1 00:00:00,840 --> 00:00:03,400 Speaker 1: Hello, and welcome to another episode of The Mark Moss Show, 2 00:00:03,400 --> 00:00:06,800 Speaker 1: where we talk about the decentralized revolution, talking about, of course, 3 00:00:07,120 --> 00:00:10,440 Speaker 1: how the world is changing through the lens of politics, finance, 4 00:00:10,520 --> 00:00:14,360 Speaker 1: and technology, and of course that technology is bitcoin. It's 5 00:00:14,400 --> 00:00:17,599 Speaker 1: always technology that changes the world. And boy do we 6 00:00:17,680 --> 00:00:20,320 Speaker 1: need that now more than ever. Now today I am 7 00:00:20,400 --> 00:00:23,759 Speaker 1: joined by Joe Consorti. Joe, thanks so much for joining 8 00:00:23,800 --> 00:00:27,320 Speaker 1: me today. Absolutely thanks for having me Mark. Joe is 9 00:00:27,400 --> 00:00:31,360 Speaker 1: amazing analyst research or he works with the Bitcoin Layer. 10 00:00:31,600 --> 00:00:33,400 Speaker 1: If you're not subscribed, we're gonna link it down below. 11 00:00:33,479 --> 00:00:35,479 Speaker 1: Check out the Bitcoin Layer. He also helps me out 12 00:00:35,520 --> 00:00:37,879 Speaker 1: with some research as well. And man, do we have 13 00:00:37,920 --> 00:00:39,600 Speaker 1: a lot to talk about. We just got off of 14 00:00:39,640 --> 00:00:43,800 Speaker 1: an hour long conversation with the bitcoin magazine Space. We're 15 00:00:43,800 --> 00:00:45,879 Speaker 1: gonna talk about it some more because I want to 16 00:00:45,880 --> 00:00:48,880 Speaker 1: take it into a different place than it did before. Now. 17 00:00:49,479 --> 00:00:52,040 Speaker 1: We spent a lot of time talking about what happened, 18 00:00:52,520 --> 00:00:55,520 Speaker 1: and I don't want to I don't want to continue 19 00:00:55,520 --> 00:00:57,560 Speaker 1: going down that road. If you've if you don't want 20 00:00:57,640 --> 00:01:00,840 Speaker 1: understand what's happened, just go check my I mean YouTube channel. 21 00:01:00,840 --> 00:01:02,760 Speaker 1: I did a whole video on that. There's plenty of 22 00:01:02,800 --> 00:01:04,200 Speaker 1: information about that, but I want to talk about a 23 00:01:04,240 --> 00:01:06,399 Speaker 1: couple of other things, and it's really about like where 24 00:01:06,440 --> 00:01:10,200 Speaker 1: do we go from here? So a couple of things 25 00:01:10,200 --> 00:01:11,880 Speaker 1: that I want to frame up and we'll talk about. 26 00:01:12,360 --> 00:01:15,840 Speaker 1: First off, Joe, we touched on just at the end 27 00:01:15,840 --> 00:01:18,800 Speaker 1: of that last space, but the FED is not fixing 28 00:01:18,880 --> 00:01:21,560 Speaker 1: the problem. Or maybe they are, but they're like the arsonists. 29 00:01:21,600 --> 00:01:24,120 Speaker 1: They light the building on fire, then they seem to 30 00:01:24,160 --> 00:01:26,200 Speaker 1: show up to try to put it out, but then 31 00:01:26,240 --> 00:01:28,399 Speaker 1: it just seems to make it even bigger. And so 32 00:01:29,280 --> 00:01:31,600 Speaker 1: you were kind of rattling off like how far apart 33 00:01:31,680 --> 00:01:34,520 Speaker 1: these booms and bus were and how they've gotten closer together. 34 00:01:36,280 --> 00:01:39,320 Speaker 1: Talk to us about that. So you started before the 35 00:01:39,360 --> 00:01:42,200 Speaker 1: fed's creation. So the FED was started in nineteen thirteen, 36 00:01:42,520 --> 00:01:45,119 Speaker 1: and so I don't we can't show the chart right now, 37 00:01:45,120 --> 00:01:47,760 Speaker 1: but the booms and bus have gotten bigger since the 38 00:01:47,760 --> 00:01:50,880 Speaker 1: fed's creation in nineteen thirteen, and they've gotten closer together. 39 00:01:50,960 --> 00:01:54,320 Speaker 1: Run us through that timeframe. Yeah, absolutely, So I haven't 40 00:01:54,360 --> 00:01:56,840 Speaker 1: in front of me, And essentially I got this sort 41 00:01:56,840 --> 00:01:59,480 Speaker 1: of inspiration to talk about this on the space from 42 00:01:59,480 --> 00:02:01,640 Speaker 1: the film call. I'm sure a lot of the people 43 00:02:01,680 --> 00:02:04,480 Speaker 1: listening now I've seen it and essentially after following the 44 00:02:04,480 --> 00:02:07,080 Speaker 1: two thousand and eight financial crisis. You know this fictional 45 00:02:07,120 --> 00:02:09,519 Speaker 1: bank CEO, he walks through all of the boom and 46 00:02:09,600 --> 00:02:13,000 Speaker 1: bus cycles. And since the Fed's inception, they've actually gotten 47 00:02:13,200 --> 00:02:17,200 Speaker 1: much closer together. For reference, you know, sixteen thirty seven, 48 00:02:17,440 --> 00:02:20,280 Speaker 1: seventeen ninety seven, those are the first two major economic 49 00:02:20,280 --> 00:02:22,280 Speaker 1: crisis that were faced by the United States. And if 50 00:02:22,320 --> 00:02:25,120 Speaker 1: you'll notice, those were very far apart, right, more than 51 00:02:25,160 --> 00:02:28,880 Speaker 1: a century apart. But then they start getting somewhat closer 52 00:02:28,919 --> 00:02:32,160 Speaker 1: together as the nineteenth century rolls around eighteen nineteen, nineteen 53 00:02:32,200 --> 00:02:35,440 Speaker 1: thirty seven, fifty seven, eighty four, and those are four 54 00:02:35,800 --> 00:02:38,880 Speaker 1: during the entire nineteenth century that are faced. And then 55 00:02:38,919 --> 00:02:41,200 Speaker 1: we're approaching the creation of the FED nineteen o one, 56 00:02:41,400 --> 00:02:45,120 Speaker 1: nineteen oh seven. World War One is at our doorstep. Obviously, 57 00:02:45,280 --> 00:02:48,520 Speaker 1: you know, the income tax was created expressly as a 58 00:02:48,600 --> 00:02:51,320 Speaker 1: very temporary measure. The Federal Reserve was created as well 59 00:02:51,360 --> 00:02:54,680 Speaker 1: as a temporary measure. And then they start to get 60 00:02:54,720 --> 00:02:57,359 Speaker 1: closer together. Right, we have nineteen thirty nine, nineteen thirty seven, 61 00:02:57,560 --> 00:02:59,600 Speaker 1: those are eight years apart, and then you have a 62 00:02:59,600 --> 00:03:02,160 Speaker 1: bit of a break because of the war, and then 63 00:03:02,360 --> 00:03:05,160 Speaker 1: nineteen seventy three nineteen eighty seven, they're pretty close, but 64 00:03:05,200 --> 00:03:08,640 Speaker 1: then they get extremely close as the twenty first century approaches. 65 00:03:08,919 --> 00:03:11,440 Speaker 1: Nineteen ninety two and nineteen ninety seven, right, those are 66 00:03:11,480 --> 00:03:14,680 Speaker 1: five years apart, right, very very close crisis that are 67 00:03:14,760 --> 00:03:17,480 Speaker 1: very close to one another, and then two thousand, so 68 00:03:17,560 --> 00:03:20,520 Speaker 1: that's three years away. And then the Great Financial Crisis 69 00:03:20,560 --> 00:03:22,799 Speaker 1: begins in two thousand and seven, so that's seven years away. 70 00:03:22,840 --> 00:03:25,440 Speaker 1: It ends in two thousand and ten. And then in 71 00:03:25,480 --> 00:03:29,079 Speaker 1: Europe we had this huge central banking crisis in twenty fifteen, 72 00:03:29,120 --> 00:03:31,120 Speaker 1: so that's five years away. And then we had the 73 00:03:31,160 --> 00:03:33,960 Speaker 1: repub blow up in twenty nineteen, and then we had 74 00:03:34,000 --> 00:03:36,760 Speaker 1: COVID in twenty twenty, so that's four years and then 75 00:03:36,800 --> 00:03:39,120 Speaker 1: one year and now it's going on today is three 76 00:03:39,200 --> 00:03:43,080 Speaker 1: years following COVID, so it's three years since the last crisis. 77 00:03:43,120 --> 00:03:46,400 Speaker 1: So these boom and bust cycles are becoming more severe, right, 78 00:03:46,440 --> 00:03:50,640 Speaker 1: The crashes are becoming more severe, and the subsequent economic stimulus, 79 00:03:50,640 --> 00:03:53,920 Speaker 1: the subsequent fiscal and monetary policy easing that comes after, 80 00:03:54,680 --> 00:03:57,200 Speaker 1: in response, they need to be much larger and more 81 00:03:57,240 --> 00:04:00,240 Speaker 1: severe in order to compensate. Yeah, I mean just kind 82 00:04:00,240 --> 00:04:02,000 Speaker 1: of put into perspective, not going all the way back 83 00:04:02,040 --> 00:04:04,160 Speaker 1: to that far in history, but in two thousand and 84 00:04:04,160 --> 00:04:07,080 Speaker 1: eight it was a banking collapse, the Great Financial Crisis, 85 00:04:07,440 --> 00:04:10,240 Speaker 1: and it took seven hundred billion, that was the tart 86 00:04:10,280 --> 00:04:13,960 Speaker 1: Bellout Plan, seven hundred billion to bell out the global 87 00:04:14,000 --> 00:04:19,720 Speaker 1: financial banking system. And today it's ten trillion. Potentially this 88 00:04:19,760 --> 00:04:22,559 Speaker 1: next one might be twenty trillion compared to just seven 89 00:04:22,640 --> 00:04:25,800 Speaker 1: hundred billion in two thousand and eight. Now, one thing 90 00:04:25,839 --> 00:04:27,600 Speaker 1: that I like to look at is like this FED 91 00:04:27,640 --> 00:04:33,760 Speaker 1: funds effective rate. So the basically most people already know 92 00:04:33,920 --> 00:04:39,080 Speaker 1: this that setting the price. Price fixing doesn't work. Socialist 93 00:04:39,120 --> 00:04:41,680 Speaker 1: and communist nations have always tried this. It always leads 94 00:04:41,720 --> 00:04:45,320 Speaker 1: to shortages and then more prices going higher. Price fixing 95 00:04:45,360 --> 00:04:47,320 Speaker 1: doesn't work. But yet what the Fed is doing is 96 00:04:47,320 --> 00:04:49,799 Speaker 1: they're setting the price of money, which is actually setting 97 00:04:49,800 --> 00:04:51,839 Speaker 1: the price of everything. And they do that by setting 98 00:04:51,880 --> 00:04:53,960 Speaker 1: the price of money through the interest rate. And if 99 00:04:53,960 --> 00:04:55,440 Speaker 1: you look at the chart of the FED funds rate, 100 00:04:55,480 --> 00:04:59,600 Speaker 1: really since nineteen eighty the rates have been going down, down, down, 101 00:04:59,640 --> 00:05:05,280 Speaker 1: down down, and really starting about nineteen nineteen ninety, they 102 00:05:05,360 --> 00:05:07,800 Speaker 1: raised them and then we had the crash in the 103 00:05:07,880 --> 00:05:09,720 Speaker 1: early nineties they had to bring it back down again. 104 00:05:10,200 --> 00:05:12,440 Speaker 1: They did bring it back up a little bit ninety 105 00:05:12,440 --> 00:05:14,400 Speaker 1: five and kind of normalize it. Had to lower them 106 00:05:14,400 --> 00:05:18,040 Speaker 1: in two thousand and since then they kept them low. 107 00:05:18,120 --> 00:05:20,160 Speaker 1: They started raising them again in like two thousand and five, 108 00:05:20,680 --> 00:05:22,800 Speaker 1: and then another crash had to bring them down. They 109 00:05:22,839 --> 00:05:25,520 Speaker 1: tried to normalize the twenty nineteen another crash had to 110 00:05:25,520 --> 00:05:27,760 Speaker 1: bring it back down, And it looks like, basically, if 111 00:05:27,760 --> 00:05:30,160 Speaker 1: you look at this chart, every time they tried to 112 00:05:30,200 --> 00:05:33,800 Speaker 1: bring the price of money back up, it causes a crisis. 113 00:05:34,200 --> 00:05:35,920 Speaker 1: Is that kind of what you would say, is kind 114 00:05:35,960 --> 00:05:39,279 Speaker 1: of that mechanism? Absolutely, absolutely, each and every time. It 115 00:05:39,360 --> 00:05:42,320 Speaker 1: seems that the way in which these cycles begin is 116 00:05:42,360 --> 00:05:45,720 Speaker 1: in response to a crisis, and so they begin easing policy. 117 00:05:45,960 --> 00:05:48,520 Speaker 1: But then the east too long, either inflation is roaring, 118 00:05:48,640 --> 00:05:52,359 Speaker 1: or the economy is just simply too tight. The labor 119 00:05:52,400 --> 00:05:55,719 Speaker 1: market is too tight, you know, businesses are doing too well, 120 00:05:55,760 --> 00:05:57,920 Speaker 1: which is a pretty scary notion that the Fed would 121 00:05:57,920 --> 00:06:00,839 Speaker 1: then try to counteract that by making the price of 122 00:06:00,880 --> 00:06:03,279 Speaker 1: money more expensive. But then they make it expensive for 123 00:06:03,320 --> 00:06:06,200 Speaker 1: too long. They caused things to break in twenty nineteen. 124 00:06:06,240 --> 00:06:07,760 Speaker 1: It was the repo market. In two thousand and eight 125 00:06:07,920 --> 00:06:10,200 Speaker 1: it was these banks, and as right now in twenty 126 00:06:10,240 --> 00:06:12,880 Speaker 1: twenty three, it seems to be the banks once again 127 00:06:13,120 --> 00:06:14,880 Speaker 1: and time and time again that seems to be at 128 00:06:14,920 --> 00:06:19,320 Speaker 1: the policy response for sure. Yeah. Now, you know, when 129 00:06:19,360 --> 00:06:22,359 Speaker 1: they went on this hiking path of let's just call 130 00:06:22,400 --> 00:06:24,799 Speaker 1: it reckless, abandoned, I mean, they haven't really raised rates 131 00:06:24,839 --> 00:06:28,000 Speaker 1: this fast or this high really maybe one time in history, 132 00:06:28,040 --> 00:06:30,360 Speaker 1: but I mean this is sort of unprecedented. Now. A 133 00:06:30,440 --> 00:06:33,440 Speaker 1: lot of people, myself included, didn't think we could do 134 00:06:33,480 --> 00:06:36,120 Speaker 1: this because we're sort of in this like Ponzi scheme. Well, 135 00:06:36,160 --> 00:06:38,760 Speaker 1: because to explain to everybody, we're in a debt based 136 00:06:38,760 --> 00:06:41,800 Speaker 1: monetary system, and so if we're not continue to expand 137 00:06:41,880 --> 00:06:44,080 Speaker 1: that monetary system, that debt base, then it contracts. So 138 00:06:44,120 --> 00:06:46,880 Speaker 1: we're either expanding or contracting, and they don't want the contraction. 139 00:06:46,920 --> 00:06:49,679 Speaker 1: And so a lot of people, like I said, myself included, 140 00:06:49,680 --> 00:06:51,760 Speaker 1: thought oh man, they can't really raise rates, they can't 141 00:06:51,760 --> 00:06:54,080 Speaker 1: tighten because the whole system will crash. But yet here 142 00:06:54,120 --> 00:06:55,760 Speaker 1: they did, and a lot of people were saying, well, 143 00:06:55,720 --> 00:07:00,159 Speaker 1: they're they're gonna keep hiking until something breaks. A lot 144 00:07:00,160 --> 00:07:02,680 Speaker 1: of people were like, well, what is this something typically 145 00:07:02,680 --> 00:07:07,000 Speaker 1: we would think about the liquidity in the system. But 146 00:07:07,240 --> 00:07:10,800 Speaker 1: now it looks like the FED has broken themselves. So 147 00:07:10,840 --> 00:07:13,160 Speaker 1: they were making money and sending that to the treasury. 148 00:07:13,200 --> 00:07:15,120 Speaker 1: Now they're broke, and so now they're putting that as 149 00:07:15,280 --> 00:07:19,360 Speaker 1: deferred liability the government. The US Treasury is now broke. 150 00:07:19,760 --> 00:07:21,680 Speaker 1: They had to borrow a trillion dollars this first quarter, 151 00:07:21,800 --> 00:07:24,400 Speaker 1: nine thirty two billion, and now the banks are broke. 152 00:07:25,400 --> 00:07:28,440 Speaker 1: I mean, is there anything else they can break? That's 153 00:07:28,440 --> 00:07:31,360 Speaker 1: a fantastic question. And and to your point, it seems 154 00:07:31,400 --> 00:07:34,320 Speaker 1: that there are several more things that can break. What 155 00:07:34,360 --> 00:07:37,800 Speaker 1: we just saw was a credit event almost occurring with banks. 156 00:07:38,000 --> 00:07:39,840 Speaker 1: But then what the FED has really done with this 157 00:07:39,960 --> 00:07:43,440 Speaker 1: new facility is essentially writing a blank check to those banks. 158 00:07:44,320 --> 00:07:47,440 Speaker 1: You know, basically every single time something has occurred, the 159 00:07:47,440 --> 00:07:50,560 Speaker 1: FED has rather than pausing hikes altogether, they still want 160 00:07:50,560 --> 00:07:52,440 Speaker 1: to fight inflation, and so what they're doing is they're 161 00:07:52,480 --> 00:07:55,560 Speaker 1: creating these facilities. And basically it's like plugging holes on 162 00:07:55,720 --> 00:07:58,120 Speaker 1: you know, a boat. Let's say you're a ship captain, 163 00:07:58,360 --> 00:08:00,920 Speaker 1: and you know on the hull of your ship there 164 00:08:00,920 --> 00:08:02,560 Speaker 1: are holes that keep popping up, and so you have 165 00:08:02,560 --> 00:08:04,200 Speaker 1: one of your crewmen put his finger in it, and 166 00:08:04,240 --> 00:08:05,920 Speaker 1: then a new hole pops up and you put it 167 00:08:05,920 --> 00:08:07,720 Speaker 1: it's you know, like pop by the sailor man right 168 00:08:07,920 --> 00:08:11,480 Speaker 1: and as he elbows and exactly, and then you know 169 00:08:11,560 --> 00:08:14,720 Speaker 1: you're you're but eventually run out of extremities and limbs 170 00:08:14,760 --> 00:08:16,840 Speaker 1: to plug these holes with, and then the ship floods. 171 00:08:16,880 --> 00:08:18,920 Speaker 1: And what we're seeing right now is the FED. You know, 172 00:08:19,000 --> 00:08:21,160 Speaker 1: it doesn't want to it doesn't want to abort ship. 173 00:08:21,200 --> 00:08:23,240 Speaker 1: It doesn't want to stop its hiking path. And so 174 00:08:23,280 --> 00:08:27,920 Speaker 1: instead of stopping the aggressive monetary tightening, more aggressive than 175 00:08:27,960 --> 00:08:30,920 Speaker 1: we've seen in over two decades, it's choosing to create 176 00:08:30,920 --> 00:08:33,800 Speaker 1: these emergency facilities and plug these holes and really dispersing 177 00:08:33,880 --> 00:08:36,280 Speaker 1: risk elsewhere. And so the likelihood of a credit event 178 00:08:36,320 --> 00:08:39,080 Speaker 1: in the banking sector is now lower, but by the 179 00:08:39,120 --> 00:08:41,679 Speaker 1: same token, that doesn't change the likelihood of a credit 180 00:08:41,679 --> 00:08:44,280 Speaker 1: event for corporations that have to deal with this mess, 181 00:08:44,320 --> 00:08:48,560 Speaker 1: particularly tech corporations. We've started seeing them layoff people, which 182 00:08:48,600 --> 00:08:50,520 Speaker 1: is sort of the precursor to what might come down 183 00:08:50,520 --> 00:08:53,480 Speaker 1: the line, which is actual defaults. And you know you 184 00:08:53,559 --> 00:08:55,720 Speaker 1: just mentioned a debt based monetary system. There are two 185 00:08:55,800 --> 00:08:58,920 Speaker 1: ways that a credit cycle corrects itself. Let's come back 186 00:08:58,960 --> 00:09:01,160 Speaker 1: to those corrections in an we gotta take a quick break, 187 00:09:01,160 --> 00:09:03,240 Speaker 1: but we have so much more to discuss, and you 188 00:09:03,280 --> 00:09:04,960 Speaker 1: don't want to get caught in this. You better understand 189 00:09:04,960 --> 00:09:06,360 Speaker 1: what's going on. So we're gonna talk more about that. 190 00:09:06,400 --> 00:09:08,920 Speaker 1: You're listening to the Mark Moss Show. I'm sitting down 191 00:09:08,920 --> 00:09:10,800 Speaker 1: with Joe Consorti. You can find them on Twitter at 192 00:09:10,880 --> 00:09:13,760 Speaker 1: Joe Consorti. Check out the Bitcoin Layer as well. We're 193 00:09:13,800 --> 00:09:15,600 Speaker 1: gonna be back talking about that. We're gonna talk about 194 00:09:16,120 --> 00:09:19,000 Speaker 1: can they keep hiking? What happens from here? Is this 195 00:09:19,080 --> 00:09:21,800 Speaker 1: a thing to be blaming on crypto? And so many 196 00:09:21,800 --> 00:09:23,679 Speaker 1: more things we're gonna talk about. Don't go away. I'm 197 00:09:23,679 --> 00:09:25,360 Speaker 1: gonna take it to this a quick short break. We're 198 00:09:25,360 --> 00:09:28,440 Speaker 1: gonna be right back. All right, Welcome back. If you're 199 00:09:28,440 --> 00:09:30,600 Speaker 1: just tune in, you are listening to the Mark Moss Show. 200 00:09:30,840 --> 00:09:33,280 Speaker 1: Of course we're talking about the decentralized Revolution, but today 201 00:09:33,320 --> 00:09:37,080 Speaker 1: we are talking about the melt down in the banking system. 202 00:09:37,200 --> 00:09:40,440 Speaker 1: Has the FED broken things finally to the point of 203 00:09:40,480 --> 00:09:42,360 Speaker 1: no return? Or where do we go from here? I'm 204 00:09:42,400 --> 00:09:44,679 Speaker 1: joined by Joe Consorti. Check them out on Twitter at 205 00:09:44,760 --> 00:09:47,440 Speaker 1: Joe Consorti. Check out the Bitcoin Layer as well the 206 00:09:47,480 --> 00:09:51,280 Speaker 1: newsletter I subscribe. You should too anyway, Joe, I cut 207 00:09:51,280 --> 00:09:54,440 Speaker 1: you off, but you were talking about, you know how 208 00:09:54,520 --> 00:09:58,199 Speaker 1: much more things could potentially break. I guess, yeah, absolutely. 209 00:09:58,400 --> 00:10:01,319 Speaker 1: And so really with corporation, we begun to see layoffs, 210 00:10:01,320 --> 00:10:04,520 Speaker 1: particularly among those more interest rate sensitive firms. What's been 211 00:10:04,559 --> 00:10:07,040 Speaker 1: happening with the Fed's aggressive hiking cycle is really you 212 00:10:07,200 --> 00:10:10,040 Speaker 1: start to see things break, sort of in a domino 213 00:10:10,120 --> 00:10:13,400 Speaker 1: of interest rate sensitivity. The more interest rate sensitive firms 214 00:10:13,880 --> 00:10:16,560 Speaker 1: exploded first, those being the crypto firms, and then these 215 00:10:16,600 --> 00:10:19,160 Speaker 1: tech firms started laying off a whole host of people. 216 00:10:19,760 --> 00:10:22,080 Speaker 1: And what you're going to see as this year trudges along, 217 00:10:22,080 --> 00:10:24,120 Speaker 1: if the FED is able to hold rates higher for longer, 218 00:10:24,160 --> 00:10:26,480 Speaker 1: which by all accounts they'll be able to because they're 219 00:10:26,480 --> 00:10:30,200 Speaker 1: creating these emergency facilities, you're going to start to see defaults, 220 00:10:30,240 --> 00:10:33,400 Speaker 1: defaults on payments. Rather than firms being able to fully 221 00:10:33,440 --> 00:10:35,559 Speaker 1: repay the people they borrowed money from and the financial 222 00:10:35,559 --> 00:10:37,720 Speaker 1: institutions they borrowed money from, You're going to begin to 223 00:10:37,720 --> 00:10:40,800 Speaker 1: see defaults and that is obviously going to spiral. Right 224 00:10:40,840 --> 00:10:43,079 Speaker 1: if one person, if Person A defaults on a loan 225 00:10:43,120 --> 00:10:45,720 Speaker 1: from Person B, then person B now can't rely on 226 00:10:45,760 --> 00:10:48,200 Speaker 1: those cash flows it was expecting from Person A, and 227 00:10:48,240 --> 00:10:50,360 Speaker 1: so he has the default on Person C and so 228 00:10:50,480 --> 00:10:53,360 Speaker 1: on and so forth, And that cascade of sorts of 229 00:10:53,400 --> 00:10:57,280 Speaker 1: defaults could very likely move its way through corporate finance 230 00:10:57,840 --> 00:11:00,640 Speaker 1: this year, if not relatively soon, then in the next 231 00:11:00,720 --> 00:11:03,680 Speaker 1: few months, and that could be the next straw that breaks. 232 00:11:03,840 --> 00:11:05,600 Speaker 1: And frankly, I don't know how the FED is going 233 00:11:05,600 --> 00:11:08,880 Speaker 1: to intervene there other than reversing course entirely. And so 234 00:11:08,920 --> 00:11:11,480 Speaker 1: I think at this point in terms of monetary tightening, 235 00:11:11,480 --> 00:11:13,920 Speaker 1: it's really reaching a breaking point where it needs to 236 00:11:13,960 --> 00:11:16,240 Speaker 1: decide what it should do and what it really can 237 00:11:16,280 --> 00:11:20,320 Speaker 1: do without really harming these corporations. The problem that we 238 00:11:20,440 --> 00:11:23,880 Speaker 1: have here is, you know, I really got involved in 239 00:11:23,920 --> 00:11:26,120 Speaker 1: the financial system in two thousand and eight because I 240 00:11:26,160 --> 00:11:29,360 Speaker 1: was involved in business. I did really good in business. 241 00:11:29,400 --> 00:11:31,000 Speaker 1: I made a lot of money in business, and then 242 00:11:31,040 --> 00:11:33,320 Speaker 1: I got hit super, super hard in two thousand and eight. 243 00:11:33,360 --> 00:11:35,480 Speaker 1: I just completely blindsided, and I'm like, what the heck 244 00:11:35,559 --> 00:11:37,640 Speaker 1: is this? I gotta go figure that out, and so 245 00:11:37,760 --> 00:11:39,719 Speaker 1: I kind of became a goal bug. It's like, oh, 246 00:11:39,760 --> 00:11:41,360 Speaker 1: the Fiat money system is the problem. We need to 247 00:11:41,360 --> 00:11:43,280 Speaker 1: sound money that's the answer. And I started listening to 248 00:11:43,600 --> 00:11:46,640 Speaker 1: Mike Maloney and Peter Schiff and Ron Paul and the 249 00:11:46,679 --> 00:11:48,560 Speaker 1: FED all that stuff. There was a book that I 250 00:11:48,600 --> 00:11:50,520 Speaker 1: had read in about two thousand and six. It was 251 00:11:50,760 --> 00:11:53,880 Speaker 1: by Harry Dent Junior, called The Bubble Boom Ahead, and 252 00:11:53,920 --> 00:11:56,360 Speaker 1: he really kind of broke it down. I was like, whole, shoot, 253 00:11:56,400 --> 00:11:58,240 Speaker 1: I see what's happening. I better start selling all my 254 00:11:58,240 --> 00:12:00,880 Speaker 1: real estate. And I've been following Harry Dent and these 255 00:12:00,880 --> 00:12:04,280 Speaker 1: guys for a long time, and their research is right. 256 00:12:05,040 --> 00:12:06,640 Speaker 1: I've had Harry Dent on my show a couple of times. 257 00:12:06,640 --> 00:12:08,560 Speaker 1: He spoke up my last conference. People like, why would 258 00:12:08,559 --> 00:12:10,240 Speaker 1: you have that guy on? He's wrong all the time. 259 00:12:11,160 --> 00:12:14,679 Speaker 1: I believe his research is right. All his analysis is right. 260 00:12:14,960 --> 00:12:19,240 Speaker 1: What they're wrong with is the timing. They continue to 261 00:12:19,520 --> 00:12:22,959 Speaker 1: underestimate how many magic tricks the FED has up their sleeve. 262 00:12:24,040 --> 00:12:26,959 Speaker 1: Just when it seems like they're cornered, they seemingly can 263 00:12:27,000 --> 00:12:29,400 Speaker 1: pull some other magic trick out. I mean, is that 264 00:12:29,440 --> 00:12:31,360 Speaker 1: how you would see it? What do you think about that? 265 00:12:31,600 --> 00:12:34,559 Speaker 1: I see it the exact same way. And that's explicitly 266 00:12:34,559 --> 00:12:36,520 Speaker 1: why in my analysis and in the analysis that we 267 00:12:36,559 --> 00:12:38,240 Speaker 1: do over at the Bitcoin lanyere. We try to keep 268 00:12:38,280 --> 00:12:40,840 Speaker 1: it non sensational. We try to play it as rational 269 00:12:40,880 --> 00:12:44,199 Speaker 1: as possible, and it is realistically. We mentioned that plugging 270 00:12:44,240 --> 00:12:47,360 Speaker 1: holes analogy before the break, and time and time again, 271 00:12:47,400 --> 00:12:49,040 Speaker 1: the FED is back into a corner. Then it can 272 00:12:49,080 --> 00:12:51,160 Speaker 1: pull a rabbit out of the hat, you know, it 273 00:12:51,160 --> 00:12:53,320 Speaker 1: can create a portal in the corner and leave and 274 00:12:53,360 --> 00:12:55,719 Speaker 1: give itself some more time. And that's what's happened time 275 00:12:55,720 --> 00:13:00,800 Speaker 1: and time again. Right when in twenty fifteen, when Europe 276 00:13:01,120 --> 00:13:03,080 Speaker 1: seemed on the brink of crisis, it was on the 277 00:13:03,080 --> 00:13:06,360 Speaker 1: brink of crisis, the FED just turned to these swap 278 00:13:06,400 --> 00:13:09,480 Speaker 1: lines and created permanent swap lines with the European Central 279 00:13:09,480 --> 00:13:12,800 Speaker 1: Bank in order to funnel liquidity to distressed European banks. 280 00:13:12,800 --> 00:13:14,800 Speaker 1: It backed its way out of a corner there, and 281 00:13:14,840 --> 00:13:18,559 Speaker 1: it saved the ECB. In twenty nineteen, it created a 282 00:13:18,600 --> 00:13:22,120 Speaker 1: permanent well. It had this overnight reverse repo facility whereby 283 00:13:22,400 --> 00:13:25,240 Speaker 1: banks could park their capital there and earn a persistent 284 00:13:25,320 --> 00:13:28,640 Speaker 1: rate of return, and it saved the repo market when 285 00:13:28,640 --> 00:13:32,000 Speaker 1: it made that facility permanent. And just what happened on Sunday, 286 00:13:32,040 --> 00:13:35,520 Speaker 1: it did the exact same thing again right through quantitative tightening. 287 00:13:35,600 --> 00:13:38,720 Speaker 1: The FED has removed so many reserve reserves from banks 288 00:13:38,720 --> 00:13:41,520 Speaker 1: to the point that these small banks were actually having 289 00:13:41,720 --> 00:13:46,800 Speaker 1: facing solvency issues, and the massive market market losses from 290 00:13:46,800 --> 00:13:48,760 Speaker 1: treasury securities meant that they were about to face a 291 00:13:48,840 --> 00:13:50,880 Speaker 1: bank run. It seemed that the FED would have to 292 00:13:50,920 --> 00:13:53,160 Speaker 1: pause QT, and just when it seemed like they were 293 00:13:53,200 --> 00:13:54,880 Speaker 1: backed into a corner, they pulled a rabbit out of 294 00:13:54,880 --> 00:13:57,560 Speaker 1: a hat and essentially, through this new facility they created, 295 00:13:57,559 --> 00:13:59,880 Speaker 1: wrote a blank check. And so time and time again, 296 00:14:00,000 --> 00:14:02,079 Speaker 1: it seems like the FED can avert crisis. And I 297 00:14:02,120 --> 00:14:04,440 Speaker 1: can imagine they're just going to continue creating more of 298 00:14:04,480 --> 00:14:08,400 Speaker 1: these facilities as more emergencies pop up. Yeah, I mean 299 00:14:08,679 --> 00:14:11,160 Speaker 1: in twenty twenty, when that whole pandemic thing started, I 300 00:14:11,160 --> 00:14:13,520 Speaker 1: mean they came up with all types of new facilities, 301 00:14:13,520 --> 00:14:16,240 Speaker 1: all types of three and four letter words for all 302 00:14:16,280 --> 00:14:18,480 Speaker 1: these new facilities. I couldn't believe it in And these 303 00:14:18,520 --> 00:14:21,280 Speaker 1: were things that they weren't really I think, legally able 304 00:14:21,320 --> 00:14:23,400 Speaker 1: to do. But yet they still found a way to 305 00:14:23,480 --> 00:14:26,800 Speaker 1: get around that and still do it. And so these 306 00:14:26,800 --> 00:14:30,200 Speaker 1: things to Joe's point, and Joe's analogy is right. All 307 00:14:30,240 --> 00:14:33,280 Speaker 1: they're doing is plugging the damn. This does not fix 308 00:14:33,360 --> 00:14:35,560 Speaker 1: the problem. It just keeps the dam from breaking today 309 00:14:35,600 --> 00:14:38,520 Speaker 1: and it just you know'll break later. But man, I mean, 310 00:14:38,560 --> 00:14:41,960 Speaker 1: who knows how many more extremities to your analogy they 311 00:14:41,960 --> 00:14:46,160 Speaker 1: can pull up. Let's talk about something else. So they're pushing, 312 00:14:46,200 --> 00:14:48,440 Speaker 1: they're kicking the count down the road. As we say, right, 313 00:14:48,440 --> 00:14:50,440 Speaker 1: they're just plugging the holes. It's not fixing the problem, 314 00:14:50,520 --> 00:14:53,800 Speaker 1: so to speak. The FED could decide not to bill 315 00:14:53,880 --> 00:14:57,040 Speaker 1: out the system anytime they want, but so far they 316 00:14:57,080 --> 00:15:00,680 Speaker 1: seem to want to. It does. See, we talked about 317 00:15:00,720 --> 00:15:03,080 Speaker 1: this yesterday on another space we are on in the 318 00:15:03,160 --> 00:15:06,520 Speaker 1: fog of war, and so what we've seen is like 319 00:15:06,560 --> 00:15:10,360 Speaker 1: this operation Choke point two point zero, and so there 320 00:15:10,400 --> 00:15:12,320 Speaker 1: was choke point one point zero is two point zero. 321 00:15:12,320 --> 00:15:16,680 Speaker 1: And basically they're sort of restricting the ability for like 322 00:15:16,760 --> 00:15:20,920 Speaker 1: crypto focused companies as well as banks from getting liquidity, 323 00:15:21,160 --> 00:15:23,200 Speaker 1: getting money in and out, things like that. And in 324 00:15:23,240 --> 00:15:25,960 Speaker 1: this kind of takedown, a sequence of events or banks, 325 00:15:26,760 --> 00:15:29,680 Speaker 1: Signature Bank got taken down. One of the authors of 326 00:15:29,680 --> 00:15:32,000 Speaker 1: the Dodd Frank Act said that he didn't see any 327 00:15:32,000 --> 00:15:33,720 Speaker 1: reason why I should be taken down. He thinks they 328 00:15:33,760 --> 00:15:36,480 Speaker 1: just took it out for no reason in this fog 329 00:15:36,520 --> 00:15:39,320 Speaker 1: of war, so to speak, and seeing as every the 330 00:15:39,360 --> 00:15:42,360 Speaker 1: system needs the FED to save it and so everyone's 331 00:15:42,400 --> 00:15:45,280 Speaker 1: at their mercy, do you see this as something that 332 00:15:45,320 --> 00:15:48,880 Speaker 1: could potentially escalate, like they need to take away the safetyness, 333 00:15:48,920 --> 00:15:51,360 Speaker 1: they don't take away the exits, so to speak. Right, 334 00:15:51,400 --> 00:15:53,000 Speaker 1: do you think this could be something that they might 335 00:15:53,320 --> 00:15:57,840 Speaker 1: increase Precisely, this seems like an opportunistic takeover. Um. I 336 00:15:57,840 --> 00:16:00,840 Speaker 1: think in the wake of FTAX, they they realized that 337 00:16:00,880 --> 00:16:03,680 Speaker 1: they got they allowed this scam to basically they allowed 338 00:16:03,680 --> 00:16:07,000 Speaker 1: the trojan horse into Rome and it nearly completely destroyed 339 00:16:07,000 --> 00:16:09,680 Speaker 1: the city, right, It nearly destroyed the faith in these institutions. 340 00:16:09,840 --> 00:16:13,240 Speaker 1: And so now rather than actually acting as they're supposed to, 341 00:16:13,440 --> 00:16:17,040 Speaker 1: they're going after anybody who remotely resembles a crypto on 342 00:16:17,120 --> 00:16:20,000 Speaker 1: an off ramp with traditional banking, and they're going after them. 343 00:16:20,040 --> 00:16:23,160 Speaker 1: And even in the case of Signature specifically, they were 344 00:16:23,200 --> 00:16:26,120 Speaker 1: a solvent institution. But from the time that they went 345 00:16:26,120 --> 00:16:30,280 Speaker 1: into FDIC receivership on Sunday and essentially all of the 346 00:16:30,360 --> 00:16:32,800 Speaker 1: mania that happened with Silicon Valley Bank over the weekend, 347 00:16:32,920 --> 00:16:35,080 Speaker 1: they were able to, as you mentioned in the fog 348 00:16:35,120 --> 00:16:37,880 Speaker 1: of war slip this in coercively, so this is not 349 00:16:37,920 --> 00:16:40,520 Speaker 1: only deliberate, but there was no reason to take over 350 00:16:40,560 --> 00:16:42,440 Speaker 1: Signature Bank because at the time of their takeover they 351 00:16:42,440 --> 00:16:46,320 Speaker 1: were a fully solvent institution. Yeah yeah, I mean that's 352 00:16:46,360 --> 00:16:50,080 Speaker 1: a scary thing. We know recently Caitlyn Long, someone who've 353 00:16:50,120 --> 00:16:53,360 Speaker 1: had on the show of Amazing interview for everyone listening. 354 00:16:53,360 --> 00:16:54,400 Speaker 1: If you want to go check that out, go to 355 00:16:54,400 --> 00:16:56,960 Speaker 1: go to my main YouTube. Piano Mark Moss got hundreds 356 00:16:56,960 --> 00:16:59,800 Speaker 1: of thousands of views over there, and she tried to 357 00:16:59,800 --> 00:17:02,600 Speaker 1: get a bank through in Wyoming called Custodia Bank, which 358 00:17:02,680 --> 00:17:06,439 Speaker 1: was going to be a custodian which was going to, funny, 359 00:17:06,880 --> 00:17:09,760 Speaker 1: potentially hold all your cash in reserves, so instead of 360 00:17:09,920 --> 00:17:11,919 Speaker 1: loaning it out and putting you into these danger situations, 361 00:17:11,960 --> 00:17:14,920 Speaker 1: they would hold it. And they got denied. And there 362 00:17:14,960 --> 00:17:16,640 Speaker 1: was another bank, I think it was called Narrow Bank. 363 00:17:16,680 --> 00:17:18,520 Speaker 1: They tried to do something similar where they would just 364 00:17:18,600 --> 00:17:20,639 Speaker 1: hold your money and they would charge you a fee 365 00:17:21,480 --> 00:17:23,760 Speaker 1: to hold your money for you, and they got denied. 366 00:17:23,920 --> 00:17:26,680 Speaker 1: And so the reason why, according to what they say, 367 00:17:26,800 --> 00:17:29,840 Speaker 1: they got denied is because the Federal Reserve can't allow 368 00:17:29,880 --> 00:17:32,440 Speaker 1: that to happen because everybody would want to move their 369 00:17:32,440 --> 00:17:34,639 Speaker 1: money there, which of course they would, and then the 370 00:17:34,840 --> 00:17:38,160 Speaker 1: entire system would collapse. It's only as weak as its 371 00:17:38,160 --> 00:17:40,120 Speaker 1: weakest link, is what I kind of said on her post. 372 00:17:40,320 --> 00:17:43,400 Speaker 1: And so they don't want to allow us any way 373 00:17:43,400 --> 00:17:45,480 Speaker 1: to exit. They wouldn't allow a bank to open like 374 00:17:45,560 --> 00:17:48,199 Speaker 1: that because everybody would leave, and the same could be 375 00:17:48,280 --> 00:17:51,280 Speaker 1: said with cryptocurrency in bitcoin. If you're just tuning in, 376 00:17:51,320 --> 00:17:53,399 Speaker 1: you're listening to the Mark Moas Show, we're talking about 377 00:17:54,040 --> 00:17:56,040 Speaker 1: the banking collapse. I want to come back and talk 378 00:17:56,080 --> 00:17:59,640 Speaker 1: about can they keep hiking and what comes next. I'm 379 00:17:59,640 --> 00:18:02,159 Speaker 1: talking to Joe Consorti from the Bitcoin Layer check them 380 00:18:02,160 --> 00:18:03,920 Speaker 1: out on Twitter at Joe Consorti. I'm gonna take a 381 00:18:04,000 --> 00:18:05,840 Speaker 1: quick break and then we're gonna come back. You don't 382 00:18:05,840 --> 00:18:09,879 Speaker 1: want to miss it, don't go away. We're back, all right, 383 00:18:09,880 --> 00:18:11,880 Speaker 1: Welcome back. If you just tune in, you're listening to 384 00:18:11,920 --> 00:18:15,760 Speaker 1: the Mark Moss Show, we're talking about the banking meltdown, 385 00:18:16,080 --> 00:18:19,760 Speaker 1: the blood bath. Has it just begun or is the 386 00:18:19,800 --> 00:18:24,640 Speaker 1: blood bath going to be stopped for now? So Joe 387 00:18:25,480 --> 00:18:30,560 Speaker 1: talking about that the FED is on this rate hiking 388 00:18:30,600 --> 00:18:34,679 Speaker 1: path with reckless abandon to stop inflation. Now inflation as 389 00:18:34,760 --> 00:18:38,840 Speaker 1: they define it as prices going up. I like the 390 00:18:38,880 --> 00:18:41,760 Speaker 1: Austrian viewpoint of inflation is when the monetary supply increases. 391 00:18:42,000 --> 00:18:44,120 Speaker 1: But they want to stop prices going up. Now, prices 392 00:18:44,119 --> 00:18:47,800 Speaker 1: are the equilibrium of supply and demand. So what they 393 00:18:47,880 --> 00:18:50,399 Speaker 1: want to do is just crush demand. Well, let's just 394 00:18:50,400 --> 00:18:55,000 Speaker 1: make everybody broke. Last week I played some video clips 395 00:18:55,040 --> 00:19:01,240 Speaker 1: of Senator Kennedy grilling Jerome Powell and saying as much 396 00:19:01,680 --> 00:19:03,800 Speaker 1: you want, and actually I played the clip of Elizabeth 397 00:19:03,840 --> 00:19:06,800 Speaker 1: Warren as well, saying you want people, you want unemployment 398 00:19:06,800 --> 00:19:09,600 Speaker 1: to go up. You want two million people to lose 399 00:19:09,640 --> 00:19:11,920 Speaker 1: their job. Do you what do you want to say 400 00:19:11,920 --> 00:19:14,400 Speaker 1: to those two million people? Right, so they literally want 401 00:19:14,440 --> 00:19:16,280 Speaker 1: you to go broke. They literally want people to lose 402 00:19:16,320 --> 00:19:18,719 Speaker 1: their job. They want your wages to come down. To 403 00:19:18,760 --> 00:19:20,800 Speaker 1: get that down. Now, the other side of the equation 404 00:19:20,920 --> 00:19:24,639 Speaker 1: is they could try to get prices to come down 405 00:19:24,800 --> 00:19:27,680 Speaker 1: by bringing more supply to market. They could do all 406 00:19:27,720 --> 00:19:31,480 Speaker 1: types of things like tax credits if you create more 407 00:19:31,520 --> 00:19:34,399 Speaker 1: goods and services, right, they could do all types of things, 408 00:19:34,480 --> 00:19:37,760 Speaker 1: release relax regulations to get more supplied to the market. 409 00:19:37,800 --> 00:19:40,000 Speaker 1: They could do things like that, but they don't, And 410 00:19:40,040 --> 00:19:42,760 Speaker 1: so they're trying to do this. However, well, they're crushing demand. 411 00:19:42,960 --> 00:19:45,160 Speaker 1: And when people don't have as much money, they don't 412 00:19:45,200 --> 00:19:48,439 Speaker 1: pay as much taxes. You and I have talked about this. 413 00:19:48,520 --> 00:19:51,000 Speaker 1: So two things are happening here, and this is what's 414 00:19:51,040 --> 00:19:54,640 Speaker 1: interesting to me. As they raise interest rates, the payments 415 00:19:54,760 --> 00:19:58,520 Speaker 1: on the debt, the debt servicing goes up. That's their expenses, 416 00:19:59,119 --> 00:20:02,080 Speaker 1: but their income is going down because they're getting less 417 00:20:02,080 --> 00:20:06,080 Speaker 1: tax receipts the US government. Can they keep hiking? If 418 00:20:06,080 --> 00:20:08,560 Speaker 1: they keep hiking, the government keeps going more broke, the 419 00:20:08,640 --> 00:20:11,520 Speaker 1: banks continue to go more broke. Oh, I mean, is 420 00:20:11,520 --> 00:20:14,800 Speaker 1: this the end I saw? It looks like as of yesterday, 421 00:20:15,359 --> 00:20:18,119 Speaker 1: the betting markets were saying that there's like a ninety 422 00:20:18,200 --> 00:20:20,320 Speaker 1: percent chance of a pivot before the end of the year. 423 00:20:20,480 --> 00:20:24,159 Speaker 1: What's your take on that. Yeah, So there are a 424 00:20:24,200 --> 00:20:26,480 Speaker 1: couple of things. The first one is that the FED 425 00:20:26,680 --> 00:20:29,280 Speaker 1: is now The FED usually remits its profits to the 426 00:20:29,359 --> 00:20:32,600 Speaker 1: United States Treasury. Right. The FED is a bank just 427 00:20:32,640 --> 00:20:35,199 Speaker 1: like any other, right, and it holds these securities, and 428 00:20:35,240 --> 00:20:38,400 Speaker 1: it takes in cash flows from these securities. But it 429 00:20:38,480 --> 00:20:40,639 Speaker 1: is ben winding down its balance sheet, of course, and 430 00:20:40,680 --> 00:20:43,080 Speaker 1: so now it's no longer getting cash flows from those 431 00:20:43,080 --> 00:20:45,560 Speaker 1: treasuries that it's allowing to mature off its balance sheet. 432 00:20:45,880 --> 00:20:49,240 Speaker 1: And as a result, now it has gone negatively profitable. 433 00:20:49,280 --> 00:20:51,280 Speaker 1: It is no longer profitable, and it doesn't have any 434 00:20:51,280 --> 00:20:53,959 Speaker 1: profits to remit to the US Treasury. And as a result, 435 00:20:54,080 --> 00:20:57,000 Speaker 1: it's been doing it's been creating on its balance sheet 436 00:20:57,000 --> 00:21:00,159 Speaker 1: and accounting gimmick what's called a deferred asset. Rather than 437 00:21:00,240 --> 00:21:03,120 Speaker 1: the FED. Because it's hemorrhaging money going under like any 438 00:21:03,160 --> 00:21:06,879 Speaker 1: other bank, right like Silicon Valley Bank did, the FED 439 00:21:07,320 --> 00:21:09,480 Speaker 1: has the ability, through this accounting gimmick and a magic 440 00:21:09,520 --> 00:21:12,000 Speaker 1: wand to essentially just put it on its book books 441 00:21:12,040 --> 00:21:14,520 Speaker 1: as a deferred asset. Now, if it's deferred, when does 442 00:21:14,560 --> 00:21:16,080 Speaker 1: it have to be repaid? Well, that's the cool thing. 443 00:21:16,200 --> 00:21:18,320 Speaker 1: It never has to be repaid. If you read the 444 00:21:18,320 --> 00:21:20,359 Speaker 1: fine print about what a deferred asset is, then the 445 00:21:20,359 --> 00:21:22,600 Speaker 1: FED can choose when it wants to actually repay that. 446 00:21:22,640 --> 00:21:24,720 Speaker 1: And so it's racking up tens of billions, but will 447 00:21:24,760 --> 00:21:27,439 Speaker 1: eventually be hundreds of billions and potentially even trillions of 448 00:21:27,480 --> 00:21:30,320 Speaker 1: dollars worth of debt that the Treasury isn't getting. So 449 00:21:30,359 --> 00:21:33,920 Speaker 1: the Treasury isn't getting those profits from the FEDS. It's bank, right, 450 00:21:34,119 --> 00:21:36,920 Speaker 1: the United States Bank. And at the same time, it's 451 00:21:36,960 --> 00:21:40,800 Speaker 1: facing a massive maturity wall next year on debt that 452 00:21:40,880 --> 00:21:43,480 Speaker 1: was issued an average coupon of just one and a 453 00:21:43,480 --> 00:21:46,159 Speaker 1: half percent, thirty percent of the debt has to be 454 00:21:46,200 --> 00:21:49,000 Speaker 1: refinanced in the next twelve months. Yeah, and so thirty 455 00:21:49,000 --> 00:21:51,520 Speaker 1: percent of the debt. You take a look at the 456 00:21:51,560 --> 00:21:53,840 Speaker 1: fact that there's this massive maturity wall, right, thirty percent 457 00:21:53,880 --> 00:21:55,399 Speaker 1: of the debt that has to be refinanced at a 458 00:21:55,520 --> 00:21:59,520 Speaker 1: rate that is three times what it was financed at previously. 459 00:21:59,720 --> 00:22:02,560 Speaker 1: But the Fed is also not remating profits of the treasures. 460 00:22:02,560 --> 00:22:04,880 Speaker 1: The Treasury is not getting any money to refinance this debt. 461 00:22:05,040 --> 00:22:06,720 Speaker 1: It has this big maturity wall coming up, and as 462 00:22:06,800 --> 00:22:10,919 Speaker 1: to refinance it because rates have risen to five percent 463 00:22:10,960 --> 00:22:13,960 Speaker 1: all across the curve at basically three times the price. 464 00:22:14,240 --> 00:22:16,720 Speaker 1: And so that's the crisis that the Treasury is facing now. 465 00:22:16,720 --> 00:22:19,280 Speaker 1: And with the debt ceiling approaching, obviously it's going to 466 00:22:19,320 --> 00:22:21,959 Speaker 1: be raised. The question has to become how much longer 467 00:22:22,040 --> 00:22:25,440 Speaker 1: can the FED keep influencing these short term rates higher 468 00:22:25,680 --> 00:22:28,600 Speaker 1: when the Treasury is facing this big maturity wall, And 469 00:22:28,760 --> 00:22:31,399 Speaker 1: the question it's you know, it's this unstoppable force that's 470 00:22:31,400 --> 00:22:34,320 Speaker 1: meeting this immovable object. I don't necessarily have the answer 471 00:22:34,359 --> 00:22:37,800 Speaker 1: for it, but certainly the answer seems to be more 472 00:22:37,840 --> 00:22:40,600 Speaker 1: debt issuance. Right, more people gobble up this debt, so 473 00:22:40,640 --> 00:22:44,480 Speaker 1: the Treasury continue can continue financing itself through this debt. 474 00:22:44,880 --> 00:22:47,080 Speaker 1: And I tend to believe that the FED is probably 475 00:22:47,080 --> 00:22:49,280 Speaker 1: going to be a big buyer of that. It's going 476 00:22:49,280 --> 00:22:53,040 Speaker 1: to resume QT quantitative easing and purchase that debt in 477 00:22:53,080 --> 00:22:55,320 Speaker 1: big quantities in order for the Treasury definance itself. And 478 00:22:55,400 --> 00:22:57,959 Speaker 1: so it's a snake eating the tail and that's going 479 00:22:57,960 --> 00:23:02,000 Speaker 1: to continue going on cycle after Syite. Yeah, the Treasury 480 00:23:02,080 --> 00:23:04,840 Speaker 1: not only is their interest payments going up, so thirty 481 00:23:04,840 --> 00:23:06,679 Speaker 1: percent of that debt has to be refinanced from the 482 00:23:06,720 --> 00:23:09,919 Speaker 1: ones up to the threes fours, whatever the rate's going 483 00:23:09,960 --> 00:23:12,680 Speaker 1: to be at at that time, which is gonna double, triple, 484 00:23:12,760 --> 00:23:14,920 Speaker 1: quadruple the amount of interest payments they have to pay. 485 00:23:15,119 --> 00:23:17,000 Speaker 1: But then their tax receipts are going down, So tax 486 00:23:17,040 --> 00:23:21,159 Speaker 1: receeats are down nine percent, So there their receipts are dropping. 487 00:23:21,200 --> 00:23:23,080 Speaker 1: So it's a it's a real big problem that they're 488 00:23:23,119 --> 00:23:25,920 Speaker 1: in as far as the banks go. I mean I 489 00:23:26,040 --> 00:23:28,920 Speaker 1: was thinking like, well, shoot, they can't keep they can't 490 00:23:28,960 --> 00:23:30,840 Speaker 1: keep racing rates. The banks are all going to go bust. 491 00:23:30,840 --> 00:23:34,200 Speaker 1: But now with this new facility. Joseph Wang, the Fed guy, 492 00:23:34,480 --> 00:23:36,439 Speaker 1: I've had him on my show as well, great interview. 493 00:23:36,480 --> 00:23:37,840 Speaker 1: Go back and check it out on my main YouTube, 494 00:23:37,840 --> 00:23:40,480 Speaker 1: Pianel and just search Mark Moss Joseph Wang. But he's 495 00:23:40,520 --> 00:23:43,760 Speaker 1: saying that now that the basically this facility has been 496 00:23:43,800 --> 00:23:46,640 Speaker 1: put in place, the banks, I'm sorry, the Fed can 497 00:23:46,760 --> 00:23:51,200 Speaker 1: continue with their hiking. Yeah, essentially that's what it's done. 498 00:23:51,280 --> 00:23:55,480 Speaker 1: So I'll give an analogy to the listeners. Perhaps you 499 00:23:55,560 --> 00:23:57,359 Speaker 1: might remember, I think I don't know if we discussed 500 00:23:57,400 --> 00:23:59,320 Speaker 1: it when I was last on the show, but last 501 00:23:59,359 --> 00:24:02,720 Speaker 1: year there was air in the United Kingdom sovereign bond market. 502 00:24:02,840 --> 00:24:06,080 Speaker 1: Essentially it played out largely similar to what happened here, 503 00:24:06,359 --> 00:24:09,520 Speaker 1: in that the value of those United Kingdom bonds dropped 504 00:24:09,560 --> 00:24:11,439 Speaker 1: so much that people that were holding them on their 505 00:24:11,480 --> 00:24:14,720 Speaker 1: balance sheet and actually leveraging them were facing margin call. 506 00:24:14,880 --> 00:24:16,879 Speaker 1: And what needed to happen was the Bank of England 507 00:24:16,880 --> 00:24:19,000 Speaker 1: stepped in and said, we're going to buy as many 508 00:24:19,000 --> 00:24:21,520 Speaker 1: of these bonds as is needed is to stabilize these 509 00:24:21,520 --> 00:24:24,320 Speaker 1: funds and make sure that they don't default. So essentially 510 00:24:24,359 --> 00:24:27,200 Speaker 1: that allowed the Bank of England to intervene and stabilize 511 00:24:27,280 --> 00:24:30,280 Speaker 1: its bond market and its financial institutions while continuing to 512 00:24:30,320 --> 00:24:33,639 Speaker 1: tighten policy. It's raised banks, It's raised its policy interest 513 00:24:33,680 --> 00:24:36,800 Speaker 1: rate by several percentage points since then. And that's the 514 00:24:36,840 --> 00:24:38,240 Speaker 1: same thing that you're probably going to see with the 515 00:24:38,280 --> 00:24:41,920 Speaker 1: Fed here. The Fed, via working with the Treasury in 516 00:24:41,960 --> 00:24:45,760 Speaker 1: the FDC, has created this facility just to stabilize banks, 517 00:24:46,080 --> 00:24:48,400 Speaker 1: but it hasn't indicated and I don't think it will 518 00:24:48,440 --> 00:24:51,760 Speaker 1: indicate that it plans to stop keeping policy rates elevated, 519 00:24:52,080 --> 00:24:54,679 Speaker 1: whether it's going to pause relatively soon and hold it 520 00:24:54,680 --> 00:24:58,040 Speaker 1: there or keep hiking in twenty five bases point increments. Basically, 521 00:24:58,200 --> 00:25:01,879 Speaker 1: this new facility allows the FED to stabilize stabilize the 522 00:25:01,920 --> 00:25:05,320 Speaker 1: banking sector, basically saying, if you ever run into liquidity issues, 523 00:25:05,320 --> 00:25:07,359 Speaker 1: don't worry. You can borrow from us and we won't 524 00:25:07,359 --> 00:25:09,760 Speaker 1: tell anybody. It's that way, there's no stigma related to 525 00:25:09,760 --> 00:25:12,280 Speaker 1: you as a bank. All the while they can continue hiking. 526 00:25:12,280 --> 00:25:14,240 Speaker 1: And it's a way of the Fed that the Fed 527 00:25:14,280 --> 00:25:16,960 Speaker 1: can play this monetary magic, have their cake and eat 528 00:25:17,000 --> 00:25:18,560 Speaker 1: it too. But at the end of the day, it's 529 00:25:18,600 --> 00:25:21,159 Speaker 1: just introducing new risks and dispersing those risks through the 530 00:25:21,240 --> 00:25:24,600 Speaker 1: financial system. So eventually, when we have to pay the piper, 531 00:25:24,600 --> 00:25:26,760 Speaker 1: when the grim Reaper is finally at our doorstep, the 532 00:25:27,040 --> 00:25:28,920 Speaker 1: crisis that we have to contend with will be all 533 00:25:28,920 --> 00:25:34,439 Speaker 1: the more worse. So the FED has basically backstop the 534 00:25:34,440 --> 00:25:37,720 Speaker 1: banks by taking all their giving them par on all 535 00:25:37,760 --> 00:25:41,359 Speaker 1: their treasuries. So forget, forget that you've mismanaged it, forget 536 00:25:41,400 --> 00:25:44,040 Speaker 1: that you've haven't paid attention, forget that you haven't headed anything. 537 00:25:44,160 --> 00:25:46,320 Speaker 1: We're just going to make you whole. So that brings 538 00:25:46,320 --> 00:25:51,000 Speaker 1: the banks whole. And now they've effectively backstopped all the depositors. 539 00:25:51,000 --> 00:25:54,280 Speaker 1: So we had two hundred fifty thousand dollars FDIC insurance 540 00:25:54,359 --> 00:25:56,680 Speaker 1: on our bank deposits, and the FED has said, well, 541 00:25:56,680 --> 00:25:59,800 Speaker 1: we're just gonna bail out all the depositors as well. 542 00:26:00,880 --> 00:26:04,320 Speaker 1: So basically the FED is backstopping both the banks, so 543 00:26:04,400 --> 00:26:08,560 Speaker 1: the treasury market, and they're backstopping the depositors as well. 544 00:26:09,160 --> 00:26:11,800 Speaker 1: That's where we're at, precisely, that's exactly what they're doing. 545 00:26:11,800 --> 00:26:13,680 Speaker 1: And frankly, if you look at the size of Silicon 546 00:26:13,720 --> 00:26:17,440 Speaker 1: Valley Bank as an institution the FED created in order 547 00:26:17,480 --> 00:26:21,320 Speaker 1: to justify bailing them out, and you know, obviously ensuring 548 00:26:21,320 --> 00:26:24,520 Speaker 1: all insured depositors, they created what was called a systemic 549 00:26:24,600 --> 00:26:27,280 Speaker 1: risk exception. This was a phrase that was thrown around 550 00:26:27,359 --> 00:26:29,440 Speaker 1: much more in two thousand and eight when two hundred 551 00:26:29,480 --> 00:26:32,160 Speaker 1: three hundred four hundred banks failed and the FDIC had 552 00:26:32,200 --> 00:26:35,600 Speaker 1: to take those over over the next decade. But this bank, 553 00:26:35,720 --> 00:26:38,159 Speaker 1: Silicon Valley Bank, was the eighteenth largest bank in the 554 00:26:38,240 --> 00:26:40,960 Speaker 1: United States. It only had two hundred and twelve billion 555 00:26:41,000 --> 00:26:43,879 Speaker 1: dollars worth of assets all told, right, compared to the 556 00:26:43,880 --> 00:26:47,200 Speaker 1: big four JP Morgan City Group, Wells Fargo, and JP 557 00:26:47,320 --> 00:26:50,920 Speaker 1: Morgan Chase, it was a pretty small bank. And so 558 00:26:51,119 --> 00:26:54,000 Speaker 1: what does that tell us about the solvency concerns of 559 00:26:54,040 --> 00:26:56,600 Speaker 1: the banking system at large? If this two hundred twelve 560 00:26:56,640 --> 00:27:01,320 Speaker 1: billion dollar bank was systemically threatening, if it went under 561 00:27:01,440 --> 00:27:03,160 Speaker 1: so the FED decided to bail it out, what does 562 00:27:03,160 --> 00:27:05,960 Speaker 1: that tell us about the larger institutions? Right? If are 563 00:27:05,960 --> 00:27:09,119 Speaker 1: the larger institutions just as fragile? Right? And then and 564 00:27:09,119 --> 00:27:12,120 Speaker 1: then they're saying, well, if Peter Thield didn't put out 565 00:27:12,160 --> 00:27:14,200 Speaker 1: that tweet about pulling money out, it wouldn't collapse. And 566 00:27:14,240 --> 00:27:16,159 Speaker 1: it's like, if people want to get their money out 567 00:27:16,200 --> 00:27:18,600 Speaker 1: of the bank causes the banking collapse, maybe the banks 568 00:27:18,600 --> 00:27:21,560 Speaker 1: were already ready to collapse. If you're just tuning in, 569 00:27:21,560 --> 00:27:23,840 Speaker 1: you're listening to the Mark Moss Show, we're talking about 570 00:27:23,840 --> 00:27:26,919 Speaker 1: the banking collapse. Of course, I'm joined by Joe Consorti 571 00:27:26,960 --> 00:27:29,000 Speaker 1: from the Bitcoin Layer. Check that out and check them 572 00:27:29,000 --> 00:27:32,000 Speaker 1: out on Twitter at Joe Consorti. Man, I want to 573 00:27:32,000 --> 00:27:34,520 Speaker 1: come and talk about what comes next? Is this the 574 00:27:34,640 --> 00:27:37,040 Speaker 1: end of capitalism? We're gonna talk about that and a 575 00:27:37,080 --> 00:27:38,560 Speaker 1: lot more when we come back. Take a quick break, 576 00:27:38,600 --> 00:27:42,919 Speaker 1: don't go away, We'll be right back. All right, Welcome back. 577 00:27:42,960 --> 00:27:44,439 Speaker 1: If you're just tuning in, you were listening to the 578 00:27:44,480 --> 00:27:47,240 Speaker 1: Mark Moss Show, we're talking about the blood bath in 579 00:27:47,359 --> 00:27:51,160 Speaker 1: the banking sector, how the entire banking system was melting 580 00:27:51,240 --> 00:27:53,880 Speaker 1: down and then it got magically saved by some more 581 00:27:53,880 --> 00:27:56,520 Speaker 1: magic tricks of the FED. I'm joined right now. I'm 582 00:27:56,560 --> 00:27:59,960 Speaker 1: talking to Joe Consorti from the Bitcoin Layer. Now, Joe, 583 00:28:00,160 --> 00:28:03,280 Speaker 1: if we play this out like like, where does this go? Right? 584 00:28:03,320 --> 00:28:08,000 Speaker 1: So lots of talk about CBDCs and central bank digital currencies, 585 00:28:08,000 --> 00:28:11,840 Speaker 1: which is basically the central bank, which in this case 586 00:28:11,840 --> 00:28:15,560 Speaker 1: the Federal Reserve, would issue a currency directly to the 587 00:28:15,680 --> 00:28:18,359 Speaker 1: retail customer, you and I and we would just have 588 00:28:18,359 --> 00:28:22,120 Speaker 1: accounts with the FED. Now, there's a million reasons why 589 00:28:22,160 --> 00:28:26,480 Speaker 1: that's big, bad, scary, authoritarian, lots of control, surveillance, etc. 590 00:28:29,119 --> 00:28:31,439 Speaker 1: And I was I did a show with Sam Callen 591 00:28:31,520 --> 00:28:34,480 Speaker 1: and from Swan talking about CBDCs, and he said, you know, 592 00:28:34,520 --> 00:28:36,240 Speaker 1: they're not going to ship, And I was also thinking, 593 00:28:36,280 --> 00:28:37,960 Speaker 1: you know, it's probably gonna be hard to get something 594 00:28:38,000 --> 00:28:40,160 Speaker 1: like that through the United States because this pesky thing 595 00:28:40,200 --> 00:28:42,959 Speaker 1: called the Constitution, and the FED doesn't have the right 596 00:28:42,960 --> 00:28:45,080 Speaker 1: to issue money, only the Treasury does, and all these 597 00:28:45,120 --> 00:28:49,600 Speaker 1: different things. But here we are, and if the FED 598 00:28:49,760 --> 00:28:54,240 Speaker 1: is backstopping all deposits, that sort of means that we 599 00:28:54,320 --> 00:28:57,760 Speaker 1: sort of have accounts with the FED. Maybe. I mean, 600 00:28:57,800 --> 00:29:01,200 Speaker 1: it's certainly a big step forward to going to that level. 601 00:29:01,240 --> 00:29:03,880 Speaker 1: It is. It is a massive leap. And I tend 602 00:29:03,880 --> 00:29:05,920 Speaker 1: to agree with Sam in the idea that in the 603 00:29:06,000 --> 00:29:09,480 Speaker 1: United States at least CBDCs won't ship. But this is 604 00:29:09,520 --> 00:29:13,760 Speaker 1: a step closer to the FED, to individuals essentially having 605 00:29:13,800 --> 00:29:17,000 Speaker 1: an account with the FED. And if all deposits can 606 00:29:17,040 --> 00:29:19,680 Speaker 1: bypass the FDIC if banks are paying insurance to the 607 00:29:19,680 --> 00:29:22,760 Speaker 1: FDIC sort of as a formality, and the FED is 608 00:29:22,760 --> 00:29:25,600 Speaker 1: the actual one who has the ability to backstop all 609 00:29:25,600 --> 00:29:28,440 Speaker 1: depositors in the United States. That just makes it one 610 00:29:28,480 --> 00:29:32,080 Speaker 1: step closer to them controlling the price of money, the 611 00:29:32,160 --> 00:29:34,800 Speaker 1: interest rate even more than they actually do, and the 612 00:29:34,880 --> 00:29:38,040 Speaker 1: actual spending behavior of individuals right if if they you know, 613 00:29:38,080 --> 00:29:41,280 Speaker 1: it brings that reality one step closer to our doorstep. 614 00:29:41,360 --> 00:29:44,080 Speaker 1: And I think Lynn Alden posted this and several other 615 00:29:44,120 --> 00:29:48,120 Speaker 1: people did. But over time, the FDIC insurance limit has 616 00:29:48,280 --> 00:29:51,560 Speaker 1: gradually increased. Before two thousand and eight, it was I 617 00:29:51,560 --> 00:29:53,680 Speaker 1: believe fifty thousand or one hundred thousand dollars, and then 618 00:29:53,680 --> 00:29:55,600 Speaker 1: in two thousand and eight it was a quarter million dollars. 619 00:29:55,560 --> 00:29:58,840 Speaker 1: And now with the actions on Sunday, essentially all deposits 620 00:29:58,840 --> 00:30:02,280 Speaker 1: in the United States are insured to infinity. And so 621 00:30:02,600 --> 00:30:06,280 Speaker 1: that introduces a tremendous degree of moral hazard into the 622 00:30:06,280 --> 00:30:09,280 Speaker 1: banking system. And now that basically individuals have a direct 623 00:30:09,280 --> 00:30:10,920 Speaker 1: line with the FED, I tend to think that that's 624 00:30:10,960 --> 00:30:13,720 Speaker 1: going to create even more misallocation of capital. Kick the 625 00:30:13,760 --> 00:30:16,840 Speaker 1: can down the road even further and potentially because now 626 00:30:16,840 --> 00:30:19,200 Speaker 1: we essentially have direct lines with the FED, might might 627 00:30:19,240 --> 00:30:22,640 Speaker 1: usher us closer one step closer at least to a CBDC. Yeah, 628 00:30:22,720 --> 00:30:25,280 Speaker 1: I mean if we have an account directly with the FED. 629 00:30:25,440 --> 00:30:27,880 Speaker 1: I mean that is sort of like a CBDC. I 630 00:30:27,880 --> 00:30:30,680 Speaker 1: mean that's it. Maybe don't have all the technical capabilities 631 00:30:30,680 --> 00:30:34,320 Speaker 1: of that, but it certainly gets us one step closer. Now. 632 00:30:34,760 --> 00:30:37,520 Speaker 1: I had also been thinking that, you know, one of 633 00:30:37,560 --> 00:30:39,600 Speaker 1: the many reasons why maybe it won't ship if we're 634 00:30:39,600 --> 00:30:41,880 Speaker 1: going to play that role, is because we have the 635 00:30:42,000 --> 00:30:45,040 Speaker 1: US dollar stable coins that have already proliferated around the world. 636 00:30:45,400 --> 00:30:47,280 Speaker 1: And so really, what does the FED want. They want 637 00:30:47,560 --> 00:30:49,280 Speaker 1: They want to control money. They want the dollar to 638 00:30:49,320 --> 00:30:52,080 Speaker 1: be the main currency. The stable coins have done that, 639 00:30:52,240 --> 00:30:54,760 Speaker 1: that's done really well for them. I've been working on 640 00:30:54,800 --> 00:30:57,160 Speaker 1: this theory, this idea for a video. I haven't been 641 00:30:57,200 --> 00:31:00,280 Speaker 1: able to get all the research done, but how USDC 642 00:31:01,120 --> 00:31:04,560 Speaker 1: circle might be the actual coin of choice by the government. 643 00:31:04,600 --> 00:31:06,200 Speaker 1: And you can look at the attack that happened from 644 00:31:06,280 --> 00:31:11,680 Speaker 1: Terra Luna through Celsius. Tether was the number one and 645 00:31:11,800 --> 00:31:14,800 Speaker 1: number two investors on Celsius and they got cut taken down. 646 00:31:15,520 --> 00:31:19,760 Speaker 1: FTX was i believe the largest redeemer on Tether and 647 00:31:19,760 --> 00:31:21,360 Speaker 1: then they got taken down. So it's like it's like 648 00:31:21,400 --> 00:31:23,920 Speaker 1: almost like this attack on Tether, which is the competitor 649 00:31:23,960 --> 00:31:27,600 Speaker 1: to USDC. USDC is this kind of Goldman Sachs company 650 00:31:27,680 --> 00:31:32,520 Speaker 1: Circle that now has a partnership with with black Rock, 651 00:31:32,840 --> 00:31:35,120 Speaker 1: And now black Rock has worked out a deal to 652 00:31:35,120 --> 00:31:38,120 Speaker 1: hold the money and then create a bank account with 653 00:31:38,160 --> 00:31:42,000 Speaker 1: the FED for that money. And so it's like getting closer, closer, closer, 654 00:31:42,040 --> 00:31:44,959 Speaker 1: and then that could just be the CBDC. It's already 655 00:31:45,000 --> 00:31:47,720 Speaker 1: there right, which could be this very thing. But but 656 00:31:47,880 --> 00:31:50,920 Speaker 1: now it looks like Circle might have gotten caught in this, 657 00:31:51,400 --> 00:31:53,320 Speaker 1: and some people are even speculating that maybe this is 658 00:31:53,360 --> 00:31:55,440 Speaker 1: even somewhat of an attack on Circle. Do you have 659 00:31:55,440 --> 00:31:58,360 Speaker 1: any thoughts on that there's an angle there? And I 660 00:31:58,400 --> 00:32:01,200 Speaker 1: think that some of some of that maybe exactly correct. 661 00:32:01,600 --> 00:32:04,239 Speaker 1: There were interests within the United States government that were 662 00:32:04,280 --> 00:32:08,160 Speaker 1: embroiled in Silicon Valley Bank that made it more attractive 663 00:32:08,200 --> 00:32:09,800 Speaker 1: to bail them out than to not bail them out. 664 00:32:10,000 --> 00:32:12,560 Speaker 1: The FED may have chosen to bail out Silicon Valley Bank, 665 00:32:12,640 --> 00:32:15,440 Speaker 1: not because it was an integral financial institution from the 666 00:32:15,480 --> 00:32:18,360 Speaker 1: standpoint of being so large that if it exploded, the 667 00:32:18,840 --> 00:32:21,880 Speaker 1: fallout of vaporizing all of its creditors would have been catastrophic. 668 00:32:22,360 --> 00:32:23,880 Speaker 1: It could have been that they bailed them out because 669 00:32:23,880 --> 00:32:27,040 Speaker 1: they had interest in doing so. One of them is 670 00:32:27,040 --> 00:32:30,680 Speaker 1: obviously the Department of Defense. Right. How many startups who 671 00:32:31,040 --> 00:32:33,760 Speaker 1: work with that, work with Raytheon, work with Lockheed Martin 672 00:32:33,760 --> 00:32:36,160 Speaker 1: and some of those other small defense contractors. How many 673 00:32:36,160 --> 00:32:38,800 Speaker 1: of those were startups and had their capital locked up 674 00:32:38,800 --> 00:32:42,280 Speaker 1: in Silicon Valley Bank and by the same token Circle Right, 675 00:32:42,280 --> 00:32:44,440 Speaker 1: If the United States government has an interest in Circle 676 00:32:44,440 --> 00:32:46,960 Speaker 1: and making that the CBDC of choice and the fedmanking 677 00:32:46,960 --> 00:32:49,160 Speaker 1: that the CBDC of choice, that could also be a 678 00:32:49,200 --> 00:32:51,320 Speaker 1: reason as to why they decided to bail them out. 679 00:32:51,320 --> 00:32:53,479 Speaker 1: Circle had three point three billion dollars worth of their 680 00:32:53,520 --> 00:32:56,880 Speaker 1: cash reserves at Silicon Valley Bank, which is roughly ten 681 00:32:56,960 --> 00:33:00,800 Speaker 1: percent of the total reserves for USD see, which means, 682 00:33:01,280 --> 00:33:04,320 Speaker 1: for those of you math wizards out there, that USDC 683 00:33:04,520 --> 00:33:07,360 Speaker 1: would now have a technical value of ninety cents rather 684 00:33:07,400 --> 00:33:10,440 Speaker 1: than one dollar, not the most stable point in the universe, 685 00:33:10,480 --> 00:33:14,800 Speaker 1: and in theory, if enough depositors redeemed their USDC for 686 00:33:15,000 --> 00:33:17,680 Speaker 1: actual dollars, Circle wouldn't have been able to meet all 687 00:33:17,720 --> 00:33:20,960 Speaker 1: of those withdrawal requests. And so from the standpoint of 688 00:33:21,040 --> 00:33:23,520 Speaker 1: the United States and the FED having an interest in 689 00:33:23,600 --> 00:33:26,440 Speaker 1: Silicon Valley Bank from a defense standpoint, but also from 690 00:33:26,480 --> 00:33:29,600 Speaker 1: a potential future CBDC and circle as that prospect really 691 00:33:29,640 --> 00:33:32,280 Speaker 1: wouldn't surprise me if that's the reason that they intervened, 692 00:33:32,440 --> 00:33:35,000 Speaker 1: rather than financial instability, because like I mentioned earlier, I 693 00:33:35,040 --> 00:33:37,480 Speaker 1: don't think Silicon Valley Bank going under would have created 694 00:33:37,520 --> 00:33:40,440 Speaker 1: financial instability. There could have been other motives here. Let's 695 00:33:40,440 --> 00:33:42,920 Speaker 1: talk about that for a second. This might be a 696 00:33:42,920 --> 00:33:44,440 Speaker 1: little out of your wheelhouse. I don't know, we've never 697 00:33:44,480 --> 00:33:48,680 Speaker 1: really talked politics or just kind of political theory. But 698 00:33:48,760 --> 00:33:51,080 Speaker 1: what do you think would have happened if they wouldn't 699 00:33:51,080 --> 00:33:54,120 Speaker 1: have bailed out SVB? And what do you think the 700 00:33:54,160 --> 00:34:00,040 Speaker 1: effects of bailing out SVB are for capitalism? So I 701 00:34:00,080 --> 00:34:03,240 Speaker 1: saw Ken Griffin from Citadel said this is the end 702 00:34:03,400 --> 00:34:06,920 Speaker 1: of capitalism. Capitalism is breaking down before ever very eyes, 703 00:34:07,040 --> 00:34:08,560 Speaker 1: is what he said. So what do you think would 704 00:34:08,600 --> 00:34:10,200 Speaker 1: be the effects if they didn't And what do you 705 00:34:10,200 --> 00:34:13,719 Speaker 1: think this does to capitalism? Right? So, I think the 706 00:34:13,800 --> 00:34:17,600 Speaker 1: effects if they didn't you would have seen creditors who 707 00:34:17,640 --> 00:34:20,000 Speaker 1: were you know, obviously you would have seen uninsured depositors. 708 00:34:20,000 --> 00:34:22,920 Speaker 1: So individuals over two hundred fifty thousand have their funds 709 00:34:22,960 --> 00:34:26,200 Speaker 1: totally vaporized, you know, the fdisay, But they wouldn't, right 710 00:34:26,239 --> 00:34:28,520 Speaker 1: because they only had they only had a one point 711 00:34:28,560 --> 00:34:31,719 Speaker 1: eight billion dollar hole, right exactly? Was that all they 712 00:34:31,719 --> 00:34:33,800 Speaker 1: had at the time. If they would have had to 713 00:34:33,840 --> 00:34:36,520 Speaker 1: liquidate all the bonds to pay all the depositors, I mean, 714 00:34:36,520 --> 00:34:39,520 Speaker 1: how much would have been lost? Ten percent, twenty percent precisely, 715 00:34:39,560 --> 00:34:41,600 Speaker 1: So investors still would have been able to get seventy 716 00:34:41,600 --> 00:34:44,040 Speaker 1: five cents in the dollar maybe, you know at not 717 00:34:44,200 --> 00:34:47,520 Speaker 1: investors the depositors, the depositors, Yes, at the worst, fifty 718 00:34:47,560 --> 00:34:48,960 Speaker 1: cents in the dollar. And so there was still a 719 00:34:49,000 --> 00:34:52,759 Speaker 1: tremendous degree of recoverable assets there. And the fd I see, 720 00:34:53,160 --> 00:34:55,560 Speaker 1: even if it was taken into receivership and this didn't 721 00:34:55,560 --> 00:34:58,960 Speaker 1: happen and the FDIC was able to liquidate some of 722 00:34:58,960 --> 00:35:01,319 Speaker 1: those assets, all likelihood would have been able to deliver 723 00:35:01,360 --> 00:35:03,960 Speaker 1: the same thing on insured depositors getting seventy or eighty 724 00:35:03,960 --> 00:35:05,799 Speaker 1: cents in the dollar. And so I don't think there 725 00:35:05,800 --> 00:35:07,680 Speaker 1: would have been tremendous fallout here. I think this is 726 00:35:07,680 --> 00:35:09,839 Speaker 1: just a knee jerk reaction on behalf of the FED, 727 00:35:09,880 --> 00:35:11,920 Speaker 1: on behalf of the government. Maybe there was a call 728 00:35:12,000 --> 00:35:15,160 Speaker 1: from the President in there basically a kneed jerk response 729 00:35:15,200 --> 00:35:17,120 Speaker 1: following two thousand and eight to say, up, we gotta 730 00:35:17,160 --> 00:35:20,120 Speaker 1: go right now. Bailed them out. And obviously it's not 731 00:35:20,200 --> 00:35:22,239 Speaker 1: a bailout, it's more of a facility that, you know, 732 00:35:22,320 --> 00:35:24,279 Speaker 1: come and take cash as you need it. But by 733 00:35:24,360 --> 00:35:26,960 Speaker 1: the same token, it does chip away a little bit 734 00:35:27,000 --> 00:35:29,279 Speaker 1: at the idea of capitalism because what this did it 735 00:35:29,400 --> 00:35:33,480 Speaker 1: was basically nationalize the banks, right you know, it said 736 00:35:33,520 --> 00:35:36,280 Speaker 1: that rather than the FDIC, which is this private insurance 737 00:35:36,280 --> 00:35:39,800 Speaker 1: corporations obviously at a federal level, but this private insurance 738 00:35:39,840 --> 00:35:43,760 Speaker 1: corporation that the banks pay premiums to in order to operate, 739 00:35:43,840 --> 00:35:46,600 Speaker 1: and offer that two hundred fifty thousand dollars deposit insurance 740 00:35:47,520 --> 00:35:50,480 Speaker 1: on all depositors. With that amount of money, now the 741 00:35:50,600 --> 00:35:53,120 Speaker 1: FED and Treasury and Confluence stepped in and said, hey, 742 00:35:53,400 --> 00:35:56,360 Speaker 1: we'll take over guys, no worries. If banks need funding. 743 00:35:56,520 --> 00:35:58,800 Speaker 1: We set up this facility where they can bar against 744 00:35:58,840 --> 00:36:01,280 Speaker 1: all their distressed assets, you can forgive all their mistakes, 745 00:36:01,520 --> 00:36:04,200 Speaker 1: and that idea of forgiving all the mistakes of these 746 00:36:04,200 --> 00:36:08,280 Speaker 1: poorly allocated banks. Not only is it introducing a tremendous 747 00:36:08,280 --> 00:36:11,000 Speaker 1: amount of moral hazard in the system, but it's essentially 748 00:36:11,120 --> 00:36:14,359 Speaker 1: nationalizing the banks, right, which completely detracts from the idea 749 00:36:14,360 --> 00:36:17,560 Speaker 1: of capitalism and the idea that those who officially allocate 750 00:36:17,600 --> 00:36:21,920 Speaker 1: their capital get rewarded and now those who poorly allocate 751 00:36:21,960 --> 00:36:25,080 Speaker 1: their capital can just erase the mistake. And so I 752 00:36:25,080 --> 00:36:27,960 Speaker 1: think this is a massive mistake, and I think it's 753 00:36:28,200 --> 00:36:32,239 Speaker 1: definitely detracts from the idea of capitalism capitalism in America. Yeah, 754 00:36:32,239 --> 00:36:34,480 Speaker 1: it's what we call moral hazard, right, and so since 755 00:36:34,520 --> 00:36:37,000 Speaker 1: they know they can't fail, they're just willing to yolo 756 00:36:37,120 --> 00:36:40,640 Speaker 1: all the time. The losses to the depositors, I kind 757 00:36:40,640 --> 00:36:43,040 Speaker 1: of agree with you, would have been immaterial. A ten 758 00:36:43,160 --> 00:36:45,280 Speaker 1: twenty percent haircut to the richest people in the world. 759 00:36:45,719 --> 00:36:47,600 Speaker 1: It would have been like a little slap on the wrist, 760 00:36:47,680 --> 00:36:49,080 Speaker 1: is what it would have been. But it would have 761 00:36:49,120 --> 00:36:51,239 Speaker 1: told people like, hey, here's a slap. If you do 762 00:36:51,239 --> 00:36:53,440 Speaker 1: it again, it could be worse, and that's maybe what 763 00:36:53,520 --> 00:36:56,120 Speaker 1: we needed to wake people up, but we didn't get it. Anyway, 764 00:36:56,160 --> 00:36:57,480 Speaker 1: If you're just tune in, you're listening to the Mark 765 00:36:57,520 --> 00:37:00,800 Speaker 1: ma Show, we've been talking about the banking collapse. Of course, 766 00:37:00,960 --> 00:37:02,760 Speaker 1: we're gonna be talking about this quite a bit, because 767 00:37:02,760 --> 00:37:05,279 Speaker 1: this is not over by a long shot. I've been 768 00:37:05,360 --> 00:37:07,400 Speaker 1: sitting down with Joe Consorti check him out at the 769 00:37:07,520 --> 00:37:09,719 Speaker 1: Bitcoin Layer at Joe Consorti on Twitter, and that's what 770 00:37:09,719 --> 00:37:10,720 Speaker 1: we got. Thanks for listening.