🟢 [E6739] Basel III gold regulations may force a transition away from USTs as the primary global reserve asset, triggering a new global reserve asset system. Gromen warns that unless the BIS has an ulterior motive to trigger a chaotic financial reset, regulators don't understand the market consequences of their actions.

🟢 [E6737] US structural position with 130% debt/GDP, -62% net international investment position, and $3T deficit creates structural headwinds for the dollar. China's investment in productivity tools to offset shrinking population versus US reliance on deficit-financed spending could structurally favor CNY over USD long-term.

🟢 [E6735] The proposed Standing Repo Facility would make USTs and bank reserves fungible, effectively nationalizing US funding markets and putting the government in charge of its own borrowing limits rather than bond markets. This removes market discipline from Treasury issuance and eliminates funding market volatility.

🟢 [E6738] Gromen argues an inflationary feedback loop exists: deficit spending to prevent GDP decline causes imported goods prices to rise, requiring ever-larger deficits. Unit Labor Costs correlate with and lead Core CPI by 12 months, with Gromen noting 'peak inflation is right now' as of May 2021. However, natural inflation peak could trigger positive real rates and deflationary collapse.

🟢 [E6742] Removing funding market volatility via the Fed backstopping credit markets should cause runaway asset inflation per the analysis, but the binary risk remains: if the Fed chooses collapse over continued inflation, or if a natural inflation peak triggers positive real rates, a deflationary collapse and severe market correction could follow.

🟢 [E6741] Draconian CO2 reduction mandates (e.g., Shell ordered to cut emissions 45% by 2030) may mask underlying 'peak oil' supply constraints. Environmental regulations cutting fossil fuel production make energy scarcity inflationary despite official environmental justifications, creating a structural supply deficit.

🟢 [E6736] Basel III NSFR rules going live end-June 2021 in EU/US treat unallocated gold liabilities with 0% funding factor and assets at 85% value, making traditional gold derivative trading unworkable. This could force a transition to physical gold markets and away from paper gold, potentially triggering a fundamental repricing of gold upward. UK implementation set for January 1, 2022.

🟢 [E6734] Fed monetary policy has become a binary 'switch' rather than a 'dial' with only two settings: inflation or collapse. With US debt/GDP at 130%, government at 22% of GDP, and NIIP at -62%, any GDP decline risks a debt crisis, making traditional monetary tightening structurally impossible without triggering economic contraction.

🟢 [E6740] Gromen predicts the early 2020s will mark the beginning of a price level target regime change for Advanced Economy Central Banks, moving from inflation targeting to effective monetary dominance. The Standing Repo Facility represents nationalization of funding markets, described as the 'clown car phase of capitalism' with runaway asset inflation as the structural outcome.

💬 [E6743] China is investing in productivity tools to offset its shrinking population demographic decline, contrasted with US reliance on deficit-financed spending for a rising working-age population. This productivity-focused approach could structurally benefit China's economy relative to the US, though reshoring could prove more deflationary than inflationary as a counter-thesis.