The Fed Can’t Let the AI Bubble Burst | Luke Gromen

— Fiscal dominance and currency devaluation: Luke argues the US fiscal position is unfixable without significant dollar devaluation. The only alternatives (cutting defense, slashing entitlements, or magic solutions like gold revaluation) are politically impossible or insufficient.

— Fed policy and Bitcoin timing: Warsh will likely tighten rates initially to establish inflation-fighting credibility, which Luke believes could pressure Bitcoin lower alongside tech stocks over the next few months. His long-term Bitcoin thesis remains intact, but he's waiting to buy back cheaper rather than chase price higher.

— AI bubble and systemic risk: The AI sector is debt-financed and valued as if it has zero risk, yet Chinese competition creates legitimate uncertainty. If growth slows (even while prices rise), a cascade of refinancing failures could trigger a financial unwind similar to 2008—not because prices fall, but because their rate of growth slows.

— Hamiltonian economics and reshoring: The administration appears to be moving toward higher tariffs, capital controls, and domestic production—a multi-decade project that will be expensive and inflationary. Long-term bondholders face real value destruction; this will require printing or gold revaluation to succeed.

— Wealth inequality and national stability: Peter Turchin's research shows elite overproduction and wealth inequality are now at their highest since 1855, correlating with political instability. The current K-shaped economy and Wall Street vs. Main Street divide threaten long-term US hegemony.

— Portfolio positioning: Luke advocates a 25/25/25/25 allocation (cash, gold/Bitcoin, real estate, equities) to survive hyperinflation, deflation, or currency devaluation scenarios. He personally holds ~3–4% Bitcoin (underweight from prior highs) and awaits clearer signals before reaccumulating.

— Avoid long-term bonds: Real value destruction is locked in if Hamiltonian economics and currency devaluation proceed as expected. Bondholders—primarily boomers—will be "destroyed in real terms."

— Consider a diversified, defensive allocation: A 25/25/25/25 split (cash, gold/Bitcoin, real estate, equities) makes you "very hard to kill" across inflationary and deflationary scenarios. This is more actionable than trying to time markets perfectly.

— Build optionality on Bitcoin: Even if you believe in long-term currency devaluation, patience may be rewarded. Watch for capitulation signals (forced selling by corporate treasurers, sentiment extremes) before committing fresh capital; Luke sees "a few split lips" but not yet blood in the water.