status as the world’s reserve currency has given the US unparalleled economic leverage. However, nations like China, Russia, and even US allies are increasingly looking for alternatives.

Why? Because holding US debt is becoming less attractive. Countries see how sanctions, inflation, and reckless spending weaken the dollar’s stability. As global trade shifts toward alternative currencies (e.g., yuan, gold, or commodities-based transactions), the US loses one of its most powerful economic tools: control over the global financial system.

What This Means for Investors

For investors, this discussion underscores the importance of real assets over paper assets. If the US continues on this path, holding fiat-based investments alone may not be enough to protect wealth. Instead, diversifying into assets that historically hold value in inflationary periods—gold, bitcoin, commodities, and select equities—becomes crucial.

As Luke Gromen warns, we may be entering a new era where the traditional 60/40 portfolio strategy (60% stocks, 40% bonds) no longer provides the safety it once did. Investors who fail to adjust may find their wealth eroded not by market crashes, but by the silent tax of inflation and currency devaluation.

Final Thoughts

The conversation in TFTC #578 highlights a stark reality: the US economy is at a crossroads. With debt levels soaring and the dollar’s dominance under threat, the Fed and policymakers face impossible choices. But for those paying attention, this is also an opportunity. Understanding these macro trends allows individuals to make informed decisions and safeguard their financial future.

Now is the time to think beyond the dollar and consider what true financial resilience looks like in an era of monetary uncertainty.

Follow-up Questions:

Q1: How does de-dollarization impact global financial markets, and which sectors or assets stand to benefit the most?

A1: De-dollarization reduces the US’s ability to export inflation and control global liquidity. Countries moving away from the dollar may increase demand for alternative reserve assets like gold, bitcoin, and commodities. This shift could benefit emerging markets, commodity-rich nations, and industries tied to hard assets, while negatively impacting US treasuries and debt-dependent companies.

Q2: If the US continues down this debt-driven path, what are the potential long-term scenarios for the dollar?

A2: There are three major scenarios:

1. Soft devaluation – The Fed allows inflation to erode debt over time while keeping rates artificially low.
2. Hyperinflationary collapse – If trust in the dollar erodes too quickly, it could lead to a severe crisis.
3. New monetary system – The US could adopt a gold-backed or commodity-linked currency to restore confidence.

Q3: How can individual investors prepare for a future where the dollar’s purchasing power is significantly weaker?

A3: Investors can hedge against devaluation by holding real assets like gold, bitcoin, real estate, and high-quality equities in strong sectors (e.g., energy, commodities, and technology). International diversification, exposure to foreign currencies, and reducing reliance on dollar-denominated debt are also key strategies.