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Fed Watch - Bitcoin and Macro


May 18, 2022

In this episode of the Fed Watch podcast, due to popular demand, I welcome Tom Luongo back on the show! Tom 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 podcast.

Fed Watch is the macro podcast for bitcoiners. In this episode, we start by getting a big picture view from Tom on the global situation, then dive into some specifics about Europe, the US, the Federal Reserve, Ukraine, and much more. We wrap up the show talking about what Tom sees for the US in the short to midterm, so, the next 3 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 Tom 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 Tom 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, et cetera. As Europe struggles and begins to cannibalize itself, all that 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. Tom asks rhetorically, “is Warsaw or New York closer to Ukraine?” As investors realize that this new conflict is not going away, and to fight it with economic weapons as they have been, they must destroy their own economies, money will rapidly flee Europe to the US. I’ll add, it will also flow into bitcoin.

The Federal Reserve is Serious

I ask Tom if he thinks the Fed will go through with uber-hawkish rate hikes. His answer eloquently lays out that Powell’s plans to raise rates back in 2017 was interrupted by Covid, 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 Tom Luongo is that the Fed, owned by Wall St banks and US monied interests, is trying to wash out the decade of malinvestment that’s built up since the GFC. He also frames it as a fracture in the relationship between US 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 Tom, 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 Tom does, but the globalists are “global communists” and will burn the global economy down before they admit defeat.

Bitcoin and US Fates are Intertwined

The last part of the episode, I ask Tom about my theory that, what is good for the US economy is good for bitcoin, at this moment in time. A majority of the bitcoin supply is likely held by US entities, the US has the largest share of mining, the largest share of bitcoin interested people, the most venture capital money, and some of the most lacks regulation. So, if bitcoin is to thrive in a major economy, it will be the US. 

Tom tends to agree with me on this, but breaks it down in more detail, saying there is a segment of Wall St that likes bitcoin, and those are the same people fighting Davos. They are planning a SWIFT replacement, and are friendly to Proof-of-work coins because they have money in it now, with mining taking off in the US.

I can’t cover all his comments in detail, because what is great about Tom 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 US 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 Tom’s entertaining storytelling ability.

That does it for this week. Thanks to the watchers and listeners. If you enjoy this content please SUBSCRIBE, and REVIEW on iTunes, and SHARE!