Luke Gromen, founder of FFTT, LLC, warns of escalating economic turmoil drawing parallels to the pre-2008 financial crisis. Debt will be repaid, but in increasingly less valuable currency, undermining purchasing power. Systemic leverage, not AI alone, will drive significant economic changes. The U.S. faces a $1 trillion budget cut to balance the budget, with 70% of revenue going to entitlements and 30% to debt interest. Political implications overshadow mathematical challenges.
Gromen predicts the current financial crisis will escalate into a panic phase, driven by affordability issues. Japan’s bond market signals worsening financial conditions, with the yen strengthening as yield spreads shrink.
The relationship between U.S. Treasury and Japanese government bond yields influences currency values, impacting global markets.