WEBVTT - The Dollar Is Under Attack From The US | Rick Rule 0:00:00.120 --> 0:00:04.280 The dollar is under attack from the United States. What 0:00:04.320 --> 0:00:06.680 the heck does that mean? Well, it means what it 0:00:06.760 --> 0:00:11.840 says is the United States dollar under attack from within. Well, 0:00:11.880 --> 0:00:15.120 my guest today a living legend is Rick Rule, and 0:00:15.200 --> 0:00:18.439 he says that it's not China and not Russia attacking 0:00:18.440 --> 0:00:21.680 the dollar, It's happening from within. So we're gonna dig 0:00:21.720 --> 0:00:24.520 into the banking crisis. We're gonna explain what happened. Now, 0:00:24.560 --> 0:00:27.360 he started a bank, sold a bank, he started another bank. 0:00:27.440 --> 0:00:29.840 He knows what happens in banks. We're gonna talk about 0:00:29.880 --> 0:00:33.080 the banking crisis. We're gonna talk about what's happened in 0:00:33.120 --> 0:00:36.960 the investing market that's driven people and banks and consumers 0:00:37.000 --> 0:00:39.760 to this point. We're going to talk about the what 0:00:39.840 --> 0:00:42.400 the bank and what the governments are doing to restrict 0:00:42.440 --> 0:00:44.360 the flow of capital and keep it trapped in the system. 0:00:44.440 --> 0:00:47.200 We're going to talk about the move from fiat currencies, 0:00:47.440 --> 0:00:51.200 how the dollar is dying and the move to commodity 0:00:51.240 --> 0:00:53.440 money is changing. We're going to talk about energy markets. 0:00:53.440 --> 0:00:55.640 We're gonna talk about central bank digital currencies, and even 0:00:55.680 --> 0:00:58.320 his view on bitcoin. We covered a lot of grounds. 0:00:58.320 --> 0:01:00.400 This is amazing conversation with Rick Rule. Now, one thing 0:01:00.440 --> 0:01:01.560 I do want to say is I want to point 0:01:01.560 --> 0:01:05.160 your direction attention down to the description down below, because 0:01:05.200 --> 0:01:07.399 he has made an offer. He has a living legend, 0:01:07.480 --> 0:01:09.920 a resource investing legend, and if you go to his 0:01:09.959 --> 0:01:13.080 website and you post him what your energy or i'm 0:01:13.080 --> 0:01:17.520 sorry your resource investments are, he will personally grade them 0:01:17.560 --> 0:01:20.680 for you. Wow, I can't believe you made that opportunity 0:01:20.720 --> 0:01:23.720 for everybody listening. So check it out in description. Message him. 0:01:23.720 --> 0:01:25.840 Don't take don't pass up that opportunity to have him 0:01:25.840 --> 0:01:28.760 look at your own investments in the resource space. He's 0:01:28.800 --> 0:01:31.040 something like a legend. Anyway, let's go ahead, just jump 0:01:31.080 --> 0:01:34.040 right into this interview with Rick Rule. So you know, 0:01:34.160 --> 0:01:39.240 I know you had started a bank, you built a bank, 0:01:39.280 --> 0:01:40.959 you sold a bank. I know you work on another 0:01:41.000 --> 0:01:43.600 bank right now. But let's talk about the banks. That 0:01:43.720 --> 0:01:46.440 seems to be like the biggest topic of the hour 0:01:46.520 --> 0:01:49.760 at this point. The banks are melting down. It's a 0:01:49.760 --> 0:01:53.680 banking crisis. Coming from somebody who is working in the 0:01:53.680 --> 0:01:56.240 banking industry building a bank and now building a new bank. 0:01:56.680 --> 0:01:58.640 What's your take on this banking crisis? 0:01:59.360 --> 0:02:02.320 You know, mark banking is a pretty simple business if 0:02:02.360 --> 0:02:05.120 you do it right. It's really about blocking and tackling. 0:02:06.680 --> 0:02:09.000 I joke for forty five years and I've basically been 0:02:09.040 --> 0:02:14.079 a used money salesman. It's important, however, to get things right. 0:02:14.160 --> 0:02:18.359 Banking is a h fairly highly leveraged business, and that 0:02:18.440 --> 0:02:20.560 means that you have to be prudent and you have 0:02:20.600 --> 0:02:25.560 to implement the idea. As an example, that you would 0:02:25.760 --> 0:02:32.919 fund a long bond portfolio with very short dated instruments 0:02:33.960 --> 0:02:36.760 is the same thing that brought down the savings and 0:02:36.840 --> 0:02:41.240 loan industry. It isn't something that the banking business hasn't 0:02:41.280 --> 0:02:48.320 seen before. Credit spreads at present are very very attractive 0:02:48.360 --> 0:02:52.120 for bankers, credit spreads being the difference between their cost 0:02:52.160 --> 0:02:55.600 of funds and their return on capital employed, provided that 0:02:55.639 --> 0:02:59.000 the banks get paid back their return on capital employed. 0:02:59.880 --> 0:03:03.240 It's interesting that Silicon Valley Bank, as an example, had 0:03:03.320 --> 0:03:08.959 enough expertise in lending that their primary lending portfolio worked 0:03:09.040 --> 0:03:12.680 fairly well despite the risky nature of many of the 0:03:12.760 --> 0:03:17.560 venture loans that they've made. Their problem came because they 0:03:17.560 --> 0:03:21.200 were chasing yield in a place and in a way 0:03:21.360 --> 0:03:26.519 that I think was inappropriate. It's strange an inverted yield 0:03:26.600 --> 0:03:30.680 curve world that they moved out maturities to four or 0:03:30.720 --> 0:03:35.240 five years, rather than keeping them tight to change differentials 0:03:35.240 --> 0:03:37.720 in yield that were fairly low. Albeit perhaps when they 0:03:37.800 --> 0:03:42.560 put the positions on two or three years ago, those 0:03:42.800 --> 0:03:46.880 longer dated yields were higher. The fact is that if 0:03:46.920 --> 0:03:51.480 you have four or five year maturities that you are 0:03:51.840 --> 0:03:56.240 funding with now deposits and demand deposits, you always put 0:03:56.320 --> 0:03:58.920 yourself in a precarious position. When the interest rates went up, 0:03:58.960 --> 0:04:05.640 of course, the stated value of those long duration bonds fell, 0:04:06.280 --> 0:04:11.040 wiping out, in effect, the tangible book of the bank. 0:04:11.880 --> 0:04:14.680 I guess the second problem that they faced Mark, which 0:04:14.720 --> 0:04:16.719 a lot of people are talking about, is the unstable 0:04:16.800 --> 0:04:20.000 nature of their deposits, which is saying that they didn't 0:04:20.040 --> 0:04:24.400 sell deposits to Rick Ruler Mark Moss. They sold deposits 0:04:24.440 --> 0:04:27.839 that were uninsured in very large amounts to two classes 0:04:28.000 --> 0:04:32.279 of deposit or, one being venture capital firms that would 0:04:32.320 --> 0:04:36.919 deposit subscription receipts that hadn't been invested in venture capital 0:04:36.920 --> 0:04:46.200 partnerships yet, and secondly, the capital raised by technology companies 0:04:46.200 --> 0:04:52.200 that hadn't yet been deployed. As uh cost of capital 0:04:52.279 --> 0:04:56.360 went up and capital became less very available to technology companies, 0:04:56.560 --> 0:04:58.920 beginning about a year and a half ago. Those two 0:04:59.000 --> 0:05:02.159 sources of new fund dried up at the same time 0:05:02.279 --> 0:05:04.960 that both the funds and the companies ran down their 0:05:05.000 --> 0:05:10.320 existing deposits, So Silicon Valley Bank had a critical, I think, 0:05:10.360 --> 0:05:14.440 liquidity squeeze. The bottom line of this for your listeners, Mark, 0:05:15.400 --> 0:05:19.599 is that the only regulator who really makes a difference 0:05:19.640 --> 0:05:22.039 for you as a banking investor, a borrow or a 0:05:22.120 --> 0:05:26.280 lender is you yourself. Silicon Valley was described by the 0:05:26.360 --> 0:05:29.720 regulators as being very in very good condition forty eight 0:05:29.760 --> 0:05:34.320 hours before its demise, but the FED. 0:05:34.400 --> 0:05:36.800 But then the FED said, we saw last November that 0:05:36.839 --> 0:05:40.120 they were there was danger in morning signs. 0:05:40.760 --> 0:05:42.800 It would have been useful had they communicated that to 0:05:42.839 --> 0:05:45.320 the market, Yeah, right, rather than trying to avert panic. 0:05:46.440 --> 0:05:51.400 My suggestion to you is simply that investors need to 0:05:51.400 --> 0:05:54.520 pay attention for themselves. They need to pay attention to 0:05:54.560 --> 0:05:56.400 a few things that you can learn from a bank 0:05:56.440 --> 0:06:00.200 statement of financial condition, which they're required to provide for 0:06:00.240 --> 0:06:03.320 you if you ask for it. The first is equity 0:06:03.400 --> 0:06:08.200 is a percentage of total assets. The FED says that 0:06:08.240 --> 0:06:11.120 a well capitalized bank has equity of seven percent of 0:06:11.160 --> 0:06:15.920 total assets. An old guy like me prefers ten to seven. 0:06:16.600 --> 0:06:18.640 Suffice it to say, a bank that has a seven 0:06:18.680 --> 0:06:22.800 percent equity slices over ninety percent leveraged, there isn't much 0:06:22.920 --> 0:06:27.240 room for error. The second thing that one must look at, 0:06:27.240 --> 0:06:29.599 and the banks must show you this if you ask, 0:06:30.520 --> 0:06:33.880 is duration risk, which is to say, the median duration 0:06:34.960 --> 0:06:39.120 of their deposit base versus the median duration and liquidity 0:06:39.240 --> 0:06:42.680 of their assets. You can spot what Silicon Valley Bank 0:06:42.720 --> 0:06:46.320 has done. In fact, there are numerous web websites now 0:06:46.680 --> 0:06:50.240 that show you the mark to market liability of the 0:06:50.320 --> 0:06:54.159 chartered banks in thenited states. The third ratio that that 0:06:54.240 --> 0:06:58.120 your client should look at, both as borrowers and also 0:06:58.200 --> 0:07:02.120 as depositors is the ratio of cash or near cash 0:07:02.160 --> 0:07:08.280 on bank balance sheets relative to their deposit liabilities. An 0:07:08.279 --> 0:07:12.240 intelligently capitalized bank has cash or near cash, that is 0:07:12.280 --> 0:07:17.400 to say, ninety day obligations or repos or overnight deposits 0:07:17.720 --> 0:07:21.520 equal to twenty or twenty five percent of their now 0:07:21.680 --> 0:07:27.600 or near term deposit liabilities. Relying on the regulators, relying 0:07:27.640 --> 0:07:31.160 on the investment banks, relying on people like that to 0:07:31.280 --> 0:07:34.520 do basic due diligence obviously doesn't work. We should have 0:07:34.600 --> 0:07:37.080 learned that with Madeoff. We should have learned that with Enron, 0:07:37.480 --> 0:07:38.080 but we didn't. 0:07:38.440 --> 0:07:42.560 Yeah, yeah, I love what you're saying. There something I've 0:07:42.600 --> 0:07:45.720 been saying, like the age of personal responsibility is coming 0:07:45.760 --> 0:07:50.360 back really hard. We've given our health care to the government, 0:07:50.400 --> 0:07:53.120 our education to the government, our pensance to the government, 0:07:53.520 --> 0:07:56.120 our health to our doctor. We've just shrugged off every 0:07:56.160 --> 0:07:58.640 single piece of personal responsibility. But we're all finding out 0:07:58.640 --> 0:08:01.960 why that's a problem. Which you take personal responsibility. I 0:08:02.000 --> 0:08:04.320 wanted to talk about who's supposed to be protecting us? 0:08:04.320 --> 0:08:06.360 But before we do, what about if we're looking at 0:08:06.400 --> 0:08:09.880 the bank, what about like the clos that they're hiding. 0:08:11.240 --> 0:08:14.480 Well, if you're asking me about unexploded bombs, I guess 0:08:14.560 --> 0:08:15.960 is what you're asking me about. 0:08:15.680 --> 0:08:17.600 Because those seem to be very hard to see. What's 0:08:17.680 --> 0:08:19.880 lurking un a balance sheet on and Wells Fargo is 0:08:19.920 --> 0:08:21.680 like on page one hundred and forty and it wasn't 0:08:21.680 --> 0:08:23.280 even fully disclosed. It didn't seem like. 0:08:24.320 --> 0:08:26.000 I can tell you what bothers me, and you know 0:08:26.080 --> 0:08:27.800 more about real estate than me. I've been a real 0:08:27.880 --> 0:08:29.960 estate lender and a real estate beneficiary, but not a 0:08:30.000 --> 0:08:34.679 real estate operator. I think the high ratio loans in 0:08:34.760 --> 0:08:39.600 commercial real estate pose a potential problem for banks. I 0:08:39.640 --> 0:08:42.520 realized for some borrowers they're a very pleasant thing, but 0:08:42.640 --> 0:08:44.760 for a lender they can be unpleasant. When I was 0:08:44.800 --> 0:08:48.840 more active in banking, I considered a reasonable ratio for 0:08:48.880 --> 0:08:53.280 a commercial loan to be sixty five to seventy percent LTV. 0:08:53.480 --> 0:08:56.400 I thought seventy was a bit aggressive. Lots of banks 0:08:56.400 --> 0:09:02.280 have been rating eighty five and ninety percent commercial firsts. 0:09:02.640 --> 0:09:06.160 I think that's problematic. The second thing that's problematic is 0:09:06.160 --> 0:09:09.640 that the senior secured doesn't always put in place a 0:09:09.679 --> 0:09:12.560 negative pledge, which is to say, even though they're in first, 0:09:12.960 --> 0:09:15.320 they don't restrict a borrower's ability to take on a 0:09:15.320 --> 0:09:17.959 second or a third to the extent that some barrow 0:09:17.960 --> 0:09:20.679 hors have taken out more than one hundred percent of 0:09:20.720 --> 0:09:23.599 the value of the project, and in liquidation and bankruptcy, 0:09:23.960 --> 0:09:30.360 that becomes a problem settling up the estate between various claimants. 0:09:30.920 --> 0:09:33.320 As I say, I'm not particularly an expert on many 0:09:33.360 --> 0:09:36.800 aspects of commercial real estate, but I notice that virtually 0:09:36.880 --> 0:09:39.960 every aspect, as an example of the office market, is 0:09:40.040 --> 0:09:44.959 experiencing some distress, and I suspect that banks that made 0:09:45.320 --> 0:09:48.080 office loans without understanding an awful lot about the collater 0:09:48.120 --> 0:09:51.040 and an awful lot about the borrower have some things 0:09:51.040 --> 0:09:55.199 to face. I think too, the banks that invested in 0:09:55.720 --> 0:10:02.560 mortgage bonds without understanding the constituent bond, the constituents of 0:10:02.600 --> 0:10:10.080 the bond, pardon me, probably face some difficulties. I think 0:10:10.120 --> 0:10:13.200 the third area where there are unexploded bombs mark and 0:10:13.280 --> 0:10:15.080 I think it's true in the ETF world as well 0:10:15.080 --> 0:10:18.600 as the banking world is in the general high yield 0:10:18.720 --> 0:10:24.120 or junk credit arena. Investors have been chasing yield without 0:10:24.160 --> 0:10:28.839 regard to credit quality for at least ten years. As 0:10:28.880 --> 0:10:32.000 long as interest rates were falling and borrowers had access 0:10:32.000 --> 0:10:35.199 to ever cheaper credit and lots of credit, life was good. 0:10:36.000 --> 0:10:40.800 With various lenders now trying to repair their own balance sheets, borrowers' 0:10:40.840 --> 0:10:43.199 ability to refinance, both in terms of real estate and 0:10:43.280 --> 0:10:45.640 junk credit is going to be constrained. That's going to 0:10:45.679 --> 0:10:49.840 be a problem. And the related problem I seated banking 0:10:49.960 --> 0:10:52.960 is in the ETFs, where you have these junk credit ETFs, 0:10:53.760 --> 0:10:57.440 where retail investors have chased yield, and where the ETF 0:10:57.480 --> 0:11:01.839 itself is highly highly liquid. But the parts that make 0:11:01.920 --> 0:11:05.120 up the ETF. The junk bonds are very very illiquid. 0:11:05.480 --> 0:11:09.720 If you have a circumstance where Joe citizen becomes concerned 0:11:09.720 --> 0:11:13.400 about credit quality and begins to redeem their ETFs in size, 0:11:14.040 --> 0:11:17.599 and the ETF manager tries to sell the underlying securities, 0:11:17.600 --> 0:11:20.800 which are illiquid, you could have a run on a 0:11:20.840 --> 0:11:25.679 different sort of bank. I'm reminded of my career as 0:11:25.679 --> 0:11:29.600 a young stockbroker where we described I liquid bonds as 0:11:29.720 --> 0:11:33.800 owl bonds. We call them owl bonds because the customer 0:11:33.840 --> 0:11:36.360 would call the broker to sell, and the broker would 0:11:36.400 --> 0:11:41.680 say to who, to who? And I'm afraid that both 0:11:41.760 --> 0:11:45.319 bankers and ETF managers are going to discover the perils 0:11:45.800 --> 0:11:50.800 of weak credits and I liquid secondary markets, much to 0:11:50.880 --> 0:11:51.480 their chagrin. 0:11:52.679 --> 0:11:56.559 You know, as you were explaining all of this unstable 0:11:56.559 --> 0:12:01.720 deposits and a mismatch on durations and not enough equity, 0:12:01.760 --> 0:12:03.560 but really you summed it up by saying, you know 0:12:03.640 --> 0:12:07.280 the nature of their depositors Silicon Valley, massive deposits. Now 0:12:07.320 --> 0:12:09.679 they're getting with draws, but they're not having enough deposits. 0:12:09.679 --> 0:12:12.160 And the whole time I'm just thinking, sounds like a 0:12:12.160 --> 0:12:15.360 Ponzi scheme, like a Ponzi scheme, Like as long as 0:12:15.360 --> 0:12:17.560 there's more going in than coming out, everything's fine. But 0:12:17.600 --> 0:12:19.960 as soon as that reverses the whole thing on winds, 0:12:20.000 --> 0:12:25.240 it seems like and it seems like it's being unwound. Well, 0:12:25.440 --> 0:12:28.520 it doesn't seem like it. Well, the FED seems to 0:12:28.559 --> 0:12:31.640 be the arsonist and the firefighter here, right. So in 0:12:31.640 --> 0:12:36.080 a sense, they took yield to zero and pushed everybody out, 0:12:36.120 --> 0:12:39.160 as you said, chasing yields. So everyone's chasing yield going 0:12:39.160 --> 0:12:41.080 into these junk bonds things like that. Because rates are 0:12:41.080 --> 0:12:44.920 at zero. Then the FED raises rates to five percent. 0:12:44.920 --> 0:12:46.760 Everyone's like, oh, what the heck am I in this 0:12:46.880 --> 0:12:49.240 junk for I'll just go to the treasury for five percent? 0:12:49.720 --> 0:12:52.800 And that drained all that that's draining all the liquidity 0:12:52.840 --> 0:12:54.760 out of these things, which is then starting to cause 0:12:54.800 --> 0:12:57.960 this liquidity crisis. Is that potentially the way you'd see it. 0:12:59.360 --> 0:13:03.559 I see the artificial manipulation of interest rates by the 0:13:03.600 --> 0:13:08.520 political class, not just the FED, as being an extraordinary problem. 0:13:09.000 --> 0:13:12.120 I would rather see free markets and interest rates. Of course, 0:13:12.640 --> 0:13:15.679 that would be chaotic, but I think it would be honest. 0:13:15.800 --> 0:13:18.840 And the artificial manipulation of interest rates down and then 0:13:18.880 --> 0:13:19.920 the recovery up. 0:13:21.760 --> 0:13:24.280 Would it be chaotok to get there? Or you think 0:13:24.360 --> 0:13:27.120 in a free market where money was priced by the market, 0:13:27.160 --> 0:13:27.960 that would be kadok. 0:13:28.679 --> 0:13:31.640 Yes and yes, okay. You know, the truth is that 0:13:31.679 --> 0:13:36.079 while markets work, they're invariably very messy, and price discovery 0:13:36.160 --> 0:13:39.120 is an ongoing circumstance, and it is in fact messy, 0:13:39.120 --> 0:13:42.480 and people don't like messy. That doesn't much matter. I 0:13:42.520 --> 0:13:45.240 think it's disingenuous to blame the FED for all of it, though. 0:13:45.320 --> 0:13:48.440 I think that investors have been through forty years of 0:13:48.480 --> 0:13:52.560 benign economic climate and we've been lulled into a sense 0:13:52.559 --> 0:13:55.880 of security. We've been lolled into believing that we can 0:13:55.920 --> 0:13:58.560 consign our future as you suggest, be it medical or 0:13:58.559 --> 0:14:00.920 financial or anything else, to the big thinkers, and I 0:14:00.920 --> 0:14:03.680 think that's an enormous mistake. I think that the FED 0:14:03.720 --> 0:14:08.200 has accommodated our own individual stupidity, and given that the 0:14:08.240 --> 0:14:11.400 FED is a political creature, I think it's important that 0:14:11.440 --> 0:14:14.760 we recapture a sense of responsibility for own future. Listen, 0:14:14.800 --> 0:14:16.760 I'm in front of the FED right now starting a 0:14:16.800 --> 0:14:19.120 new bank, and I got to tell you, the young 0:14:19.200 --> 0:14:21.240 employees of the FED that I have to deal with 0:14:21.560 --> 0:14:28.520 superb human beings, much to my dismay, smart, nice, curious, 0:14:28.960 --> 0:14:34.160 hard working, But they work for an organization that is political. 0:14:34.480 --> 0:14:38.040 They work for an organization where their success or failure 0:14:38.080 --> 0:14:42.600 is human beings, is determined by Congress. That's not so good. 0:14:43.640 --> 0:14:46.400 I don't think it's going to change. So the idea 0:14:46.680 --> 0:14:53.200 that individuals, be they depositors, borrowers, or bank shareholders, need 0:14:53.240 --> 0:14:56.560 to rely on their own resources rather than on the FED, 0:14:56.640 --> 0:14:59.520 on the OCC and on the FDIC. 0:15:00.600 --> 0:15:03.440 Do you think that you know, there's the saying of 0:15:03.480 --> 0:15:05.920 a general is always fighting the last war. And so 0:15:06.480 --> 0:15:08.960 obviously everyone still has the PTSD from two thousand and eight, 0:15:09.000 --> 0:15:10.880 and we had the banking collapse, the banking crisis. So 0:15:10.880 --> 0:15:13.640 everyone's looking now, oh, the banking crisis, the banking crisis. 0:15:14.840 --> 0:15:18.280 It seems that yes, there's problems in the banking sector, 0:15:18.360 --> 0:15:22.040 but it seems like this is something much bigger, potentially 0:15:22.080 --> 0:15:25.160 the unwinding of a one hundred year sovereign debt crisis. 0:15:25.560 --> 0:15:28.880 And it's the sovereign debt crisis that's then causing the 0:15:28.920 --> 0:15:32.200 strain into the banks in the commercial real estate, et cetera. 0:15:33.920 --> 0:15:37.760 What's your take on that on it. From a bigger picture, I. 0:15:37.680 --> 0:15:39.520 Guess I sort of hope that there is a sovereign 0:15:39.560 --> 0:15:44.560 debt crisis. Understand that the sovereigns regard me as collateral. 0:15:47.120 --> 0:15:53.560 Their ability to solve this crisis involves ringing more blood 0:15:53.760 --> 0:15:54.760 out of my stone. 0:15:56.360 --> 0:15:59.640 Stones don't have a lot of blow. Stones don't have 0:15:59.680 --> 0:16:01.880 a lot of blood. That's the problem. 0:16:01.960 --> 0:16:04.040 I recognize that, but they seem to believe that I do. 0:16:05.240 --> 0:16:07.240 The part of the I mean, the part of the 0:16:07.280 --> 0:16:10.960 sovereign debt crisis that causes people to lose faith in 0:16:11.000 --> 0:16:14.960 government securities and at the same time actually causes people 0:16:15.000 --> 0:16:17.640 to believe that the size of government should be constrained 0:16:18.520 --> 0:16:23.960 is something that I applaud. The idea being, however, that 0:16:24.000 --> 0:16:26.960 the answer to the sovereign debt crisis is to find 0:16:27.120 --> 0:16:33.120 more resources from the citizenry to fund more official sector 0:16:33.200 --> 0:16:37.560 stupidity is not particularly attractive to me, Mark, and I 0:16:37.560 --> 0:16:41.040 suspect it's not particularly attractive to you. The idea that 0:16:41.080 --> 0:16:43.960 you may be referring to is the idea that we 0:16:45.520 --> 0:16:49.840 rely on the commonwealth as a solution to every want 0:16:49.840 --> 0:16:53.240 and need in society, rather than relying on ourselves. And 0:16:53.320 --> 0:16:57.440 I completely agree with you there, and I completely agree 0:16:58.320 --> 0:17:01.680 that the idea than in addition to having the government 0:17:02.240 --> 0:17:05.159 satisfy all of our wants and needs, that they should 0:17:05.400 --> 0:17:08.520 satisfy them with quantitative easing, which, by the way, if 0:17:08.520 --> 0:17:12.760 Mark Moss did it would be called counterfeiting or through borrowing. 0:17:12.920 --> 0:17:16.080 The idea that we're spending our children and our grandchildren's 0:17:16.119 --> 0:17:18.760 money to satisfy our wants and needs is I think 0:17:18.800 --> 0:17:20.600 the author of the sovereign crisis. 0:17:21.760 --> 0:17:24.800 I think if if it was really trying to squeeze 0:17:24.840 --> 0:17:27.359 more blood out of us, I think that would be 0:17:27.359 --> 0:17:29.200 met with a lot of resistance. But of course they 0:17:29.240 --> 0:17:33.119 silently and secretly inflate it without asking us, right, and 0:17:33.160 --> 0:17:36.240 so secretly they print themselves more money, so it's not 0:17:36.280 --> 0:17:39.480 really coming directly from the Commonwealth, and that lies in 0:17:39.520 --> 0:17:39.879 the problem. 0:17:39.960 --> 0:17:40.040 Right. 0:17:40.040 --> 0:17:42.040 If they had to go house to house begging for gold, 0:17:42.160 --> 0:17:44.040 like in King Richard's day, it would be a whole 0:17:44.080 --> 0:17:46.480 lot different story. But instead they inflated away, and so 0:17:46.920 --> 0:17:51.040 you know, now they're in this situation where we're seeing 0:17:51.280 --> 0:17:53.680 nations around the world high inflation. War tends to be 0:17:53.760 --> 0:17:55.960 very inflationary. Nations around the world are being forced to 0:17:56.000 --> 0:17:59.920 liquidate government bonds to pay for high energy costs, for example, 0:18:00.200 --> 0:18:02.760 and just a little bit of bond selling starts to 0:18:02.840 --> 0:18:06.680 unravel and cause massive volatility in the treasury markets. And 0:18:07.200 --> 0:18:10.120 then we have this massive volatility which is then being 0:18:10.200 --> 0:18:13.600 responded with more printing, and it says more of the 0:18:13.640 --> 0:18:15.240 same problem that just causes a bigger problem. 0:18:15.240 --> 0:18:18.159 It seems like, you know, Mark, I shouldn't laugh so 0:18:18.240 --> 0:18:23.680 hard that I have seen this before. In some support 0:18:23.680 --> 0:18:26.840 of what you just said, I note that the government 0:18:26.960 --> 0:18:29.360 just extended the banks as sort of a financial lifeline 0:18:29.359 --> 0:18:32.439 of two hundred billion dollars and they did that without 0:18:32.440 --> 0:18:36.520 borrowing it and without raising tax. Now, how did they 0:18:36.560 --> 0:18:39.879 do that? They must have printed it. They must have 0:18:39.960 --> 0:18:45.320 conjured it up. You know. In addition to all the 0:18:45.320 --> 0:18:47.399 other problems that you and I have discussed, we have 0:18:47.440 --> 0:18:50.159 to discuss quantitative easy because it really truly is counterfeiting. 0:18:52.200 --> 0:18:55.120 The printing of new specious currency units does not make 0:18:55.200 --> 0:18:59.440 existing units more valuable, the opposite, And we need to 0:18:59.520 --> 0:19:02.880 understand end that that constitutes a tax in an end 0:19:03.080 --> 0:19:07.439 of itself. We just don't feel it. We don't feel 0:19:07.440 --> 0:19:13.080 it coming out of our paychecks. Although if your income 0:19:13.119 --> 0:19:16.359 tax and capital gains tax aren't indexed to inflation. Perhaps 0:19:16.400 --> 0:19:18.480 you do see it coming directly out of your paycheck 0:19:18.600 --> 0:19:21.520 or out of what your paycheck will buy you. Yes, 0:19:21.560 --> 0:19:23.600 after they take their bite. 0:19:23.760 --> 0:19:27.200 Yeah. I just read this book and I interviewed the author. 0:19:27.240 --> 0:19:30.440 It's called The Revolt of the Public, and it talks 0:19:30.440 --> 0:19:32.520 about how the rise of the Internet and all this 0:19:32.560 --> 0:19:36.480 information that goes around and through the internet spread information 0:19:36.560 --> 0:19:39.040 has led to all these revolts and overthrows of the government. 0:19:39.240 --> 0:19:41.200 And he spent a lot of time in twenty eleven 0:19:41.280 --> 0:19:46.040 talking about Arab Spring and what happened in Egypt and 0:19:46.119 --> 0:19:48.480 Syria and Tunisia and all of those things, and even 0:19:48.560 --> 0:19:51.520 Occupy Wall Street, which happened in twenty eleven. And it 0:19:51.560 --> 0:19:54.119 seemed like as I was reading the accounts of all 0:19:54.200 --> 0:19:58.520 these happening, it all was traced back to people were 0:19:58.520 --> 0:20:00.920 ready to revolt, like we're seeing in France today when 0:20:00.960 --> 0:20:05.399 their cost of when their quality of life goes down, 0:20:06.240 --> 0:20:09.000 when inflation affects, then when they can't buy as much food, 0:20:09.400 --> 0:20:12.159 that seems to be the trigger point for all of this. 0:20:12.960 --> 0:20:15.080 Even today in France are saying, oh, it's you know, 0:20:15.080 --> 0:20:17.960 we have to raise the retirement age by two years. 0:20:18.200 --> 0:20:20.760 But it's all about that quality of life, that's that 0:20:20.880 --> 0:20:21.639 silent tax. 0:20:23.480 --> 0:20:27.439 I think what you say is very, very correct. I 0:20:27.480 --> 0:20:30.760 think on the one hand, what the French you're doing 0:20:30.840 --> 0:20:36.240 is revolting against arithmetic. They're suggesting that raising the retirement 0:20:36.240 --> 0:20:39.760 age from sixty two to sixty four is somehow some 0:20:39.960 --> 0:20:43.959 enormous travesty, when in fact it's a reflection of the 0:20:44.000 --> 0:20:48.399 financial ability of the French state to support their citizenry. 0:20:49.400 --> 0:20:51.800 On the other hand, I think the Citistry have come 0:20:51.840 --> 0:20:58.719 to understand that they have each voted themselves too much 0:20:58.840 --> 0:21:03.000 mono from heaven. Everybody seems to believe that mana from 0:21:03.040 --> 0:21:06.600 heaven that they receive is justified, but any mona from 0:21:06.640 --> 0:21:09.520 heaven that someone else receives as a consequence of their 0:21:09.560 --> 0:21:15.240 effort is some crime against humanity. And I agree with 0:21:15.280 --> 0:21:22.160 you one hundred percent. In a politicized world, we believe 0:21:22.400 --> 0:21:25.760 that we have calls on the wealth and efforts of others, 0:21:26.640 --> 0:21:30.680 but we try to defend ourselves against other people's claims 0:21:31.119 --> 0:21:39.159 against us. When the allocation of benefit is occurs politically, 0:21:39.320 --> 0:21:42.800 rather than from servicing your customer, you come to believe 0:21:42.840 --> 0:21:45.679 yourself to be politically entitled and to the extent that 0:21:45.680 --> 0:21:48.160 there's a failure, you don't accept blame for the failure, 0:21:48.680 --> 0:21:51.600 You assign blame on society as a consequence of that, 0:21:51.640 --> 0:21:54.359 you revolt against it. And we're seeing that around the world. 0:21:54.920 --> 0:21:59.199 Yeah, I'm curious, you know, on your take on when 0:21:59.240 --> 0:22:02.280 you look back through when you see the end of 0:22:02.320 --> 0:22:05.200 the empire coming. It seems like one of the last 0:22:05.240 --> 0:22:08.959 final stages of these empires is to restrict capital flows 0:22:08.960 --> 0:22:11.840 and so capital controls, because they know if they don't 0:22:11.880 --> 0:22:14.480 keep that capital in, the whole thing collapses. And it's 0:22:14.480 --> 0:22:17.240 not just a historical lens. That's why China doesn't want 0:22:17.240 --> 0:22:20.480 to have open capital markets, and so it seems that, 0:22:20.640 --> 0:22:24.080 you know, maybe that's sort of this stage that we're 0:22:24.080 --> 0:22:26.560 in the United States right now, is capital control laws. 0:22:26.560 --> 0:22:28.960 And so, you know, I don't know how much you've 0:22:28.960 --> 0:22:30.840 been paying attention to some of the headlines. There's a 0:22:30.880 --> 0:22:33.480 talk of this choke point two point zero coming back 0:22:33.520 --> 0:22:36.600 out where the banks are starting to restrict flows. Potentially 0:22:36.720 --> 0:22:40.919 these three banks that went down Silvergates, SBB and then 0:22:41.000 --> 0:22:44.080 Signature we're all crypto friendly banks, and so are they 0:22:44.080 --> 0:22:47.160 taking down these banks to take out these crypto exits? 0:22:48.119 --> 0:22:51.000 Are they doing everything can to block the exits to 0:22:51.080 --> 0:22:54.960 keep this capital control in. And then there's two more examples. Recently, 0:22:55.080 --> 0:22:57.520 Caitlin Long she tried to get a new bank charter 0:22:57.600 --> 0:22:59.960 open called Custodia Bank, which was going to be a 0:23:00.240 --> 0:23:02.560 full reserve bank. They're going to keep one hundred and 0:23:02.560 --> 0:23:04.479 percent of reserves, and the FED shot them down. They 0:23:04.480 --> 0:23:06.680 shot down another bank called Narrow Bank for the same thing. 0:23:07.080 --> 0:23:09.240 They don't want a full reserve bank because then everybody 0:23:09.280 --> 0:23:11.160 would go to that full reserve bank and it would 0:23:11.200 --> 0:23:15.480 drain all liquidity. So it seems what's your take on 0:23:15.640 --> 0:23:17.480 trying to restrict their Capitalpholles, Do you think that's what 0:23:17.520 --> 0:23:19.280 they're doing. I know you're trying to open a bank. 0:23:21.000 --> 0:23:26.520 I haven't seen, as an investor who invests internationally, anything 0:23:26.600 --> 0:23:30.040 that I could describe as a concerted federal effort to 0:23:30.440 --> 0:23:33.560 cause me not to be able to invest or deposit 0:23:33.720 --> 0:23:39.240 money overseas. Certainly, know your client regulation and the extra 0:23:39.359 --> 0:23:46.119 territorial imposition of American law on foreign institutions makes my 0:23:46.400 --> 0:23:51.879