What is going on with banks??

Basically, we've got 2 things ahead of us that I don't have a timeframe for, but under 20 years and longer than 6 months. We've got 2 things: yield curve control and a nationalization of the banking system with a CBDC. So the yield curve control happens because we have this situation where the government won't be able to afford its expenses. Their deficit is increasing because of mandatory spending. Like Social Security, Medicare, discretionary spending, and the interest expenses on the debt. Those are things that are political suicide to deal with. And so they'll just continue to spend until they have to borrow at 10%, 20%, whatever the percentage is they're borrowing at. It eventually gets to a point where they can't afford it, where nobody's willing to lend that money to them, either because there's no more money left in the system or because they're perceived as too big of a credit risk. In that case, they turn to the Federal Reserve, the central bank, and they say, Fed, you print the money to lend to us. This is where it gets sticky because legally right now the Federal Reserve has political independence. So the Fed can say no to that because the Fed has 2 mandates given to them by Congress: price stability and full employment. And so recently, in the most recent press conference, somebody asked Jerome Powell, will you help refinance the government's debt? And Jerome Powell said under no circumstances. And it looks like between the Fed and a couple other central banks around the world, central banks are realizing they messed up and they funded too much government spending. And now the cat's out of the bag and they need to pull it back and not, uh, fund this reckless activity by governments. And if that's the case and the Fed stands firm and says no, we will not restart QE, The Federal Reserve Act will get rewritten. Congress will get together and they'll rewrite the Federal Reserve Act and they'll say, you are no longer price stability and maximum employment. You are here to be a bank, a printer for expenses. And monetary policy and fiscal policy will be merged. The debt will cease to be debt because it's not debt that gets repaid. We'll just take control of the money printer and print what we need for our expenses.

Hmm.

Another way that that happens is through soft yield curve control. If Jerome Powell or whoever it is at the Fed Yields and says, okay, yes, we will monetize the debt. That happens through yield curve control. So we'll buy or lend as much money as possible as needed to the United States government at, you know, 5 bps or, you know, 1% or whatever is needed so that they don't go bankrupt. We just won't do that for anybody else. So the government gets the stimulus, but everybody else has really high rates.

My dad, and some of you guys know my dad runs a— formerly did run a— he ran a $48 billion family of real estate funds and now since retired. But he talks about this all the time is He goes, the US dollar is a Ponzi scheme.

Mm-hmm.

And we're all just a part of it. And it's fine, actually. Ponzi schemes, you know, we know it won't run forever. What we're doing won't run forever. But he goes, I don't know if it'll end in 1 year or 20 years or 100 years. It could keep running for a long— I know Ray Dalio's got his book and everything. He talks about the cycles and everything. But, you know, and then you think about this deleveraging, and then you look at other countries, though. But the question always comes back to, compared to what? Well, we're bad, but compared to what? All these other countries are even worse off than we are. They've been doing this at even a worse level than the United States has. Not every— I mean, well, maybe I haven't looked at every country. I would assume most— almost there's a couple that haven't, but almost every country, major nation on earth has done this. And so then the question comes back to, well, what did they do? Like, how do you get out of this situation? When the Ponzi scheme unravels, what does it unravel to? And I think you just pointed out a very good probability. Yeah, maybe it would. That's actually a great, you know, option. Maybe they centralize, they rewrite that act, and they centralize it into one essentially bank that funds the government. That would be one way to get out of that. And then if anybody wants to come after the United States, they say, well, you and what army? You know, we have 14 aircraft carriers and this whole, you know, we have the military machine that says, yeah, you know, if you want your debt, come and get it. We're going to change things. And then maybe we're going to reset our currency, which you're about to get into, I think, with the CBDC. Um, I, I, it's not a terrible plan, actually, if you're looking at a way to get out of the situation. You know, what are your options? I think this is actually a very viable option. And I don't— and again, I don't make the decisions. I don't think Joe makes the decisions. We're just kind of saying— I always try to just say, well, what do I— if there's a wave coming, I'm just going to go with the wave. I'm—

you can—

we can argue till our faces turn blue if it's right or wrong or the dangers, but I don't— I'm not the one making the decisions. I'm the one that I need to just front run and get in front of what's going to happen. That's at least how I approach things. Um, on a macro scale. So, Joe, keep, keep going on this. I want to hear what that then turns into.

Yeah. Yeah. I, I 100% agree with you that none of what I've said is, uh, uh, prescriptive. I'm not saying I think this should happen or I want it to happen. I'm just saying based on what I see, this is probably what's going to happen. Um, now the, you mentioned like the, the, it's the clean, the dollar is the cleanest, uh, shirt in the dirty laundry hamper, right? Typically throughout history, Ray Dalio talks about this as well, that when you get to the end of kind of a reigning power, one of the last things, there's a couple things that last towards the end when everything else has kind of gone away. It's still the financial center of the world, it's still the reserve currency of the world, and those 2 things kind of last the longest. And so when you find yourself asking the question, well, you know, they're gonna give up the dollar, but for what? Like, there's no other alternative. The defense for the dollar is no longer Hey, well, America is the wealthiest country, it's the strongest country, it's the, you know, it's not, you know, economically, it's not the, you know, it's not the richest with the, you know, the best debt to GDP or any of that. So there's no fundamental backing to it other than, well, there's no good alternative. That's actually a signal of it being, you know, near the end. And that could be a multi-decades long, you know, period of time.

Yeah.

But it's still not a sign of strength, it's a sign of opportunity for newcomers. The nationalization of, of the banking system is kind of— it kind of goes along with that because once you, once you step in, I call it the regulatory roller coaster to tyranny. And you start off by, you know, Greenspan trying to save the economy, blunt the effects of the dot-com bubble with a subsidy, basically lowering rates. Well, that causes, you know, that causes excess and risk-taking in the housing market. Uh, which causes a crash. So you have to rescue that with a bigger rescue. Uh, but then you're bailing people out that did all the bad things. And so you come in with new regulations to try and prevent that in the future. Those new regulations make it harder to make money in the old way. So that money spills out to other ways that, uh, then causes excess risk that you have to subsidize once there's a crash. Regulate, subsidize, regulate, subsidize, regulate. And you get to this point where now nothing can happen that is not explicitly prescribed by the government. whether implicitly or explicitly, you have an eventual nationalization of the entire banking system. Yield curve control is part of that. The other part of that is a central bank digital currency, because we're getting to a point now where banks are still collapsing, bankers are still making a bunch of money. People are going to start getting really upset with that again, especially if they end up losing money. You get this dissatisfaction with the socialized losses and the privatized gains. So, this has happened many times. Governments just nationalize the banks. You end up with 6 big banks, and they're all controlled directly by the government, probably under the Fed. And the easiest way to do that is a central bank digital currency. Because at the end of the day, today we, we have ledger money. That's what money is. Every bank has its own ledger. It's a ledger, it's just a list. List of account numbers, how much money's in the account. We're already doing that. We're already doing it. That's, that's what That's what ledger money is. What would be easier? We have 2,000 different ledgers held at each bank, or unify it all under one ledger at the central bank? Obviously, that would be easier. They'd be able to implement monetary policy easier, taxes easier, rationing on X, Y, and Z when there's a shortage because people are buying too much of it easier. Obviously, you can spill over into tyranny really easily, but if there's enough of a crisis, people are willing to accept any handcuff as long as it comes with a handout.

Well said. You know, what's funny is whoever the person that keeps winning through this whole banking crisis is JPMorgan. I mean, they have won consistently. I mean, First Republic Bank, they bought, I think, for $0.07 on the dollar. I did the math on their whole asset purchase. I mean, it's just wild. There was no other bidders that wanted to come in $0.08 or $0.09 or $0.10 on the dollar. And it makes you think that, you know, these big— let's call them Big 4 banks are in cahoots with the Fed on this whole consolidation of the banking industry that's going on right now, and potentially for exactly what you're saying. I think it's I think it's spot on. Something else that's I think you know fascinating about this space right now is just well first off we're already there right? We already are using. I love what you said. We're already on a ledger system. We all of our money is digital anyways. If they turned off the electricity, your money's kind of gone. My money's kind of gone if just the electricity turns off, right? That's how dependent we are on this. It's not that far of a leap to hit to a central bank digital currency.