Luke Gromen doesn’t think the U.S. can print or tax its way out of its debt spiral anymore. The only viable reset, he says, may come through gold. His idea is simple but radical: revalue the nation’s gold reserves high enough to generate about $5 trillion in new money. That sum could then be used to buy back roughly 20% of all outstanding Treasury debt, instantly shrinking the debt load and pulling the debt-to-GDP ratio down from around 120% to near 100%.
That’s just the first-order effect. Gromen says once that $5 trillion enters the system, nominal GDP would likely surge for a couple of years, pushing the ratio even lower — maybe toward 80%. But the catch is obvious: a flood of new money means a burst of inflation, probably in the 10–20% range, much like what happened during the COVID stimulus. In that environment, no one would want to hold a bond yielding 4%, so the Fed would have to step in, suppress rates, and monetize debt outright.
Handled correctly, he argues, that inflation could actually be useful — a temporary shock that resets the system. But it’s a one-shot move. Undershoot the gold price, and inflation hits without solving the debt crisis. That’s why Gromen believes policymakers would have to go big — maybe revalue gold to $20,000 or even $30,000 an ounce — or risk watching the whole plan backfire.
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Credit to : The Metal Mindset