Tom Luongo: London Closed the Strait of Hormuz

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Tom Luongo came back on the show this week and immediately reframed the entire Iran conflict narrative in a way that I think is right and that almost nobody is telling publicly. The headline everyone ran with was Iran closed the Strait of Hormuz. Tom's read, and I think he's correct, is that Lloyd's of London closed the strait before Iran fired a meaningful shot. When you cancel shipping insurance on every tanker in the region, those vessels become legally immovable and tactically indefensible overnight.

Iran didn't need to do much. The tankers were already sitting ducks.

That reframe cascades into a much bigger argument about what this conflict was actually designed to accomplish, and it has very little to do with Iran's nuclear program. The real target is the Eurodollar order and, specifically, the European sovereign bond market. France is the weak link. Christine Lagarde is running out of road at the ECB.

And Bessent is running a Treasury buyback operation that is quietly retiring US long-term debt liability at cents on the dollar while all of this unfolds.

I came into this conversation willing to check my own priors out loud. I paid $126 to fill up the Tahoe. I don't love that. But the Armageddon calls haven't materialized, oil flows from Venezuela have buffered supply, WTI is recovering toward pre-war levels, and on the deal side, things look better than I expected six months in.

Tom gave me the framework to understand why. This is a long one, and worth every minute.

Key takeaways

• Lloyd's of London, not Iranian missiles, closed the Strait of Hormuz. Canceling shipping insurance rendered tankers legally immovable, turned them into sitting targets, and handed Iran the ability to write headlines by blowing up a ship here and there without actually shutting anything down themselves.
• The real casualty of the Iran conflict is the European sovereign bond market. France is the weakest leg of the tripod. Lagarde is doing yield curve control at the ECB without public acknowledgment, and she has reached the point where she can save the bond market or the euro, but not both.
• Bessent is retiring US long-term debt liability at a discount. Buying back bonds issued at 2% coupons now trading at 75 cents on the dollar converts a $1.5 million future liability into a $750,000 current payment and clears the balance sheet. That's the game.
• Europe hates Bitcoin more than anyone, and it is not a coincidence. MiCA wiped out the majority of exchanges. France is allegedly letting KYC data leak to kidnapping gangs targeting Bitcoin holders. The price suppression around the $86K level reads as coordinated to Luongo's technical eye, and the quarterly close flipped the bear trend.
• The DARPA-Bitcoin creation story may have a true nugget with the opposite conclusion. Not a rug pull, but potentially a US-designed antipode to the corrupted Eurodollar gold, silver, and oil markets. Europe's hostility to Bitcoin is the tell.
• The Constantine/solidus analogy points to a decades-long arc, not an election cycle. Bitcoin as the reserve layer, stablecoins as the spending layer on top, with a multi-decade implementation period before the payoff. The people screaming for a 49-0 blowout are watching the wrong game clock.

Lloyd's Closed the Strait Before Iran Fired a Shot

The narrative around the Strait of Hormuz has been mostly backward from the start.

Tom's framework: when Lloyd's of London pulled shipping insurance from the region, that single move rendered tankers legally unable to operate. You cannot sail an uninsured vessel through a war zone. The tankers stopped moving not because Iran had the capability to close the strait by force, but because the legal and financial infrastructure underpinning global shipping made it impossible to move.

Iran's degraded missile capability was then just enough to blow up an occasional tanker, write a headline, and pump Brent crude. That's the whole mechanism.

That distinction matters when you look at the actual oil market data. At the time we recorded, WTI was trading around $88.50 while Brent sat near $100.50, a $12 spread. Tom reads that kind of spread as a tell, not a reflection of genuine supply disruption.

"The Brent paper oil market is desperate to keep the price of oil up because somebody's going to go broke if it collapses."

Brent is, as he puts it, effectively the world's largest contract for difference. It is a purely financial contract. WTI is physically settled. When the spread blows out that wide, someone is short collateral and needs the Brent price elevated to keep derivative positions solvent.

The physically settled market tells the real supply story, and WTI trending lower tells you what it actually is.

Venezuela's role in this matters too. I've been saying for a while that Maduro was first in the order of operations deliberately. If you are going to disrupt Iranian oil flows, you show the American people that alternative supply is coming online first. The Venezuelan crude import ramp-up was that proof of concept. It was sequenced on purpose.

You can see it in the Iraq dinar devaluation as well, the downstream pressure from the Hormuz disruption is real, but it is being managed at the margins in a way that the Armageddon narrative never accounted for.

The Real Story Is the European Sovereign Bond Market

Once you accept that the strait closure was a financial and legal operation more than a military one, the question becomes: who benefits and who pays?

Tom's answer is the European sovereign bond market, and France in particular. He called France as the weak link about nine months before we recorded, and the data has borne it out since.

His method is straightforward: track the French-Italian spread, the German-Italian spread, and the US-German 10-year spread simultaneously and map them against geopolitical calendar events. What jumps out is that Lagarde is sitting hard on the German 10-year yield, using the German bund as the anchor for the entire European bond sector. If she controls German yields, she can theoretically hold the Italian, French, and peripheral spreads in check. Except she cannot do it infinitely, and the cracks are showing.

In the two weeks before we recorded, the US-German 10-year spread had blown out from negative 1.5 to positive 1.8. The German-Italian spread widened 30 basis points. She is sitting on the German 10-year at 3.5% and cannot let it go higher.

The problem is she has no carry trade left to fund the operation. The Bank of Japan keeps raising rates and letting the long end rise, which kills the yen carry that was backstopping the whole thing.

Tom's blunt summary of where Europe sits right now: they can save the bond market or save the currency. Lagarde is choosing the bond market, which means the euro devalues. The euro-yen cross had been held in a tight band between 181 and 186 for over a year. By the time we recorded, it had broken below 180 on a weekly closing basis and was sitting at 176.

The pound was crashing. The US-UK 10-year spread collapsed to 7 basis points briefly before blowing back out.

The underlying fuel for all of this is the long-dated Treasury position European central banks have accumulated. By Tom's reckoning, and the TIC data supports the directional argument, the European zone of control, Bank of England and its subsidiaries plus most of continental Europe, accumulated roughly $2 trillion in long-dated US Treasuries over five years, bought at 2%, 2.5%, 3% coupons. Now they are dumping them at 75 cents on the dollar to raise the dollars needed to unwind currency forwards and yen carry positions. Which brings us to Bessent.

Bessent's Buyback Is the Quiet Kill Shot

The Treasury buyback program is the piece of this that most people are not talking about enough.

Tom walked the math live on tape, and it is worth following. Take a 30-year bond issued ten years ago at a 2% coupon. A million-dollar bond pays $25,000 per year in interest. Over the remaining 20 years, that is $500,000 in interest payments plus the million-dollar principal at maturity: $1.5 million in future US government liability.

Now the Bank of England, sitting on that bond at a loss, dumps it on the market at 75 cents on the dollar. If Bessent buys it for $750,000, the US retires the full $1.5 million future liability for a $750,000 current payment and saves the difference.

"He's picking and choosing the ones he wants that are the best value, the ones that he knows are going to lower the future and present liabilities of the United States."

That is the buyback program in plain English. The Europeans are forced sellers into a buyer who has unlimited capacity at their currency, and the buyer is systematically clearing the liability stack at a discount. You can track the mechanics in the Treasury's TIC data, which shows central bank flows into long-dated US debt in exactly the categories Tom is describing.

The flip side of the long end is the short end. Tom's argument is that the incoming Fed chair, by raising rates modestly at the front and steepening the curve, uncovers non-linear demand for T-bills. He frames it as going from $40 billion per day in T-bill demand at 3.75% to potentially $150 billion at 4%. That liquidity underwrites the stablecoin market, funds short-term credit to industry, and finances the reindustrialization.

Bear flattener on the long end, demand ramp on the short end. The architecture is coherent, and Europe has no equivalent play because nobody is buying German bunds or French OATs to give them the same room to maneuver.

I have been tracking the MOVE index for six months watching this play out. The volatility spikes, but Bessent keeps containing them. That is not an accident. The US holds the better hand in a world where everyone is playing the same game and the question is just who can sustain higher cost of capital longest.

The post-WWII order breaking apart is exactly the backdrop this strategy was built for.

Bitcoin in the Crossfire, and Why Europe Hates It Most

The Bitcoin section of this conversation is where things got interesting.

Tom's technical read: the quarterly close reversed a three-bar downtrend from the $125,000 peak. One-bar bullish reversal against a trend that had a 95% historical probability of continuing lower. By his read, the Bitcoin bear market is technically over.

Since then, the daily action has been an $83,000 to $86,000 roller coaster, bouncing $2,500 every 24 hours. That kind of pinning is a tell.

"Someone is desperately trying to hold the market back from going to 90 grand or 95 or back to 100."

Who? Tom's lens points to Europe. MiCA regulation wiped out the majority of exchanges operating in the EU. That was the regulatory vector. Then I raised something that's been on my mind: France is allegedly letting Bitcoin holders get kidnapped and tortured, with people inside the tax authority selling KYC and AML data on wealthy Bitcoin holders to Moroccan gangs.

There have been documented crypto kidnapping incidents in France through 2024 and 2025. Whether tax-authority data specifically was involved in those incidents is, per reporting available at time of recording, Marty's characterization of what he was seeing. But the pattern, regulatory pressure plus physical intimidation plus price suppression, reads as a coordinated effort to keep European capital out of Bitcoin and inside a system that Europe can still control.

The DARPA steelman is worth sitting with, even if you don't buy it fully. Tom floated it as a hypothesis worth testing rather than a claim. The classic anti-Bitcoin argument is that DARPA created it and it's a rug pull. Tom's reframe: what if the nugget of truth is that it was designed, but designed as the antipode to the corrupted gold, silver, and oil markets that the Eurodollar system has bent completely out of shape?

Launched October 31, 2008, right after Fannie and Freddie were nationalized in September, right before the election. Designed to be the thing that the old system cannot control. Europe's hysterical hostility to it would make a lot of sense in that frame.

I was literally talking about this the previous Friday. I am not asserting it as fact. But it is worth thinking through.

The High Table, France, and Who Is Actually Running This

Tom has been cautious for years about the "City of London" shorthand, and he clarified it again here. His preferred frame is the High Table, borrowed from the John Wick films, which he only half-jokingly calls a documentary.

His point: everywhere you think it's evil America doing something nefarious, look again, because it is probably London selling you that frame while doing the nefarious thing itself. The money flows through the City of London, its shadow banks in the Caribbean, Hong Kong, Singapore, Dubai, and Zurich. That does not make London omnipotent. Tom is explicit about that.

There are multiple franchises at the High Table, the Russian, the European, the Italian, the British, the American, and they are fighting amongst themselves. But the center of the Eurodollar liquidity pump sits in London, and that shapes everything.

France is a specific node in this. There is a longstanding relationship between the IRGC and France that Tom has been tracking. The French bond market's volatility charted against the Iran conflict timeline is not random. He started watching the French-Italian spread specifically and mapped it to geopolitical events, the volatility on that spread went quiet the day the 12-day war ended last summer and has been drifting steadily in one direction since.

The riots in France fit multiple interpretations simultaneously. One read, which Tom engages with seriously: the French government may have incentive to allow social unrest if it creates a pretext for emergency fiscal measures when the bond market is imploding. Another read: the government has simply lost the ability to control organized violence because of who it has allowed into the country and where. Both can be true.

Regarding the RAF Riverford incident Tom raised: he was explicit that his attribution of it to SAS, MI6, or Ukrainian special forces is his hypothesis and could be wrong. His words: "I could be wrong about that, it could be my fan fiction." I'm not going to go further than he did on that.

The Midterms, the Libertarian Patience Problem, and Frog Twitter

The libertarian contingent demanding a 49-0 blowout is going to be disappointed, and they should examine why.

Tom's argument on impeachment is simple: zero probability. Republicans will not lose the Senate, and the math is not close. By his count, something like 17% of the Senate is turning over in January from retirements and primary losses alone, and most of the departures are the squishes. McConnell gone. Thom Tillis gone. Bill Cassidy gone. John Cornyn gone.

Darlene Graham winning South Carolina. The Senate that comes back in January is structurally more loyal to the direction this administration is taking than anything we have had in recent memory.

On polling: Tom cited Susan Collins' 2020 race as the benchmark for how seriously to take the current numbers. The RCP pre-election average showed her losing by somewhere between 6 and 12 points. She won by roughly 8.6. The polls are not real. They are a manipulation vector.

Keep that in mind when you see the doom scroll on Frog Twitter.

The deeper frustration is with people who cannot distinguish between "this isn't what I wanted" and "this is going the wrong direction." Trump got Ross Ulbricht released. He is reindustrializing the country. The Clarity Act failing to pass Congress led to the administration telling the SEC, CFTC, and OCC to write the rules anyway. That is an administration that knows how to execute regardless of congressional calendar.

"People want a 49 to 0 blowout. It was never going to be that way."

You are moving the ball forward in a contact sport against a team that is fighting back hard. Winning 35-21 is still winning. The scoreboard matters more than the margin.

Constantine, the Solidus, and the 700-Year Bitcoin Analogy

I recorded with a Roman historian the Friday before this conversation, and the Constantine parallel has been sitting with me since.

Constantine introduced the solidus and it took roughly two decades to implement properly. After that, you had something in the neighborhood of 700 years of Byzantine monetary stability anchored by that gold coin. The solidus functioned as the reserve layer. On top of it, silver coins handled everyday transactions, the spending layer.

The architecture was layered and it took time to cement, but once it did, it held for centuries.

That is exactly how I see Bitcoin and stablecoins playing out. Bitcoin is the solidus. It is the reserve asset, the thing that anchors the system. Stablecoins are the silver coins, the spending layer on top. The transition is a multi-decade process, the same way Constantine's reform was, and Judy Shelton's arrival at Treasury is a signal about the direction of travel, whether that ultimately means gold-backed bonds, Bitcoin-backed bonds, or something else we have not named yet.

Tom agreed we should save the full crypto and stablecoin conversation for the follow-up episode on his show. That is coming. But the framing stands: the old monetary order is breaking, the US holds the better hand, and in a world where every central bank is racing to debase its currency, Bitcoin wins. That is straightforward math.

The data center piece is a concrete proof point on reindustrialization that I can speak to directly. I sit on the board of a data center company and the anti-data-center rhetoric is simply false. We just announced an expansion of our Hopkinsville operation by 50 megawatts. To support that, we are building a 65-megawatt substation, fully funded privately.

The taxpayer is not paying for it. The grid gets better infrastructure. Electricians, welders, and construction workers get real jobs. The rhetoric does not survive contact with what is actually being built.

About Tom Luongo

Tom Luongo publishes the Gold, Goats, and Guns newsletter and podcast, where he covers geopolitics, monetary economics, and markets from a sovereign-nationalist perspective. He has been writing independently for over a decade and built an audience focused on the intersection of Eurodollar dynamics, European political instability, energy markets, and what he calls the High Table of global financial power. His work is available at tomluongo.me.

Sources mentioned

• Treasury International Capital (TIC) data, ticdata.treasury.gov: central bank flows into long-dated US Treasuries, the foundation of Tom's European accumulation argument
• Iraq dinar devaluation under Hormuz war pressure (TFTC): downstream fiscal pressure from the strait disruption playing out in real time
• Rabobank: the post-WWII order is gone (TFTC): institutional framing on the breakdown of the old order that maps directly to Tom's High Table thesis
• Jeff Currie: $110 diesel crack spread signals structural inflation (TFTC): the Brent and physical oil market dynamics Tom describes from the commodity analyst side
• The world needs more stuff, not more financialization (TFTC): Treasury buyback context and the reindustrialization frame
• Iran seizes US Anduril drone at Strait of Hormuz (TFTC): operational detail on the strait conflict Tom and I discussed
• Brazil self-custody reporting (TFTC): the broader pattern of governments targeting Bitcoin holders through financial surveillance, relevant to the France KYC discussion

Watch the conversation

Timestamps

• 0:07 - Bitcoin wins when central banks debase
• 3:51 - Six months into the Iran conflict: checking priors
• 10:20 - Brent-WTI spread and how Lloyd's closed the strait
• 17:17 - Who handles higher cost of capital: the relative yield game
• 26:00 - Bessent's buyback math and the bear flattener
• 37:05 - Bank of England, the US-UK spread, and Canada
• 43:26 - Judy Shelton at Treasury and the gold revaluation long game
• 49:24 - France's bond market, social unrest, and the High Table
• 58:10 - DARPA, Bitcoin, and Europe's hostility as the tell
• 1:06:00 - Midterms, libertarian impatience, and the 49-0 problem
• 1:14:00 - Constantine's solidus, data centers, and the decades-long arc

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