Checking in with Tom Luongo, Ep #57

Tom Luongo is a former research chemist and part-time goat farmer. He publishes the “Gold, Goats, ‘N Guns” blog, a monthly newsletter, and records podcasts. His work is also published in Bitcoin magazine and syndicated regularly on sites like ZeroHedge, Investing.com, etc. Tom has a unique way of connecting geopolitical dots. In this episode of UPThinking Finance™, I pick his brain about some of the latest things he’s written about.

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LISTEN IF YOU ARE INTERESTED IN…

[1:56] The parallels between Shadowfist and geopolitics
[12:53] The last 10 years of history
[22:18] Does the long-term end goal ever change?
[28:09] Welcome to Splitsville
[34:17] Is it “every man for himself?”
[38:03] LIBOR, SOFR, and the Fed
[49:00] Chevron, Trump, and Jarkesy

The parallels between Shadowfist and geopolitics

Shadowfist is a now-defunct collectible card game similar to Magic: The Gathering or Pokemon. It came out in the mid-90s. It was a brilliant multiplayer game. Its vibe was “What if every conspiracy theory were true?” From a game design perspective, it was groundbreaking.

Most games consist of you attacking someone else. There’s no way for other players to get involved. In Shadowfist, they had to keep the board just balanced enough that everyone was in a constant state of rebuilding while playing offense and defense.

To excel at the game, you had to become a diplomat. Tom would talk other players into taking their “optimal” play, which was also his optimal play. The game revolved around saying things like, “If you don’t do this, he’s going to do this and win.”

Tom’s goal was to make the game last long enough to get to his next turn. He manipulated people in every way possible by giving them good advice. He was telling them the truth that was also in his best interests.

Tom was teaching himself how to read multivariable problems, assess everyone’s point of view, and see solutions. Geopolitics is nothing but a big metagame.

Powell’s power move

Powell is raising the cost of dollars on the rest of the world. His job is to make sure that everyone who needs dollars outside of the United States pays through the nose for his resources. Tom believes that the Fed is trying to take out the Euro-Dollar System.

The European Central Bank ECB had to follow the Fed higher and do yield curve control or the bond spreads would become comical. Lagarde will either have to continue “fighting inflation” or save her banks. The European banking system is more vulnerable to rate hikes than the US banking system.

LIBOR was the London Interbank Offer Rate. It was a way to price euro-dollars. The British Banking Association took over LIBOR in 1984 and it became the standard for the dollar-pricing system around the world. How did that happen? Because there wasn’t an alternative. The Fed wasn’t in charge of its own monetary policy.

Then the Fed created SOFR (the Secured Overnight Financing Rate) to replace LIBOR in the United States. Every transaction that’s quoted through SOFR is based on real-world secure transactions where someone bought dollars and pledged a security.

The United States economy is now more resilient because of SOFR. We no longer have to pay the tax bill to subsidize everyone else’s social welfare systems and grand plans to subvert our economy.

Gold Goats ‘N Guns

We need to train the next generation to think critically. The ethos of “Gold Goats ‘N Guns” is to teach people how to interpret what they’re seeing because good foundational principles of how to look at the world can be applied to anything.

The scientific method trains us to get rid of outliers. What we should be doing is looking for the outliers that poke holes in our arguments. The outliers will be the catalysts for change. They will be leading indicators. This framework is beginning to take hold.

Tom Luongo is not affiliated with or endorsed by LPL Financial or Capital Investment Advisers.

Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

The financial professionals associated with LPL Financial may discuss and/or transact business only with residents of the states in which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state.
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RESOURCES MENTIONED

The Jarkesy Case: https://www.supremecourt.gov/opinions/23pdf/22-859_1924.pdf
Shadowfist: https://en.wikipedia.org/wiki/Shadowfist

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CONNECT WITH TOM LUONGO

Tom’s Patreon: https://www.patreon.com/GoldGoatsNGuns
Gold Goats ‘N Guns: https://tomluongo.me/
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