🟢 [E6234] Foreign central banks have been net sellers of US Treasuries since 2014, with selling accelerating to $2.5T annual pace by September 2022. This structural shift away from UST accumulation by foreign sovereigns reflects erosion of the dollar-reserve system's demand side, forcing the Fed into the role of buyer of last resort for US government debt.

🟢 [E6226] Strong dollar makes FX-hedged Treasury yields deeply negative for foreign investors: -1.14% for Europeans and -1.05% for Japanese as of late 2022. Foreign central banks have been net sellers of USTs since 2014, accelerating sharply. Gromen argues the Fed will ultimately sacrifice dollar stability to prevent Treasury market collapse, implying structural USD weakness ahead.

🟢 [E6223] Gromen identifies unprecedented Treasury market dysfunction: for the first time in 60 years, USTs underperformed equities during a major stock drawdown. Brian Sack noted 'liquidity in the UST market has deteriorated further.' Foreign central bank selling accelerated to $2.5T annual pace in September 2022 while Treasury needs to issue $2.2T, creating a potential $5.8T annual supply glut.

🟢 [E6227] Gromen recommends a barbell portfolio: 25-30% cash hedging deflation risk, plus gold, gold miners, industrial equities, energy commodities/equities, and Bitcoin — positioned for either deflationary collapse followed by massive money printing, or a direct move to currency debasement. The 'COVID bubble rests atop the QE bubble, atop the shadow banking bubble, atop the banking bubble, atop the currency bubble.'

🟢 [E6231] Gromen warns of an 'Andrew Mellon' risk scenario where the Fed maintains hawkish stance longer than expected, causing deflationary collapse before the pivot. The layered bubble structure — COVID bubble atop QE bubble atop shadow banking bubble atop banking bubble atop currency bubble — means correction risk is severe. He recommends 25-30% cash as hedge against this deflation scenario.

🟢 [E6229] Energy commodities and equities are included as core holdings in Gromen's recommended barbell portfolio, positioned for the currency debasement endgame as Fed is forced to monetize Treasury debt. Physical commodity assets benefit from either path — deflationary collapse followed by massive money printing, or direct move to controlled debasement.

🟢 [E6228] Gromen includes gold and gold miners as core portfolio holdings in his recommended barbell positioning, based on thesis that Fed will ultimately be forced to monetize debt and debase the currency regardless of inflation. With US debt/GDP at 125% and $100T+ off-balance sheet obligations, currency debasement is the endgame that supports structural gold allocation.

💬 [E6233] Gromen's layered bubble framework — 'COVID bubble rests atop the QE bubble, which sits on the shadow banking system bubble, which relies on the banking bubble, which depends on the currency bubble' — implies systemic contagion risk across credit markets. The question of 'at what layer of bubble will the Fed make a determined defense' highlights potential cascading failures in private credit and shadow banking.

🟢 [E6224] Gromen describes an internal Fed 'civil war' between Powell's 'Make Bonds Great Again' faction pushing aggressive rate hikes to defend USD, versus Brainard's faction favoring debt monetization to inflate debt/GDP down. With US debt/GDP at 125% and $100T+ off-balance sheet entitlements, the Fed operates a binary switch — 'US & global economy on or off' — not a dial, and will ultimately be forced to restart QE.

🟢 [E6225] Treasury General Account drawdown expected to inject $228B in liquidity by year-end 2022, providing temporary relief. Debt ceiling resolution in 1H23 would give Treasury more flexibility. Gromen sees these as band-aids before an inevitable UST market crisis forces Fed balance sheet expansion regardless of inflation.

💬 [E6232] Gromen includes Bitcoin in his recommended barbell portfolio alongside gold, energy, and industrial equities as a beneficiary of eventual Fed capitulation and currency debasement. This positioning comes amid the FTX collapse in November 2022, suggesting conviction in Bitcoin's role as debasement hedge despite crypto market turmoil.

🟢 [E6235] Gromen recommends a specific barbell allocation: 25-30% cash for deflation hedging, with remainder in gold, gold miners, industrial equities, energy commodities/equities, and Bitcoin. This positions for either path — deflationary collapse followed by massive money printing, or direct currency debasement — reflecting the Fed's binary 'switch' rather than 'dial' dynamic at 125% debt/GDP.

🟢 [E6230] Gromen frames fiscal dynamics as a structural regime shift: Federal deficits at 7% of GDP at cycle peak, Federal spending at 22% of GDP, GDP dependent on rising asset prices. California's swing from $100B surplus to $25B deficit in one year, driven by tech layoffs and falling asset prices, foreshadows federal revenue collapses that will force increased Treasury issuance into dysfunctional markets.