The Peter McCormack Show #153 - Luke Gromen - The AI-Debt Collision Breaking the Financial System
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Mar 4, 2026 
Luke Gromen, macro strategist and founder of FFTT LLC, explores sovereign debt dynamics and the clash between AI-driven deflation and a debt-dependent system. He discusses bond market warnings, signs of an acute fiscal break, portfolio hedges like gold and cash, and how rapid AI adoption could accelerate economic stress and social fallout.
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Yen Weakness Despite Higher JGB Yields Signals Stress
- Japan's bond market signalled rising sovereign stress when the yen weakened despite JGB yields becoming more competitive versus US Treasuries.
- Gromen interprets that divergence as markets fearing a near-term Japanese debt blowup and return to yield-curve control or bond-market crash.
Control What You Can And Stay Nimble For Opportunities
- Focus on what you can control: reduce leverage, improve health, and hold conservative liquid assets to survive systemic shocks.
- Gromen emphasizes being nimble with capital to buy cheap assets during short severe drawdowns when governments eventually print.
AI Deflation Collides With A Debt Based System
- AI will cause rapid productivity-driven deflation that is mathematically incompatible with a debt-based system requiring inflation to service liabilities.
- Gromen argues even modest job losses via AI, amplified by systemic leverage, can trigger mortgage and credit distress cascading across the economy.