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Luke Gromen, president and founder of research firm Forest For The Trees, warns that the U.S. dollar-centric global monetary system is breaking down but gold and Bitcoin BTC/USD are well-positioned assets.

What Happened: In a recent interview, Gromen argued that the U.S. government’s fiscal situation has become so precarious that it now requires negative real interest rates and continued stock market gains to remain solvent.

"The reserve currency issuer of the world cannot afford their debt unless real rates are negative over some sustained period of time," Gromen stated. He pointed out that in August, the U.S. government's "true interest expense" – including entitlements and interest payments – reached 150% of tax receipts.

Gromen believes this dynamic will force the Federal Reserve to cut interest rates aggressively, regardless of economic conditions.

While skeptical of proposed anti-inflation measures from presidential candidates, Gromen predicts inflation will rebound as the government seeks to inflate away its debt burden. He sees gold and Bitcoin as well-positioned assets in this environment, expecting gold to potentially reach $3,000 per ounce (currently $2,632 per ounce).

Why It Matters: Gromen expressed optimism about Bitcoin’s prospects alongside gold in the current economic environment.

He suggested that Bitcoin has likely attracted some investment that might have previously gone to gold mining stocks, noting, “Some portion of people that buy gold miners have historically been ‘Well, I want to own gold, but I want to own gold with a ticker.'”

He added that the narrative for these investors may be to buy Bitcoin if they want to own gold “with a leverage.” Gromen sees both gold and Bitcoin as well-positioned assets in a regime where the world’s most indebted nation requires negative real interest rates to service its debt.

"If stocks go down and stay down, the U.S. receipts will not cover true interest expense," Gromen cautioned, underscoring the government’s dependence on rising asset prices to fund its operations. He believes U.S. stocks must continue rising to drive consumer spending and tax receipts, making a major market correction unlikely.

What’s Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.

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