Luke Gromen: The Bull Market That Loses You Money | #645

**Meb Faber** (0:00)
Tell us what the Stupid Washington Consensus is.

**Luke Gromen** (0:02)
The Stupid Washington Consensus is what Vice President JD. Vance referred to the financializing of the US economy. It's as big or bigger than the Berlin Wall coming down in 90, and every bit as big as Nixon clothes in the gold window in 71 120% at the GDP, multiple dumb wars.

**Meb Faber** (0:29)
Welcome to The Meb Faber Show, where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better Investing starts here.

**SPEAKER_3** (0:42)
Meb Faber is the co-founder and Chief Investment Officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria's funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.

**Meb Faber** (0:58)
What is up, everybody? Summertime, almost over. Not so much here in LA, maybe in Cleveland. Today, we got another awesome episode. Today's guest is Luke Gromen, founder of the macro research firm, which I've been reading for years, Forest for the Trees or FFTT for short.
Luke is one of the sharpest voices out there on dollar, gold, treasury, how the plumbing of the global monetary system actually works. Luke, welcome to the show.

**Luke Gromen** (1:24)
Thanks for having me here, Meb. It's great to be here. I'm excited to talk to you.

**Meb Faber** (1:28)
I wanted to kick off with a fun question. Tell us what the stupid Washington consensus is.

**Luke Gromen** (1:34)
The stupid Washington consensus is what JD. Vance, Vice President JD. Vance referred to the financializing of the US economy after the fall of the Berlin Wall. He gave a speech in, I believe, it was Munich in February or March or so of 2025, in which he said that everybody followed the stupid Washington consensus and deindustrialized and offshored their industrial base to China, essentially, and importantly, their defense industrial base, and said that Germany had been the only nation that refused to but had in recent years begun following the stupid Washington consensus as well. And so it was an early sign, in my opinion, that the Trump administration, part two, part two, was going to actually really press towards reshoring, etc. Because you had Trump, you had Vance, you had Besant, everybody reading from the same hymnal on that front. So it was good for a laugh at the time, for sure.

**Meb Faber** (2:38)
And there's something that's been popping up a handful of times across Besant, Trump, Vance, discussing this phrase, Hamiltonian economics. And I heard it the first time, and I was like, what are they talking about? And I heard it again, I heard it again. So will you tell us a little bit about what this means? And then what are they referencing? Do they know what they're referencing? And then what is the actual implications?

**Luke Gromen** (3:01)
In a nutshell, Hamiltonian economics are high tariffs, protection of domestic industry and a neutral reserve asset. Hamiltonian economics are the exact opposite of what the United States has been doing for the last 35, if not 40 years, certainly since the fall of the Berlin Wall.
And arguably since Volcker in the early 80s. We've been doing the opposite of it. It's called Hamiltonian economics for Alexander Hamilton, First Treasury Secretary, who wrote a report on manufacturers, I think he called it, in 1791 Gave it to Congress, early days of the United States, and basically says, look, if you want to become a great power, you have to put up trade barriers and make your own stuff and become largely self-sufficient in a lot of things. And it set the tone for certainly the first 50, 60 years of the United States.
Bringing it forward, we've seen in the second Trump term talk about Hamiltonian economics over and over. We had in 2025, Trump didn't say Hamiltonian economics specifically, but he said early in his second term, we want to take the US back to when it was richer and more powerful than ever before. 1870 to 1913, when we were taxing foreigners to pay for America, rather than taxing Americans to pay for foreigners. And that's as good an explanation of Hamiltonian economics in a nutshell. This was followed by earlier, obviously, the stupid Washington Consensus comment by JD. Vance came out about two months after Trump said that.
And Vance had made multiple comments around this front in 2023 as a senator. He goes as far as says, I think the dollar's reserve status is no longer a positive for the United States. It's now a negative for the United States. We've hollowed out our manufacturing. Another nod towards Hamiltonian economics before Vance was ever appointed by Trump as our vice president. Fast forward another, call it eight to nine months, we have US Trade Representative, Jameson Greer at Davos, who flat out said, we are going back to Hamiltonian economics, cited the Hamilton paper. This kind of got dropped until, until Hamiltonian economics came back up with Secretary Besant, Treasury Secretary gives a speech at the America 250 gala at the New York Economic Club, which is obviously sort of a big, a very politically connected group of people, particularly around the finance, politics beltway. And he says, we're pursuing Hamiltonian economics. And just in case anybody thinks that he was talking out of turn, he publishes a Wall Street Journal op-ed the same day, saying flat out says we're doing Hamiltonian economics. And so I think it's a super important recognition of a shift in policy. And for 40, 50 years, we've all been working in markets where, I'm not more than 50 years, but 30, 30 plus years, we've been in markets where the system was anti-Hamiltonian economics. It was globalization. It was neoliberalism. It was quote unquote free trade. And what that looked like was America offshores its labor, it offshores its factory base to the lowest cost provider. It buys stuff from them, it exports dollars. Those dollars are recycled into US Treasury bonds and US financial assets. That helps finance deficits. And it leads to a very predictable set of responses slash policy outcomes slash symptoms. You end up with a hollowed out defense industrial base. You end up with a hyper sized financial sector. You end up with rapidly growing wealth inequality led by the financial sector. Free trade and anti-Hamiltonian policies are very good for Washington, and they're very good for Wall Street, and they're very bad for America, and in particular, the middle and working classes and the US industrial base. And that's exactly what we've seen since 1982, but especially after the Berlin Wall came down.