At the center of Sovereign Man’s core ethos is the indisputable view that the United States is in decline.

I take absolutely zero pleasure in writing that statement. But it’s incredibly difficult, if not impossible, to objectively appraise the bountiful evidence at hand and not reach the same conclusion.

Consider the following:

US government finances are appallingly bad. The national debt exceeds 100% of GDP, annual deficits run into the trillions of dollars with no end in sight, and major trust funds for Social Security and Medicare will soon run out of money.

Political incompetence is mind-blowing; politicians fail to be able to even identify problems, let alone understand them, let alone reach compromises to solve them.

Ditto for central bank incompetence. These people simply cannot understand how, by keeping interest rates at zero for nearly a decade and conjuring trillions of dollars out of thin air, they engineered record high inflation. And they also fail to understand how their actions to ‘fix’ inflation are causing widespread havoc in the economy and financial system.

Social divisions across the country are extreme. Censorship and cancel culture prevail, and corporations now wag their fingers at their own customers to “be better”.

The education system is in pitiful shape, with many politicians and school board officials turning classrooms into activist training camps.

The population is terribly unhealthy. Obesity and drug addiction are epidemics. Plus there’s an obvious mental health crisis that drives far too many people to commit horrific acts of violence on innocent people, including children.

National security is in decline. Military readiness is down, yet top officials seem more concerned about diversity and inclusion rather than the ability to prevail in war.

The rule of law has been perverted, including for political purposes and self-aggrandizement. We just saw another example of this yesterday.

Even the national fertility rate continues plummeting– an indication of the rising cost of living and social apathy.

The Wall Street Journal recently published a series of polls indicating that most Americans doubt their children will have a better future; pessimism is strong.

They also found that certain values which once defined American culture, including a sense of community, hard work, and civility, are no longer important to the majority of people.

This is all happening at a time when adversaries are circling. And that includes China.

Now, usually whenever I bring up China, there are always people who are quick to assert that China cannot possibly replace the US as the dominant superpower because they have just as many problems.

And it’s true that China has a ton of problems. They have their own debt issues, financial system chaos, and economic problems. They have social challenges, a major demographic crisis, and even a serious issue with childhood obesity.

But no civilization or empire throughout history has ever been problem-free.

Ancient Rome, even during its early republic days, had enormous problems. They had to deal with constant revolts, civil war, the genocidal dictatorship of Sulla, famine, war, plague, and more.

Yet there’s an enormous difference between taking on challenges while you’re on the rise… versus succumbing to them while on the way down.

Rome was able to deal with its challenges and continue its rise to become the dominant superpower. China may be able to do the same.

The US finds itself in a precarious position where they have a mountain of compounding problems… and no ability to even slow them down, let alone solve them.

I’ve written before about what I call the “Four Forces of Decline”, which I define as

1) Forces of History– the inevitable, cyclical nature in the rise and fall of Empire. No empire, no civilization in human history has ever retained the top spot forever, and most tend to experience similar challenges on the way down.

2) Forces of Society– the vicious way in which a society eats itself from within, vanquishing the ability and inclination to solve complex problems.

3) Forces of Economy– the debilitating toll that enormous debts, deficits, and currency inflation take on a nation and its people.

4) Forces of Energy– when energy is cheap and abundant, prosperity reigns. When energy is expensive, prosperity wanes. The relationship couldn’t be more clear.

Today’s podcast puts all of these together, with a particular focus on #4, Forces of Energy.

Part of being the dominant superpower in our modern world means having access to abundant energy. Yet the US government has spent the last few years trying to destroy its energy (oil and gas) industry.

They’ve been pretty successful. The President of the United States hardly misses an opportunity to bash oil companies. Politicians pass new rules and taxes to punish them. The media beats up on them. Investors have pulled funding for them.

So it shouldn’t be a surprise that US oil production, while not in terminal decline, is failing to keep up with growing demand.

Shale oil is especially problematic given that most of the highest quality “tier 1” sites have already been drilled. Many are already in decline.

This is a big deal. Shale oil is the reason why the US achieved near energy independence. With shale in decline, the US will be forced to import a LOT more energy (which, again, is critical for prosperity) from places where they have an increasingly adversarial relationship.

Russian oil is obviously off the table. So is Iranian oil. Saudi Arabia is rapidly becoming cozy with China; in fact the Saudis are now publicly considering to sell their oil in Chinese currency, the renminbi.

This is an enormous threat to the US. Saudi Arabia has been selling oil in dollars for decades; they’ve even had their currency, the riyal, pegged to the US dollar since 1986.

This concept of selling oil in US dollars is known as the petrodollar, and it’s one of the key reasons why the US dollar is the global reserve currency.

Anyone who wants to buy oil needs to own US dollars. And that pretty much includes every country on the planet. So foreigners are forced to stockpile dollars, and by extension, US government bonds… simply because they need dollars to buy oil.

As a result the US government is able to get away with the fiscal equivalent of murder. They can run multi-trillion dollar deficits every year. They can wage expensive wars in foreign lands. They can go into debt to pay people to stay home and NOT work…

… and they’ve always had a bunch of suckers overseas– foreigners who have no choice but to buy US government bonds, simply because oil is priced in US dollars.

But what if Saudi Arabia started selling oil in renminbi?

Most likely a LOT of foreigners would dump at least some of their dollars and start holding renminbi as part of their official reserves.

America’s biggest privilege and benefit– its reserve currency– would vanish, practically overnight.

Suddenly the US government wouldn’t be able to run multi-trillion dollar deficits. It wouldn’t be able to go into debt to pay people to stay home and NOT work.

They’d have to be like almost every other country– act with some fiscal responsibility.

Think about it– if the President of Mexico shook hands with thin air, investors would be rightfully terrified and panic-sell Mexican government bonds. If South Korea ran a multi-trillion dollar deficit, its currency would probably plummet.

Back in September we saw the British pound and UK government bonds practically collapse… and the Prime Minister of one of the world’s largest democratically elected sovereign governments was forced to resign… simply because investors didn’t like her economic revival plan.

These issues are all linked. If the US continues to demonstrate incompetence and weakness… if they continue to subvert and destroy the energy industry… and if Saudi Arabia starts selling oil in renminbi…

… the consequences will be life-changing.

This is one of the biggest stories of our lives. It’s easy to miss because it’s playing out over a period of years. It gets lost in the day-to-day noise and the crisis du jour.

But rest assured this is happening in front of our very eyes; it’s a slow motion crash that’s already started.

The outcome isn’t inevitable yet. But nothing about these people’s actions demonstrate that they have the slightest clue what’s going on.

Join me in today’s podcast as we dive further into this… and I outline my “51st state” theory– a ‘solution’ that I wouldn’t be surprised to see in the near future.

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Today we're going to go back in time to September 24, 1599, to a place called Founders Hall, which at the time was located on Lothbury Road in the city of London. It had long time later burned down and they rebuilt it on, I believe it's on Cloth Fair Road today. But back in the late 15 hundreds, it was on Lothbury Road. That's in London City, basically very close to where the bank of England is today. If you're familiar with London, it's between Morgate and Bank Station.  

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This was, at the time, the headquarters of one of the Guilds in London. Now, Guilds were like unions in the medieval days. You think about all the people that were in a particular industry, leather makers or haberdashers or these people that would all the craftsmen, the artisans, they would get together and they would essentially unionize. They were all more or less self employed professionals, but they would get together and they would form these unions. They called them Guilds and the Guilds and the Guild leadership would go and negotiate with the city government.  

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And in exchange, the city government would essentially award the Guild a monopoly. And they would say, only people from the leather makers guild are allowed to sell leather goods in London. So if you were a leather worker but you weren't part of the Guild, basically you were out of a job. You couldn't make a living for yourself unless you joined the Guilds. The Guilds were very heavy handed.  

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They had a lot of political power, again, very much like unions today. And they would charge dues to all of their members. And the people that were at the Guild bosses, they would take those dues and a lot of them would enrich themselves. A lot of the Guilds would buy these very, very nice properties, build these very swanky places for the Guild bosses. And founders.  

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Hall was one of those. Founders hall was the headquarters of a guild of basically guys that were brass workers. They would make brass candlesticks and brass buckles and all these things. That's what Founders Hall was. And like a lot of these guild headquarters, founders hall was really swanky.  

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And we know this because their own records actually stayed, that the Guilds kept good records. And the records for Founders Hall in that guild show that they spent lavishly on. They built a penthouse in the inside of the Guild headquarters. They spent on artwork and furniture and all these really nice things that people would want in a nice place like chimneys and ovens and so forth to keep it warm. And in order to generate some positive cash flow on this investment, they used to rent it out from time to time for weddings and other private events.  

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And that's what was going on on September 20, 499. It was a private event. It was organized by a guy named Thomas Smyth. Smyth was an aristocrat, a very prominent guy. He'd made a lot of money, had been in and out of different government offices.  

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He'd been customs auditor at a certain point, all these different things. And Smyth invited a whole lot of people from all walks of life. If you had sort of walked into Founders Hall on September 24, 1599, and just looked around, you would have seen the mayor of London, right, the lord mayor of London, very prominent guy. You would have seen some of the richest nobles of the heir, some of the richest aristocrats. You would have seen merchants, people that had become very successful, not necessarily aristocrats, but people that had come up on their own, maybe certainly born into good families, but people had made a fortune in foreign trade on their own.  

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You would have seen pirates. Pirates were there. They were technically called privateers, but they were pirates. Guys that, according to the records, had sort of politely shoved their daggers into their pants so as not to offend everybody else that was there. But there were pirates that were there alongside the mayor, alongside these merchants.  

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There were also some of these artisans in Crescent. There were brass workers and leather workers and haberdashers and drapers and grocers and all these guys that were there alongside veterans and sailors from foreign conflicts. There were explorers who were there. There were travelers and adventurers. People this used to be a vocation to be an adventurer.  

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People would grow up and become adventurers where they would travel the world and do things. One of the guys that was in attendance was William Baffin, who's the namesake, if you know your geography, the namesake of Baffin Bay, which is the large body water between Canada and Greenland, that guy was there. And to top it all off, thomas Smyth hired the services of this sort of famous writer. His name was Richard Hacklett, who's a nonfiction writer, had been published extensively, had works on international travel and exploration and adventuring, basically. And Hacklett was there to sort of act as the group secretary to keep the minutes of the meeting, because Smyth had a feeling that what they were doing was historic.  

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And he wanted, basically hired this, like, best selling nonfiction writer to keep the minutes, to make it exciting so that people could understand. So again, just imagine walking into this very swanky, lavish place, opening the doors and seeing everybody around this big, beautiful wooden table, and you got the mayor, you've got pirates, you've got blue collar workers, you got this best selling writer, you've got William Baffin. What are these people doing here, right? What is such a bizarre group of people doing in the headquarters of the Brass Workers Guild? What is going on here?  

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Well, you got to remember, 1599 was sort of peak Elizabethan era. Shakespeare was at the top of his game. He had released Romeo and Juliet a couple of years prior. He was, at this point, probably working on Hamlet and so forth. And England in general was on an upswing.  

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Remember, if you think about where England had been centuries before, I mean, England had basically been an almost perpetual state of conflict and turmoil for a couple of hundred years. Go back to the 1300s. What happened then? They had the 100 Years War against France, which technically lasted for more than 100 years, during which time, by the way, the bubonic plague broke out, which was devastating loss of human life. Almost as soon as the 100 Years War was over, that gave rise to the War of Roses.  

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The War of the Roses, which was basically a civil war, which lasted into the mid to late 14 hundreds, lasted for decades. Right. Most of the 1500s up to that point had been consumed by internal rebellion, conflict, persecution, genocide, over religion, right? So you think about from the 1300s, basically, all the way to the, you know, well into the 15 hundreds, just conflict, conflict, conflict. Remember Henry VIII in the 15 hundreds broke away from the Catholic Church and he had a lot of people in England said, hell no, we're not following you.  

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We're good, loyal Catholics. And he had a lot of people say, yeah, sure, we'll be Anglican. We'll buy your new religion. That's fine. And that created a tremendous amount of conflict.  

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And you had laws that were passed and rebellions and literally murder and genocide that was taking place over all this. And on top of everything else, the English economy. Suddenly they were cut off from the rest of Europe. Suddenly people in Europe saying, you're not Catholic anymore. We can't do business with you.  

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The Pope's going to excommunicate us if we even talk to you. And you had some powers like Spain. Spain was the big dominant power at the time, and the Spanish were King of spain was a guy, Phil II. Phil II was a fanatic. He was a Catholic fanatic, and it was his life's mission to invade England and make England Catholic again.  

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And so this was all the stuff. Their economy was in turmoil, their society was in turmoil. They're fending off threats of invasion, and now you have the reign of Elizabeth. And Queen Elizabeth was a major turning point in all this turmoil. She came to power, and one of the first things she did relatively early on in her reign was to just sort of settle the religious dispute.  

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And she told everybody, said, look, just put down the pitchforks, people, and let's just everybody relax. Everybody chill out. You're going to believe what you're going to believe, he's going to believe what he's going to leave and let's just all get along. She took away the heresy laws and just basically had everybody bury the hatchet, and it settled the conflict for a while. She said, let's just stop killing each other already and focus on the fact that the Spanish Armada is coming and let's just prioritize people and so she settled this.  

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And there was a sort of temporary respite in these religious disputes and conflict. And then, of course, quite famously, in 1588, england had successfully fended off the Spanish Armada. The Spanish Armada came, and that's a whole, actually ridiculous story that we need to talk about some other time. Just a classic government bungling situation. But in 1588, England did defeat the Spanish Armada, and they also figured out ways to grow the economy.  

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England was going at it alone again. They'd been cut off from Europe due to this religious conflict, due to these issues, and they had to create new means of trade and transportation. It helped quite a bit that there are people like Francis Drake that had successfully circumnavigated the globe and figured out new trade routes and really arousing a lot of new possibilities. And quite fortunately for England at this time, in the late 15 hundreds, france was embroiled in its own religious civil wars. Italy had been impoverished by a series of wars between the Habsburgs and the French as well.  

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And so the Spanish were reeling from their losses. The French were busy. The Italians had kind of been vanquished in England. They sort of looked around a certain point and said, hey, we're doing okay. I think the worst is over.  

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We're on the rise. We're through this, and let's see what we can do. And so these guys that gathered in Founders Hall in September 1599, they knew this. They knew that England was on the rise. They were good, loyal Englishmen, english subjects to the Queen.  

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And they looked around and they saw what the Dutch were doing. And the Dutch were incredible business people. The Dutch were sophisticated. They had essentially created a brand new financial system and things that people never thought were possible before. I mean, the Dutch were really, really impressive.  

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And the Dutch had a stunning level of success in the spice trade. And they had set up a company and were doing these things in the spice trade. And the funny thing is, in many respects, the Dutch were going around the world and they were trading on their own, and they were using English sailors and in some respects, English ships. And so the English, these guys gathered in Founders Hall and they looked at the Dutch, they said, look at how successful these guys are. We could do that too.  

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They're using English sailors, they're using English ships. Why can't we do that? We could do that. Why should the Dutch have all the success? And of course, the big deal at the time was the spice trade.  

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We might think it's silly. Who cares about nutmeg? I mean, why is that such a big deal? But in many respects, it always had been right? If you can go back thousands of years, you can go back to ancient Mesopotamia.  

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Spices were always a big deal in the early fifth century. It's a great story. From the visigoths. The Visigoths came down to sack Rome, and the Romans paid a very hefty ransom to ward off the Visigoths. They just, please don't destroy our city.  

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And part of that ransom was £3000 of peppercorn, right? So this was spices were always a big deal. There was actually a time I mentioned nutmeg earlier, during the Black Death in the 13 hundreds, nutmeg literally became worth its weight in gold simply because there was this rumor going around that if you wore an amulet of nutmeg, that you would be able to ward off the infection of the Black Death. It was snake oil. But nutmeg became incredibly valuable.  

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So we can kind of look at and say, oh, my God, these people are so silly. But it's no sillier than our modern obsession with coffee, right, which is one of the most widely traded commodities in the world. The coffee trade is enormous. It's global. So many countries in the world are trading in coffee, and there may be a certain .1 thousand years from now where people don't drink coffee anymore.  

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And people look back and go, My God, how could those people have been so obsessed with coffee? But we are, and we accept it in the same way. Spice was a really big deal. It was the coffee, basically of the day. And at the time, really, for most of history up to that point, spices and the spice trade basically depended on traders, arabian and North African traders who came along the Silk Road.  

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They got spices from Asia or from Africa, and these merchants, they would charge outrageous markups, crazy markups, and they're making a killing off of it. But especially at the time, in the 15 hundreds, the Europeans couldn't go and do it themselves. They couldn't go over land along the Silk Road themselves, simply because the Ottoman Empire had taken Constantinople. The Ottoman Empire effectively blocked the Silk Road. The Ottoman Empire, in the 14 hundreds, took Constantinople, made it their headquarters, and it basically sat at the crossroads of the Silk Road.  

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And especially some of these sea trade routes, the Black Sea and the Mediterranean made it really, really difficult because the Ottoman Sultans, they were Muslims, and they charged exorbitant taxes to non Muslims and to foreigners. And so if you're an Englishman coming and you want to go across the Silk Road, forget it. It's going to be so expensive because the Ottoman Empire is going to charge you out the nose for this stuff. And so they start looking around and say, okay, what can we do? How do we cut out these middlemen merchants that are coming and charging us these crazy markups?  

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And ever since, you had people like Francis Drake, Vasco de Gama, other explorers who had developed new sea routes, they had discovered, like, oh, my God, we could sail around Africa, we could sail around these different places and go to the straits. We could go to asia. We go to Indonesia, some of these places today where you could get these things. Europeans started to realize it was actually possible to bypass the Silk Road. They could go directly to Asia, they could buy their spices directly from the producers.  

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And that's what the Dutch had started doing. And again, the Dutch were killing it. They were absolutely killing it. So we had these proud Englishmen gathered in Founders Hall in 1599. They said, we could do that too.  

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We can do what the Dutch are doing. And so they reached into their pockets and they agreed to invest a sum of money and form their own venture. And the concept behind it, which they wrote in their books, it said, quote, to voyage to the East Indies and other islands and countries thereabouts there to make trade. That was the whole point of it. And of course, this venture became known to history as the East India Company.  

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Now, the East India Company was structured eventually as what's called a joint stock company. And this was a pretty radical concept at the time. This meant that investors would share in the profits of the company based on their proportion of how much they put in, right? And this was just to us, this is simple. If we start a company and everybody puts in $100,000, as ten people put in $100,000 each, there's a million dollars in capital.  

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Everybody owns 10%, right? That's pretty basic concept for us. But to them, it was revolutionary. They didn't have that before. They didn't have this idea, say, well, wait a minute.  

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I put in money and I get a share based on the proportion of my money to the total amount of money raised, and I can take my share and I can sell it to other people. I could buy other people's shares. That's incredible. That just didn't really it was a very, very new concept, this idea of a company. The word company comes from the Latin campanas, which means to share bread because it's ultimately what they were doing.  

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They were sharing in the fruits of their labors. They were sharing in the prosperity of the business in accordance with how much they put in. There were early forms of this, this idea of a joint stock company going back to ancient China in the Arab world, there was this essentially limited partnership prototype. It spread to Italy in the early Renaissance and late medieval period, in the 11th century. And England had experimented with this before.  

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They had something called the Muskavi Company, which did trade with Russia. So it wasn't entirely unprecedented, but it was still a very new concept. They didn't have corporate law, they didn't have Delaware bankruptcy courts. They didn't have established precedents. They didn't have limited liability.  

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But even still, Smyth, he gets all these people in a room. He's got blue collar workers, best selling author, super wealthy aristocrats, and they all get together and everybody in total raises around £30,000. All these guys reach into their pockets. They put in money that's worth about $10 million today, right? Which is pretty good.  

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You have a meeting and you say, all right, guys, let's go and do this. And they raise $10 million. Now, the next step is they had to go and petition the Queen because they didn't actually have a company. You couldn't just say, we have a company. You had to and get a royal charter, basically from the Queen.  

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That took them over a year. They didn't get that until the following December. But over time, they used that time wisely and they started getting ready for their first expedition and so forth. And it was funny. They had to go out and get some labor.  

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They had to get a ship. And the writings of this, again, the minutes of the meetings, it's actually kind of funny, honestly. They had trouble attracting any talent and labor whatsoever. Most of the people they were getting were all ex cons. They were people that came out of the lunatic asylum at Bedlam.  

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If you think about the word bedlam, that's actually where it comes from, is this lunatic asylum that was called Bedlam. And these are the people that they were getting. I mean, people are saying, well, wait a minute, I got to go overseas in some place that most people never been before and risk life and limb for this society and this thing. I don't even understand what a joint stock company is. I'm not going to do that.  

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So, sure, they were getting they're kind of scraping the bottom of the barrel here. At the same time, they also needed to buy a ship. They had to get a ship and something that fit within their budget. $10 million was a pretty good amount of money, but if you think about it today, you can't buy a big ship for $10 million, something that's going to be some huge cargo ship that's not really going to get it done for you. So they were working within a budget, right?  

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And quite ironically, one of the first ships that they looked at for the first expedition was the Mayflower, which ended up taking the Pilgrims to the New World sometime later. But they ended up passing on the Mayflower. They didn't think it was right for them. They ended up acquiring another, bigger, heavier, sturdier armed ship and they got their royal charter and they set sail on their first expedition. There was just all kinds of problems.  

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There was no wind in the English Channel. They're basically stuck. It was just a comedy of errors. And people weren't really too excited about their prospects for success. And especially at first, they were basically pirates.  

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Again, they had pirates. They get all these ex cons. So rather than sailing all the way to these ports in Indonesia, they came across a Portuguese ship and they said, oh, well, we'll just take what they've got. So these guys are basically pirates at first. And their prospects for success were were quite modest.  

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They had modest success. And it was just little by little by little, those first years, those first decades, really, it just went very, very, very slowly. The Dutch were oh, my God, the Dutch were so much more advanced financially. The Dutch had raised so much more capital. They were so much more sophisticated in their business practices.  

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And again, the Dutch were killing it. And the poor English, they would have these board meetings, and they would realize, this is going to be tougher than we thought. I don't know if we're going to be able to crack the Dutch and their market share. But little by little, they'd established some footholds at Asian ports, and they had, again, limited success, but it was nothing compared to the Dutch and what they wanted it to be. And so finally, at a certain point, the East India Company, the directors began to realize initially, I think there were 1415 directors, something like that.  

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I mean, there's a lot of people for a company, and they began to realize, they say, you know what? Maybe the spice trade has passed its prime. And in a way, especially now, we're in the 16 hundreds, mid 16 hundreds. It's sort of like would be today investing in a company that is just basically selling cars, internal combustion engines, right? You know, at this point, the industry is moving to electric vehicles, you know, the government regulation and maybe even some consumer taste and so forth.  

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People kind of moving towards electric vehicles, and they realized, maybe we're investing in the past here. We're not doing something that's got a terribly bright future. And so they decided to shift their focus away from spices. They said, we're just not going to be able to crack the Dutch. We're not going to be able to crack the Spanish.  

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And so let's get into something different. And they got into textiles. Textiles is an area in which Europe at the time was really quite underdeveloped. Most European countries, they're producing wool and things like that to them. Things like silk were obviously known to them, but not in major quantities.  

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Weren't able to get it in huge quantities. But at the time, the East India Company, they did have some small bases in what was really the textile capital of the world, and that was India. India at the time, this was in the 16 hundreds. I mean, this is Taj Mahal days. India was under the rule of the Mughal Empire, which, along with the Ming dynasty in China, were basically the richest place in the world.  

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Two richest place in the world by far were India and China in the 16 hundreds. I mean, the two of these together was way more than 50% of global GDP. India was almost a quarter of global GDP. England was like 1%. So England was like nothing.  

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And the Mughals in India, they had you could just imagine these guys. They had fine clothes, finer palaces, they had incredible art, food, advanced music, public baths, sporting competitions and culture, strong rule of law. They had a very advanced, very civilized culture. By comparison, these Europeans showed up and the Mughals looked at these kind of weird looking, relatively impoverished, pale skinned people who didn't quite know how to wash themselves properly. They ate this bland, disgusting food and thought them backward and uncivilized and barbaric.  

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And they kind of said, sure, we'll trade with you. Just don't sit at the table with us. You stink and we don't want to be around you. They really thought I mean, the Mughals thought they were really so much higher and more elevated. And in many respects, they were they really were.  

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I mean, by comparison, the Europeans really were far, far, far behind the Indians and the Mughals at this time in history. And they started trade, they started trading with the Mughals, they started bringing textiles. It became very, very successful business for the East India Company. And this is a part where we don't want to get too deep in the details. We could be on and on about this, but it took more than a century.  

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Basically, you get into the 17 hundreds. Now, the East India Company had become a very, very powerful force. They basically had their own army. And this is now nasty stuff. I mean, they're using slave labor, foreign mercenaries, they're bribing locals in India.  

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And this is happening at a time where the Mughal dynasty was in clear decline. They were weakened, they had terrible leadership. I mean, their equivalent of guys who shake hands with thin air, overspending, they had all sorts of internal divisions and power struggles, breakaway republics and so forth. I mean, it was just a really terrible time for the Mughal empire. And simultaneously, there was this long period of very ambitious executives from the East Indian Company that were capitalizing on every opportunity, pitting all these various bickering factions in India against each other and just sort of sitting back and sort of pulling the strings and making conflict happen in India.  

[00:21:53.020]

And they were just capitalizing on all of that and getting wealthier and wealthier and more powerful in India every year. And it essentially resulted in the company basically taking over the entire subcontinent. They took over the entire country. And the East India Company basically became a state masquerading as a corporation within a state. But you had England, which technically ruled over the East India Company.  

[00:22:13.710]

And the East India Company became the rulers of India. And they plundered everything, everything. They just stole everything that there was in India. And remember, I said India. India.  

[00:22:24.450]

At the time, they were just wealthy beyond imagine. This is the Taj Mahal days. Everything is they got gold and jewels and everything everywhere. And there was a top executive from the east India Company. This guy named Robert Clive, who was one of the key figures in leading this India assault and taking over the country.  

[00:22:41.250]

This guy brought so much wealth back to Britain that he's basically hauled in front of Parliament to explain himself. And he told Parliament, he basically said, guys, if you had seen the amount of wealth that I had seen I was there, I saw it. If you had been there and seen it, you would be astonished at how little I took. He told him, he said, I was, quote, astonished at my own moderation. So that's how much wealth there was in India.  

[00:23:05.440]

And these guys basically stole everything, hauled it all back to England and took this country over. And once they did that, frankly, they weren't really very effective as administrators. They were quite effective at plundering, weren't very good at administrating, and it was very early on, and even in company rule, they managed to engineer a famine. It was just devastating for the locals and also almost bankrupted the East India Company. Everything was in the East India county was tied to their agriculture production, the textiles, the value of the land, and it almost bankrupted the company because these guys were so incompetent that they engineered this famine in India.  

[00:23:40.210]

But at the same time, a lot of politicians back in England, people in Parliament, I mean, these guys we think about it, the members of Parliament are all stockholders. They kind of turned a blind eye to all these practices. And bear in mind, this is like an enormous company today, by most estimates, would be way bigger than Apple, probably even bigger than Apple and Amazon combined. I mean, this is just an enormous, enormous business. And these Members of Parliament, they're all stockholders.  

[00:24:04.330]

Sure, they had an incentive to turn a blind eye and even be quite friendly, pass legislation that was in favor of these income, which actually happened when the company almost went bankrupt because they were stupid. The British government stepped in to bail them out. They did all sorts of things, including the Tea Act of 1773, which led to the Boston Tea Party and ended up being one of the direct causes of the American Revolution. This is tied directly to the East India Company. And even the East India Company's bungling and pitiful administration in India is directly linked to the American Revolution.  

[00:24:36.350]

Right? So the larger point in all this is that the company was eventually nationalized. Its holdings became British Crown territory. This is how you end up with British India and so forth. But I wanted to raise this today just simply to demonstrate the story and the historical precedent.  

[00:24:50.180]

It's not isolated, by the way. There's plenty of instances throughout history of foreign countries basically becoming a puppet state through private enterprise. I'll talk about one very briefly again at the end of this. But my point with all this is to say I think. There's a case to be made that this could happen again.  

[00:25:06.320]

And it's just a theory. It's one I mentioned before. I did a podcast actually about this about six months ago, but I wanted to explain it further here because it's so much that's happened over the last six months. If we look at what's happening right now in the United States, this is one of the primary themes of our organization at Sovereign Man is that the US. Is in indisputable decline.  

[00:25:29.150]

And I take no pleasure in saying that, but it's a rational conclusion based on an objective look at the facts. It's extremely difficult to make a case to the contrary, it's extremely difficult to make a rational, fact based case that the US. Is not in decline. And if you look at all these different facets government finances, you look at the national debt is outrageously high, way over 100% of the entire size of the US. Economy.  

[00:25:54.250]

The deficits. The guy that shakes hands with thin air released his budget for next year talking about these guys, three $4 trillion deficits, $5 trillion. It's nothing to them to have multi trillion dollar deficits. It's completely ridiculous. You got the insolvency of Social Security that's pending over the next several years.  

[00:26:13.900]

Medicare's insolvency is coming up very, very soon. Just around the corner. You got the political incompetence, probably best exemplified by this debt ceiling fiasco. You got both sides refusing to negotiate. You've got this thing that everybody knows sort of needs to happen, and neither side is willing to negotiate.  

[00:26:30.560]

Being very public about it, it's just childish. It's so childish. But this is sort of par for the course. Now. You got the mismanagement of the currency.  

[00:26:37.860]

You got a central bank that has no idea what it's doing. Managing to engineer super high inflation, has no clue to go, oh, gee, we kept interest rates at 0% for so long, we conjured trillions of dollars out of thin air. We can't possibly understand why there's inflation. They engineered a bank crisis on top of everything else. Totally mismanaged all this.  

[00:26:59.000]

You look at the basics of the economics recession, declining productivity. You have an entire generation where there's a lack of enthusiasm, even work anymore. Quiet, quitting, all these sorts of things. I mean, on top of that, you got a pitiful state of the education system, especially because of what happened during the pandemic, the massive pandemic gap. You've got teachers now that are basically social activists rather than educators.  

[00:27:22.390]

You've got a terribly unhealthy population. Obesity crisis, drug addiction, mental health crisis. People want to go into schools and go and shoot children now because of mental health in the United States is just so screwed up. Outrageous social divisions, extreme social divisions, people at each other's throats running around with protests. You just can't even go to Brunch anymore without protesters running around getting in your face.  

[00:27:47.510]

You got to put a fist in the air and all these ridiculous things. Crime waves, skyrocketing, murder rates. You've got city councils that go and decriminalize shoplifting demographic issues. They've got a crazy declining birth rate. You've got a perversion in the rule of law, especially for political purposes.  

[00:28:05.070]

We just saw this now, yesterday, go and indict a former president of the United States over something that state and federal prosecutors didn't want to touch with a ten foot pole because they knew they didn't have a case. But now, all of a sudden, you got a local prosecutor who's going to go some guy trying to make a name for himself. So let's go indict former president that'll get my name in the paper. Obvious declines in national security, military readiness. You've got adversaries now that are unintimidated by the United States anymore, that engage in cyber warfare within punity that go and basically kidnap US citizens with impunity.  

[00:28:35.610]

And all these things barely scratch the surface of the issues that we're talking about, leading to, to me, an undoubtable conclusion that the US. Is in decline. Again, I take no pleasure in that, but it is what it is. And I have spoken before in these podcasts about the four forces of decline things. I talk about the forces of history.  

[00:28:58.480]

This is the inevitable rise and fall of empire that we saw with the Romans and we saw with the Ottomans and we saw with the French and we saw with the Mesopotamia. I mean, this is sumerians. There's so many of these examples about the rise and fall of empire in history. The inevitability of the cyclicality of this rise and fall. These are the forces of history that every society succumbs to.  

[00:29:17.480]

We have the forces of economy. Again, the things that the debts and the deficits and the inflation, the currency and the debasement, all these things that we also see throughout history, over and over and over again, the forces of society where a society eats itself from within. They don't have any social cohesion, they don't have shared values anymore. These are forces of decline, forces of history, forces of society, forces of economy. But I said there are four forces of decline.  

[00:29:40.870]

The fourth one is energy. Energy is crucial to everything because without energy, you have no life, you have no economy, you have no military, you have no government, you have nothing without energy. And more importantly, there is a critical and obvious link between prosperity, individual and national prosperity, and the abundance and efficiency of energy. When energy is expensive, it's scarce. It's being inefficiently produced, prosperity wanes.  

[00:30:08.760]

When you have abundant energy, when you have cheap energy, prosperity. Soars there is a crystal clear relationship in this. And this has been the case. We can see this literally for thousands of years. Human civilization barely moved because they didn't have a good, cheap, efficient source of energy.  

[00:30:23.000]

Energy was basically very expensive. And this is why, if you look at day to day life in Spain, in, let's say the 1100s wasn't really so much different than day to day life in ancient Hispania in the days of the Romans, more than 1000 years before that right. And simply because they didn't have a cheap and abundant source of energy, that's what really made the difference. What made the difference was now all of a sudden you had this surge in human prosperity in the 17 hundreds because you had the Industrial Revolution. People developed machines that made the world so much more productive.  

[00:30:58.570]

And you had the availability of cheap and abundant energy to power those machines very cheaply. They discovered coal. They discovered eventually oil and natural gas and these sorts of things. Oh my God, we have machines and we could power them. And both of these went hand in hand.  

[00:31:15.010]

You could have the best, most productive machine in the world. But if energy is super expensive, you're not going to be able to afford to operate it. So you're not going to get the benefits out of it. And of course, you could have really great energy, but if you don't have anything to use the energy on, it's not going to matter. And so the two of those go hand in hand.  

[00:31:28.890]

They had the machinery in the Industrial Revolution and they had the energy to power it. And we have been as, as a species, enjoying the benefits of these cheap energy sources ever since. Oil is one of those cheap energy sources. And the US has been a major oil producer pretty much since oil became a thing. Now, oil production in the US began dwindling in the 1970s.  

[00:31:50.130]

It peaked at around 10 million barrels per day and had basically been steadily declining for decades. By the early 2000s, it was less than 5 million barrels per day. And bear in mind, from the 1970s to the early 2000s, demand had skyrocketed. You had more people in the United States demanding more energy per capita. You also had China and India and all these rapidly developing countries that were demanding oil.  

[00:32:12.970]

A lot of you guys probably remember oil popped in nearly $150 a barrel in 2007. It got to $147 a barrel. And there was a lot of fear. People were predicting $300 oil, $500 oil. It was kind of terrifying.  

[00:32:26.450]

But it was around this time that oil producers began developing these shale fields. Shale, of course, is a rock. You've got unconventional oil that's locked in these rocks and they had long before invented and then perfected the technology to extract and refine oil from these shale fields. And the shale fields brought so much oil production online in the United States, it was the equivalent of an entire Saudi Arabia's worth of oil production. Not even including gas, just the oil.  

[00:32:56.910]

It was like an entire Saudi Arabia being discovered in the United States from these shale fields. So this is the thing that brought oil production in the United States down from this very dwindling 5 million barrels today per day to a point where basically the US. Was practically energy independent. In fact, the Energy Department, at a certain point of release, press releases saying, oh, our production is exceeding net imports. And it was a really, really big deal for the US.  

[00:33:22.820]

And obviously one of the key factors that drove oil prices down so low for so many years in the sort of mid 20 teens, that it was all based on this shale production because there's so much shale oil that was being produced. But now things are changing. Things are changing rather significantly. A lot of that shale oil production seems to be peaking. Many of the highest quality wells in these shale fields in the Permian Basin, for example, these are mature, their outputs dwindling.  

[00:33:50.980]

And this is happening at a time when the entire oil and gas sector is facing this dearth of capital. Nobody wants to invest in this stuff anymore. And this is deliberate. This is deliberate. Oil companies require capital to produce more, right?  

[00:34:03.060]

Duh it takes money. It takes a lot of time and money to go out and find producing fields, to develop wells and produce more oil. It takes time and money to do that. So the industry needs the money. They need the capital to be able to do that.  

[00:34:16.630]

But the industry is now being starved of capital. They've got all these climate warriors who think that the industry is evil. It needs to be vanquished. And so you've got private equity funds and ETFs and banks, et cetera. They're all pulling their capital away.  

[00:34:29.190]

You've got people like Larry Fink, the crusader in chief, who goes around he runs almost, what, $10 trillion financial institution, and he's going around basically threatens banks and other institutions, say, if you give money to the oil companies, we're going to pull our money away from you. We're going to torpedo your stock price. Basically threatens everybody practically at gunpoint to not invest in oil and gas companies. Meanwhile, you've got the President of the United States, who dumps on the oil industry every chance he gets. He gets in front of a camera and he starts, he starts talking smack about ExxonMobil and all these companies, they're all evil.  

[00:35:01.860]

Wow, what a surprise that oil production seems to be dwindling. They've got limited capital. They get zero support from the government. They get constant interference, negative interference, new taxes, new permits, regulations, all these requirements. And on top of all that, even private industry isn't investing.  

[00:35:18.320]

So you've got the stock prices of these oil companies that trade at ridiculously low valuations because nobody wants to own them anymore. Nobody wants to own shares in some profitable oil company because Greta Thunberg doesn't like it. It's so completely ridiculous. But it actually gets worse because, like I said earlier, most of these Tier One locations and a lot of the key shale areas, places like the Permian Basin, they've already been drilled, they're already sort of peak, they're mature. And so they're dwindling in their production, dwindling in the numbers.  

[00:35:48.750]

And what you're left with essentially is a smaller number of lower quality sites where you can't get as much oil out of them. And so this is happening at a time where there's limited capital, negative criticism, zero support, total antagonism from climate fanatics. It makes it really, really hard for oil companies to produce at a time when they absolutely need to. This isn't an issue of peak oil, really, so much as potentially peak US shale. And this is something that a lot of the shale CEOs really echo this sentiment.  

[00:36:17.770]

In fact, I would encourage you to read. There's something called the quarterly energy survey. It's released by the Dallas Federal Reserve Bank. So this is the Federal Reserve Bank of Dallas Quarterly energy survey. And they basically interview all these different CEOs in the oil and gas sector, a lot of shale guys that are there.  

[00:36:36.750]

And honestly, some of the comments are hilarious spot on. I mean, there was one that was actually just released a couple of days ago, earlier this week, and one of the CEOs said, quote, the biggest threat to our business is the federal government. Or they say the biggest industry we have in our industry is the federal government, which advocates for our extinction. One of the things they talk about is their inability to bring on new talent. In a way, it's sort of like the East India Company, where all they were getting was lunatics and ex cons.  

[00:37:01.220]

And one of the CEOs said that, they said that the young talent from college, they've been brainwashed into believing that our industry is bad and evil and that our industry is disappearing and there's no future. And they also talk about the fact that shale producers have drilled most of their tier one quality, right? So this is a really big deal, because again, we're talking about energy is one of the most important things you can have in your economy without energy. And there's a very clear link between cheap and abundant energy and prosperity. So if you have energy that isn't efficient, isn't abundant, or is expensive, that's going to seriously damage your potential prosperity.  

[00:37:41.190]

That's what's happening right now. And it's deliberate because you've got politicians at the highest level that go and dump all over the energy companies every opportunity they get. You've got these big financial institutions that are masquerading as climate warriors going around trying to torpedo the energy companies and their prospects, starving them of capital. At the same time, you've got most of these wells that have been producing for 15 years or more that now all of a sudden they're starting to dry up. They're not producing in the way that they used to.  

[00:38:10.290]

So you've got Dwindling production at a time when demand is soaring. And this is happening at a time where you've got really serious geopolitical consequences. And that's kind of the point of all this that I want to get to now. This is all happening in an age where inflation is everywhere. Central bankers approved, they don't have a clue what they're doing.  

[00:38:28.450]

Conflict is everywhere. And paper currency can no longer be viewed as a measure of national wealth. China is sitting on trillions of dollars of US dollars, us government bonds, US dollar assets. They are not sitting there admiring their mountains of US dollars, really trying to figure out how do we get rid of this stuff? And they're doing that, and they've been doing this for years.  

[00:38:49.610]

They've been trading their US dollars for real assets. And again, they've been doing this for years. They've been spending US dollars on their Belt and Road initiative, which is basically like the Chinese version of the Marshall Plan, going and sprinkling dollars around Africa and Latin America and East Asia. They've been buying up massive quantities of agricultural property. And energy security is another one of these key pillars.  

[00:39:10.010]

Energy. These people understand this. They understand that controlling energy, controlling the energy trade is sort of like the spice trade was hundreds of years ago or the textile trade hundreds of years ago. It's a key requirement in being the global superpower. And this is a major problem for the US.  

[00:39:24.500]

Because the US went from being essentially energy independent to very quickly going to have to rely on a significant amount of imports once again, because they've got dwindling energy production. But this is a problem, right, because Russia is off the table, iran's off the table. Iran is one of the largest oil reserves in the world, but they won't trade with Iran, right? Everybody else is trading with Iran, but the US is not going to trade with Iran for its oil. Russia is obviously off the table.  

[00:39:48.820]

They got a lot of oil in Russia, but that's off the table. Russian oil, they won't take it. And you got Saudi Arabia. But Saudi Arabia is cozying up to the Chinese. And you can see this now.  

[00:39:57.550]

China was just brokered this peace deal between Saudi Arabia and Iran. Of course they're going around the world. They were in Honduras recently, got the Hondurans to flip from supporting Taiwan. Now they're very much, the Honduras is very much in Camp China. And so if you think about this scenario where you've got a government administration that's gone out of its way to destroy the oil companies, you've got an entire financial industry that's gone out of its way to destroy the oil companies, you got a media empire has gone out of their way to destroy the oil companies.  

[00:40:29.110]

Now all of a sudden, wow, what a surprise, oil company and oil production is dwindling in the United States at a time when the Chinese are going around essentially securing the supply for themselves, putting themselves in position to mop up all the supply from Saudi Arabia from Russia, from Iran. Where does that leave the US? It leaves the US in a much, much weaker position where it's dependent now not even on Saudi Arabia, but on China in order to get its energy. That's a big deal. The bigger problem with all this, as I pointed out before, is the US.  

[00:40:58.600]

Dollar. The US. Dollar at present is the global reserve currency. I've talked about this a lot of times. The reserve currency is the thing that everybody uses it.  

[00:41:06.790]

Central banks. Hold us. Dollars. Foreign governments hold us. Dollars.  

[00:41:10.090]

Foreign financial institutions, foreign banks hold US. Dollars. That's why China has trillions of us. Dollars. China is no friend to the United States, but they own trillions and trillions of US.  

[00:41:19.290]

Dollar and us. Dollar denominated assets. It's because the United States dollar is the world's reserve currency. It means that when foreign countries engage in trade with one another, they close that transaction, settle it in US. Dollars.  

[00:41:34.050]

Right? And this is a huge benefit for the United States. It's an enormous benefit for the United States because it means that the American government always has this willing pool of suckers from overseas to buy and accept their US. Dollars, to buy their pitiful US government bonds. And it puts the US financial system at the center of the universe.  

[00:41:51.900]

It means that all these Wall Street banks who essentially control the flow of US. Dollars, every central bank in the world, sorry, every commercial bank in the world, foreign institutions, big foreign corporations, they all have to have accounts in these big Wall Street banks to hold their US. Dollars. And because of this, essentially allows the United States, it keeps these big Wall Street banks flush with deposits. It keeps the US government in a position where they can get away with outrageous acts of fiscal financial responsibility.  

[00:42:20.240]

They can run multi trillion dollar deficits. They can have a 31 and a half trillion dollar national debt. They can go into debt to pay people to stay home and not work. They can get away with this ridiculous political incompetence and high inflation, all these things because foreigners have to keep buying US. Government bonds.  

[00:42:36.860]

They have to keep holding dollars. And US. Government bonds are the easiest and most liquid way to hold US. Dollars. But people are really starting to get sick of it.  

[00:42:48.150]

I mean, really, really sick of it. I talked about this last week, and the banking crisis is just the most recent. It's another brick in the wall of foreigners who are really starting to rethink the doll. They're looking this to go, okay, let's see. Gee, we've been dealing with your stupid inflation, your central bankers that have no idea what they're doing.  

[00:43:06.590]

And by the way, foreigners, these are the guys that bought US. Government bonds in 2000 and 22,021. They bought these bonds at 0% yields. You know, they're buying ten year charges at like eight basis points so that the federal government could pay people to stay home. And these foreigners, the ones that are footing the bill for this, they're buying these bonds.  

[00:43:26.710]

They're suffering basically 0% interest rates. They got paid eight basis points. They had to deal with inflation. They've lost a ton of money because of the decline in the value of the US dollar. Now they've lost a ton of money because the value of their bonds has gone down.  

[00:43:38.980]

Now the banks are going up in the US and they're going to look at this and go, jesus Christ, guys, just I'm sick of it. I'm so sick of it. Can you guys just get your shit together for once, please? But all this stuff and again, this barely scratches the surface of the issues that foreigners have with the US dollar. The US.  

[00:43:58.320]

Financial system. I've been talking about this for a long time. I said back in, I guess it was 2013, this is ten years ago, the US government passed a law called Fatka, the Foreign Account Tax Compliance Act. And this is something they basically put a gun to the heads of every bank in the world. Foreign banks, even banks that have no jurisdiction in the United States, they don't have a branch in the United States.  

[00:44:21.400]

They have no business in the United States. But all these foreign banks and institutions basically had a gun held to their head and said, you will comply with this US law or else we're going to excommunicate you from the US financial system. You won't be able to have dollars anymore. You won't be able to use US dollars. And of course, that's basically a death sentence for a bank, a bank overseas.  

[00:44:40.580]

If they don't have access to US dollars, they're finished because everybody needs to have access to the reserve currency. And so the US basically weaponized the dollar. They weaponized the financial system. They've done this so many times. And I wrote about this back then.  

[00:44:53.250]

I said this is just, again, another brick in the wall against the US dollar. It's going to cause people to have really bad feelings about the dollar, really bad feelings about the US government. It's going to make them look around, look for options. People have been looking for options for ten years at least. And now they've got the inflation, the low interest rates, the decline in value of the dollar.  

[00:45:11.370]

It's ridiculous. Debts and deficits. And now they've lost a ton of money. Now they got the banking crisis to contend with. They're sick of it.  

[00:45:17.890]

They are so sick of it. And they're like, why do we keep loaning you guys money? And now you can't even get your act together with the debt ceiling, right? I mean, now you're putting yourself in a position where you're going to default on all this debt that's owed to foreigners, and you can't even get it together to extend the debt ceiling. Why would anybody continue to invest in these complete idiots that are running the US government.  

[00:45:38.640]

You got a guy that shakes hands with thin air, for Christ's sake. That's not going to give anybody confidence. So the thing that's been a huge benefit to maintaining the US dollar and its status as the global reserve currency has been oil. And this is commonly referred to as the petrodollar. Oil is a major pillar in holding up the US dollar status.  

[00:45:56.460]

And that's really important because oil is really the most widely traded commodity in the world, and most of these oil contracts around the world are in US dollars. Saudi Arabia sells oil in US dollars. Saudi Arabia pegs its currency, the real, to the US dollar. It's done so since 1986, right? So this is something else, a really important thing that forces people to hold US dollars.  

[00:46:17.020]

Because if you want oil, you got to buy it in US dollars means you got to hold US dollars. And if you're going to hold US dollars, you got to go and buy these people's stupid US government debt, which you don't want to hold. You got to hold your nose to buy these US government bonds. But you need the bonds because you need dollars. And you need dollars to buy oil because oil is denominated in US dollars thanks to Saudi Arabia.  

[00:46:38.970]

But what if Saudi Arabia started selling oil in another currency? What if Saudi Arabia started selling oil in renminbi in Chinese currency? Right? Suddenly, all of a sudden, you got these foreign institutions go, oh my God, now we don't have to hold dollars anymore. Now we have an excuse.  

[00:46:52.460]

We can hold another currency, now we can hold renminbi. And a lot of them want to. They're desperate to because they're so sick of these US government shenanigans, the fiscal irresponsibility, just all the absurdities. They're so sick of it. But they just don't have an option.  

[00:47:07.750]

China has been rapidly building that option. China has been building an alternative to the US financial system, this international payment system, and now they're working very closely with Saudi Arabia. They've already visited the Saudis, they said last year they're working with the Saudis on making a renminbi denominated oil contract for Saudi to sell oil in Renminbi. They've been working on this even very recently. In fact, just earlier this week, I think, on Tuesday, the very first LNG trade in Renminbi, this is the liquefied natural gas took place on Tuesday between China's national oil company and France's total.  

[00:47:43.250]

So this is happening. This is happening. This is not some wild crazy. If you had said in 1995 that the Chinese are going to saudi Arabia is going to be selling oil in Renminbi, people thought that was ridiculous. But today it's so obvious.  

[00:47:59.300]

It's so obvious. China is all over the place, all over the world, making peace with Saudi and Iran and pretending to have a peace deal and Russia and Ukraine, all these different things and really improving their international stature. This is happening. I mean, this is already in the works. And you've got to acknowledge that.  

[00:48:16.830]

Sure, it's possible it doesn't happen, but it's very, very likely because we know it's already in the works. And sort of the obvious sign I talk about the canary in the coal mine, I've thought about this. I mean, the obvious sign that is sort of game over for the US. This is way past canary in the coal mine. The obvious sign that is game over would be the US.  

[00:48:34.330]

Having to buy oil from Saudi Arabia in Renmin. B right. That's the sign. When you see that headline that some US refiner or whatever has to buy oil from Saudi Arabia denominated in Renminbi, that's when you go, okay, that's done. Game over.  

[00:48:50.970]

And every time I talk about this, every time I raise up China, there's always people go, yeah, China has its problems. China has few problems. Yes, China has huge problems. China has huge demographic problems. China has huge debt problems.  

[00:49:02.500]

China has social stability problems. China has all sorts of problems. The difference is that China's problems are on the way up, not on the way down. No place, no country, no empire in history has ever been problem free. The Romans, even in their sort of idyllic republic days, were never sitting around going, man, we got no problems.  

[00:49:22.420]

Of course they had problems. They had so many problems. And they had to deal with in the course of rising into empire, and they had to deal with Sullen, they had to deal with internal rebellions. They had to do all sorts of things foreign invasions, all sorts of stuff. Rome always had problems.  

[00:49:36.030]

The issue is that they had problems on the way up and they had problems on the way down. When you have problems on the way up, you can deal with those problems. When you have problems on the way down, they're pretty much impossible to deal with. France had problems on the way up in the days of Louis XIV, going back to the late 16 hundreds. They also had problems on the way down.  

[00:49:53.840]

They were able to deal with the problems on the way up. They couldn't deal with the problems on the way down. This has been the same thing in the United States. Lots of problems on the way up, lots of problems on the way down. They're harder and harder and harder to deal with when you're on the way down.  

[00:50:05.250]

And that's really the issue here. And so if you look at this from a big picture perspective, again, depending on who's in charge, you got people right now that don't seem to have a clue about any of this. They have no clue that they're at risk of losing the petrodollar status. Which means in that case, the days are numbered for the US dollar as the global reserve currency, which is going to be catastrophic, catastrophic for the United States. Particularly for the US.  

[00:50:30.630]

Government. I don't think the people in charge right now have any clue that that's happening. I don't think the White House knows. I don't think Congress knows. I don't think the Central Bank gets it.  

[00:50:38.970]

But depending on who's in charge, at some point, there may be some movement to prevent this. There may be people that wake up and go, oh my God, we're about to destroy the golden egg here. And what are we going to do about it? Well, this is what I call the 51 1st state theory. And I have discussed this before.  

[00:50:53.430]

Again, I did a podcast about this about six months ago. When I call the 51st state, I'm not talking about Washington, DC. I'm not talking about Puerto Rico. I'm talking about a place that's not too far from the United States that has far more oil than Saudi Arabia. Frankly, I don't think anybody can trust the numbers that Saudi Arabia says.  

[00:51:10.010]

These are our oil reserves. Yeah, okay, whatever, buddy. I don't think anybody can really believe that credibly but even if we believe the numbers, there's a place pretty close to the US. That has way more oil than Saudi Arabia. But at the moment, they barely produce anything because they're so just backward and underdeveloped.  

[00:51:25.490]

In a way, this is like India and the Mughal Empire that was once this incredibly wealthy, well ordered, civilized place that just plunged into chaos and revolution. And of course, I'm talking about Venezuela. Venezuela has far and away the largest oil reserves in the world. And again, this is just a theory. That's why I called the 51st state theory.  

[00:51:46.140]

And I'm not advocating for this, but if you view the world through this sort of Dick Cheney, Henry Kissinger, machiavellian type, real politique, depending on who's in charge, people that get this, they figure out a way to make a grab for Venezuela. Amid all of this crisis that Venezuela is having, this revolution and turmoil and hyperinflation, all these things, you figure out how to make a grab for it. Now, they tried this before, obviously, during the Iraq invasion, where they just went and invaded. They invented reasons. I doubt anybody's going to believe that Venezuela has weapons of mass destruction or any of these sorts of things.  

[00:52:18.940]

There will be no coalition of the willing, so they can't just all outgo and do an armed invasion. And I've had six months to think about this. I said this before. I said, oh, maybe there'll be an invasion of Venezuela. But if you look at it through the text of the East India Company, in theory, you could actually do that with a private company.  

[00:52:34.210]

You have an East India Company type to go and basically commandeer the oil and take over. This is obviously not without precedent. I'm not even talking about the East India Company. The US did this well over 100 years ago now. They did this with Panama and the reason why is because the French were the first ones to come in.  

[00:52:53.050]

And they surveyed this and they said, oh, wow, this is a really skinny isthmus here. We could build a canal, and this will be great for global trade. And they tried and tried and tried, and the French failed. Not because they were bad engineers, they were wonderful engineers. They just weren't able to get the political support because the time Panama was part of what was known as grand Colombia, colombia had broken away from Spain, and Panama was basically a province within Colombia, and they couldn't get the Colombian government to go along with it.  

[00:53:18.820]

So what happened? Well, the Americans essentially sort of buy the rights to the canal, and the big banks are desperate to finance this. They look at this and go, wow, this is a great deal for us. We could go in, we could finance the canal, and we'll make an enormous amount of money from this, and this will just be great. And so this is, again, not a conspiracy theory.  

[00:53:35.900]

There's a couple of great books about this. J. P. Morgan, the guy and the bank, essentially engineered a revolution in Panama to break away from Colombia. They financed the revolution.  

[00:53:45.420]

They went and basically installed a guide to be the new president. And it was sort of like with the Afghanistan invasion back in 2001. The first thing that this new government of Panama does is they go and award the canal rights to the Americans and JP. Morgan. All these big banks come in and they finance the Panama Canal.  

[00:54:04.440]

And lo and behold, Panama became this independent place. The canal gets built, and the new government of Panama awards this canal zone to the United States. And for years, the Panama Canal was sovereign us. Territory. So this is not without precedent, even within US history.  

[00:54:19.560]

There's so many examples of this throughout history. And I think potentially Venezuela could be a similar approach. I think anybody that's paying attention is going to see this is a big deal. US oil production is dwindling, and there are some signs in the US. There are some chances.  

[00:54:35.550]

You've got green river shale and you've got other places you could go for. But Venezuela is this obvious target. You've got so much oil there, again, more than anywhere else in the world, and to make a grab for that in some capacity, to just secure the supply, basically, of oil, something that's friendly, something that can be sold in US dollars to continue to maintain and support in some capacity the petrodollar. It sort of kills two Chinese birds with 1 st. You're securing abundant and efficiently cheap energy supply, and you're supporting the petrodollar all in one fell swoop and doing it in a way that the government can kind of have plausible deniability, say, oh, that's not us.  

[00:55:13.350]

That's ExxonMobil doing that, or whichever they kind of establish as the new East India Company. Again, look, this is just a theory. This is I call this the 51st state theory in the same way that India effectively became a puppet state of Britain because of what the East India Company was doing. I call this the 51st state because it would be a way that Venezuela essentially becomes subordinate to the United States and selling all of its oil. And again, it's just a theory.  

[00:55:38.560]

I'm not advocating for an invasion of Venezuela, but I am definitely suggesting that we pay attention to the bigger story here, because there's so many things that are going on right now, especially now people are waking up and reading headlines about a former president being indicted and all that. I mean, there's just so many ridiculous things. You got war in Ukraine and all this. The really big story, I think something that's really going to dominate our time. I mean, I think particularly people in the United States have grown accustomed to the United States being the dominant superpower.  

[00:56:07.000]

This is going to be one of the biggest events of our lifetimes. And it's happening in many respects in slow motion, right? There are these individual snapshots. Somebody gets indicted or some country invades another country and there's a war in Ukraine, et cetera. And that dominates the headlines day to day, week to week, month to month.  

[00:56:21.880]

This is something that's taking place and unfolding over a period of years. And because it takes place over a period of years, it's easy to miss. But it is got to be at least one of the biggest, if not the biggest story of our lifetimes, because you're talking about this thing that is inextricably linked to prosperity, is energy production, energy abundance, cheap energy. And that's going away. It's going away because the people in power are literally driving to make it happen, right?  

[00:56:49.860]

And this creates a because you've got dwindling energy production, you got more expensive energy. This is a huge driver of inflation. It's a huge driver of the decline in global power and status, and most importantly, leads to a displacement of the US dollar as the dominant reserve currency. And again, this is a huge, huge event because it signifies a major reset. This is going to be Titanic for the US government, pun intended, I think, in this case, because you talk about losing the special status and privilege of the US government.  

[00:57:22.480]

You can't run debt, you can't run multi trillion dollar debts anymore. You can't have the fiscal responsibility, you can't have the incompetence. If you got a guy that shakes hands with thin air, that's going to trigger a collapse in the bond market. I mean, if you think about that, if the Italian Prime Minister gave a speech and then turned around and shook hands with thin air, italian bonds would plummet that very day because people go, oh my God, this place is screwed, and nobody wants to own that. If that happened in mexico.  

[00:57:48.640]

If that happened in the UK, there would be convulsions in financial markets because of that. But in the United States, nothing happens because the US is the dominant reserve currency. If that reserve status goes away, suddenly you're just like everybody else. You've got to live within your means. You've got to make deep, deep cuts.  

[00:58:06.580]

You've got to gut the military, you've got to gut Social Security, all these things. It's a major reset in the way the US government does business, and it's essentially going to destroy the global status, the global superpower status. And this is something, again, I think is going to be one of the biggest stories of our times. And it's unfolding right now. Again, the thing where, you know it's game over is when the US is going to have to start buying oil from Saudi Arabia in Renminbi.  

[00:58:32.490]

And this is the sort of thing that's already in the works. And I think in theory, this is solvable. In some ways, there are ways to do this right. You could look and say, oh, jeez, well, maybe we shouldn't completely torpedo the energy companies. Maybe we should treat the energy companies instead of like pariahs, but start treating them as vital to national security.  

[00:58:50.810]

Maybe we shouldn't be so stupid about nuclear and let's be somewhat supportive about obvious technology that could really move the needle for energy independence. So it's not inevitable, but they are in no way on a path to fix any of this. And time is quickly running out. I'm going to go ahead and leave it at that. I, as always, appreciate you guys listening.  

[00:59:10.100]

And I'm off next week, but we'll speak again soon. Thanks so much.   Close Podcast Transcription

In 1898, a Polish author named Jan Bloch published a 3,000+ page volume on modern warfare entitled Future War and its Economic Consequences.

Bloch had studied military technology and saw the rapid pace with which destructive new weapons and munitions were being developed. And he came to the conclusion that the next war would be absolutely devastating.

Bloch predicted, in fact, that the days of classical warfare– cavalry charges and large troop movements on an open battlefield– were over. And that the next war would entail long, bloody, pointless trench warfare that would be unimaginable in its destruction.

In short, he predicted World War I.

Bloch was even invited to speak at a diplomatic conference in the Hague in the following year in 1899, and he urgently warned the attendees to do everything they could to prevent war.

The experts listened politely… and then completely ignored him. 15 years later Bloch’s prediction came true when the Great War broke out. Millions died. Europe was destroyed.

And yet in retrospect it was all so obvious. The warning signs were there all along. But somehow the people in charge not only managed to NOT avoid war, they managed to steer directly into the path of destruction.

This is often the case with major world events, including wars and major economic catastrophes. They’re seldom accidents, nor do they sneak up without announcing themselves years in advance.

And after the crisis is over, it all seems so obvious in retrospect. Yet the people in charge failed to see it coming, and often contributed to the cause.

Another great example is the Global Financial Crisis of 2008, where banks and financial institutions engaged in high-risk behavior that nearly brought down the entire global economy.

Once again, the people in charge not only failed to notice, but they played a key role in engineering the crisis to begin with.

The Federal Reserve slashed rates to just 1% after 9/11 in the early 2000s, which led to a massive asset bubble. The Fed didn’t seem to notice.

Then when they started aggressively raising interest rates in 2005 (to help fight inflation), asset prices fell dramatically. The Fed failed to predict this too.

Banks lost billions of dollars as a result, and many banks failed entirely. This triggered a chain reaction in the financial system and the worst economic crisis since the Great Depression. And the Fed not only missed the warning signs, they steered directly into the disaster.

We’ve just seen a similar crisis unfold with this month’s bank runs.

The Fed slashed rates to zero, sparking yet another major asset bubble. The Fed failed to notice.

Banks paid record high prices to buy US government bonds using their depositors’ funds. The Fed failed to notice.

Then when the Fed aggressively raised rates, they failed to predict that asset prices (including bonds) would plummet in value, causing widespread solvency problems at banks.

Banks have even reported $600+ billion in unrealized bond losses to the Federal Reserve– one of the banks’ primary supervisors. And yet the Fed still failed to notice.

In fact just three days before Silicon Valley Bank went bust, the Fed insisted to Congress that everything was fine in the financial system.

These experts are consistently wrong. And it reminds me of World War I: the warning signs were obvious, yet the people in charge failed to notice… and steered directly into the path of disaster.

So in today’s podcast, I spend some time exploring an important question: what other key risks are lurking out there which the people in charge have failed to notice?

At this point, frankly, it would be stupid to assume that the government and central bank have everything under control. What are they missing?

I talk about five separate risks today– including further fallout from these aggressive interest rate hikes. We also discuss Social Security (which is a pretty obvious risk), war, energy challenges in the US, and– the biggest flashing red warning sign I see– fading dominance of the US dollar.

You can listen here.

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[00:00:00.650]

It's today. We're going to go back in time to May 18, 1899 to the Great Orange Hall of Western Boss Palace in the Hague, which is located in South Holland. May 18, 1899 was the 31st birthday of Tsar Nicholas II of Russia. And the tsar was really excited because on his birthday, world leaders and diplomats from all over the world were gathering in The Hague for the open of a peace conference, which was kind of his idea. There were dignitaries from all the great powers attending because Tsar Nicholas was one of the people who thought, you know what?  

[00:00:35.310]

This is starting to get intense. Decades of rising tensions across Europe, going back to the Crimean War, the Franco Prussian War, the Austrian Prussian War. So many more. There was a stunning rapid pace in the development of military technology, alliances, messy entanglements, and diplomacy. And Nicholas said, you know what?  

[00:00:57.430]

It would be a good idea if we just get together and talk. Let's impose some guardrails. Let's establish a framework to see if we can maintain some peace and, if nothing else, to create some kind of standards for warfare to make sure that we don't all obliterate each other with all this new technology that's out there. So there was at least one guy who saw what was going on and felt like, we need to do something about this. And so this happened on May 18, 1899, all these diplomats convened, and they opened this conference called the Hague Peace Conference, and they spent months hammering out all these different treaties and things.  

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One of the things they did was they established something called the Permanent Court of Arbitration, which actually still exists today. The idea was to have an international court where nations could bring up disputes against each other as a diplomatic way of resolving their differences without resorting to military conflict. And they also made treaties and agreements to, for example, not use poison gas against each other, not use soft point bullets, which, once they enter human tissue, actually expand and make the devastation even worse inside of a human body. Now, there was a speaker that was there, and this is really important. It's a very interesting guy.  

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He was a Polish guy named Jan Block. And Block had been a successful, very successful banker. He invested in railroads and had made a small fortune, and he turned to military history. He was fascinated by modern warfare. What was modern, obviously, at the time, in the 18 hundreds.  

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And Block was particularly entranced by the results of the Franco Prussian War, the French and the Prussians, which are really kind of on their way to becoming Germany at that point, in the 1870s, early 1870s, they went to war. And Bloc was amazed at how quickly and decisively the Germans defeated the French. And he looked at it and he said, look, the Prussian victory was based on they had better technology, they had better munitions. They had better organization, they had better industrial capacity, which allowed them to produce all these munitions and ferry their people out into the field and invade more quickly and organize more quickly. And this was something everybody in Europe saw this.  

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Everybody in Europe said, oh my God, look, those Prussians are brutal, lethal jeez. And everybody realized they had to catch up. Whatever the Prussians were doing, that's what we all need to do. And that's what was happening, is that everybody in Europe was basically catching up to the Prussians, getting their military technology up to stuff, basically created an arms race to see who could create the biggest, deadliest, most destructive munitions, things that could go boom bigger and harder than anybody else's. And so Block noticed this and he said, the next war is going to be absolutely devastating because everybody will have caught up, right?  

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The Prussians aren't going to have this advantage anymore. Everybody's going to have caught up at this point. So everybody's going to be dealing from the same level. And he wrote about this. He wrote 3000 pages, this multivolume compendium of modern warfare, and basically predicting what the next war was going to look like.  

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And he wrote all about this sort of future conflict. And he predicted total economic mobilization. He said the next war is going to be based on the industrial capacity of these countries and they're basically going to have to turn their entire economies into this war. Production, economy, all the factories, the agriculture, everything is going to have to go to war. Total economic mobilization.  

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He predicted trench warfare. He said, there's all this classical warfare that's existed for thousands of years. Large volumes of troops moving on open ground, bayonet charges, cavalry charges, all these sorts of things. That classical warfare that's been waged for thousands of years, forget it. It's going to be a stalemate.  

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It's going to be trench warfare, artillery barrages, poison gas, widespread devastation of entire nations. It's going to be these modernized industrialized nations. They'll have to commit huge armies, million people at a time, and basically dig in across an endless battlefront and wait each other out in the trenches. It's basically like a siege, a mutual siege, where the nation that wins, basically it's because they had superior industrial capabilities, but there would be countless soldiers dying not only of combat, but even more dying of disease and famine because they're going to be sitting in these trenches. This is coming to all the elements and exposure.  

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There's going to be devastating psychological consequences, economic impacts. They're going to lead to social revolutions. Entire governments will be toppled. He predicted all of this and all the experts in attendance politely listened, gave him some polite applause, and then basically ignored his warnings because these people were from that classical era of war where they had brightly colored uniforms and the cavalry charges and soldiers maneuvering in the battlefield in an open battlefield accompanied by germer boys and bugles. Right?  

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That's the warfare that they were accustomed to. And so all these people that were sitting in the audience, all these diplomats and dignitaries, they just didn't get it. They did not comprehend what block was telling. I'm sure some of them did, some of them did. Some people understood.  

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Obviously, tsar Nicholas was one of the people who said this could be a big deal and we need to do something about it. But most of the people, especially the underlings that were there, the experts in diplomacy, they just didn't get it. And for his own part, John block was dejected. He was dejected after the conference. He was so dismayed, and he wrote shortly afterwards, that he said he was, quote, astonished.  

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He was astonished, and he said these obvious risks of war, and he said, had, quote, passed almost unnoticed even by the professional watchmen who were paid to keep a sharp lookout. He just explained, they just didn't get it. They just didn't get it. He was telling them everything that was right in front of their face. It was so obvious, and they just didn't get it.  

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He said, the facts at hand, the consequences, he said, go against, quote, the vested interest of the most powerful class. This was a big deal. And he lamented about the stubbornness of these people taking any real action and even distorting reality to reject the obvious conclusions that were right in front of their faces. And because of this, he said, he concluded there would be no real reform and there would be no peace. I've actually read and you can see this, there are the diplomatic reports from the delegates.  

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The Yale university actually has all these, the writings back and forth, the reports from, for example, the US delegates who are in attendance, and there are a lot of these that exist. And obviously they speak in glowing terms about the important work that they're doing. They were really patting themselves on the back. They said, oh yeah, those pesky Germans, they were trying to get us to concede something here, but we didn't do it. And the French wanted this, and the British wanted this, but we didn't agree.  

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For the US delegation, for example, they said, oh, well, we were able to not sign the treaty against not using poison gas for technical reasons and all these things. And they went on and on about all the great work they're doing. They said that the court of arbitration is so wonderful that there's a guy, I think his name was captain crozier, us military officer who was in attendance. He said that this arbitration court will, quote, be, will doubtless be found to be imperfect and require modification. But they went on and on about how great everything was.  

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The US. Didn't even bother to sign a lot of the treaties. Like I said, they didn't sign the treaty against using gas. They didn't sign the treaty against using dumb, dumb bullets. They said these were for technical reasons.  

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And in the end, of course, it was all useless. It was all useless. All these people that showed up, they had a guy telling, this is exactly look at the evidence, people. This is right in front of your face. Just open your eyes and you can see what's happening, what's going to happen.  

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It's so obvious. Just do the right thing here, steer us away from this. But instead, all these people that were there basically continue to steer the world directly into the most unimaginable devastation ever. Block turned out to be right. It was a nasty protracted.  

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Trench warfare required 100% economic mobilization. There were uprisings that broke out as a result, including, obviously, the Russian Revolution. Disease and famine were right, were widespread and again, just unimaginable devastation. It was so obvious. And I think anybody that looks at history, you got to ask the question, how did you not see this?  

[00:09:01.050]

And not just the people that were there in the delegation, but obviously all the experts, all the leaders I'm doing air quotes all the leaders that were in charge making these decisions, how do they not see this? How did they not prevent this? It was just so it was so clear. I mean, Europe was this giant mess of alliances and all the diplomatic entanglements and rising powers and declining powers. The Austro Hungarian Empire.  

[00:09:21.720]

The Ottoman Empire in decline. Places like Germany that are rising. The French were desperate to assert themselves. Britain wanted to maintain its status of the top position of the world. I mean, there was so many there were nationalist movements, Marxist movements, republican movements.  

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There were so many things different strategic interests. It was so clear, so obvious. And you had this guy who shows up and tells everybody everything. And Block wasn't the only one. Again, there were even people like Zara Nicholas who understood.  

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But once again, the experts failed to do anything about it. They failed to appreciate the consequences of what they were doing and they steered the world right into the war to end all wars. This is not uncommon. This is actually an incredibly common theme throughout history. You see these major events, wars, social revolutions, economic crises.  

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They're not accidents. The warning signs are there and they're often ignored. And I'm not talking about cases where there's just some bad luck. There's a natural disaster, something that's just totally beyond people's control and they're just trying to figure it out and deal with it and do the best they can. This is something where, like Block said, the experts, they're paid to keep watch and prevent disaster.  

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Not only they don't see the warning signs, they actually steer directly into the disaster. And World War I was an obvious example. It was an obvious example of total and complete failure on the part of the people that are being paid to prevent this from happening. I mean, it's ridiculous when you think about it. They literally had a conference to say, oh well, let's try and prevent a war.  

[00:10:52.290]

And then that's exactly what happened. And the guy who was there saying, there's going to be trench warfare, it's going to be total warfare, it's going to be brutal, it's going to be blood, it's going to be all these things. And they said, I don't think so, I don't think so. And we see this example over and over and over again, the same model, and we'll shift gears and talk about economic crises. Now because it's very similar in this case.  

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Many of you probably remember very clearly, as I do, the global financial crisis. This is back in 2008, 2009. Again, not an accident. This is one of those things people go, oh, it's just bad luck. Sure, it's bad luck for everybody else.  

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But the experts in charge of this steered directly into this crisis. They engineered it and made it happen. You had this crisis that the banks had spent years making no money down loans to risky borrowers with poor credit so they could purchase homes at record high prices, right? So the banks were basically taking 100% of the financial risk and saying, sure, you can buy a home at a record high price. Sure, you have a history of not paying your debts.  

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Sure, you don't have a job, you don't have any income, you don't have any assets. They call that ninja. No job, no income, no assets. You were making these Ninja loans to people to buy homes at record high prices with no money down. Of course that was a dumb idea.  

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Of course that was going to blow up. And it did, right? But everybody just sort of closed their eyes. All these experts in the financial system closed their eyes and pretended that that whole arrangement was literally risk free. The rating agencies that are literally risk free were slapping their their highest ratings, triple A ratings on pools of these risky mortgages pooled together into giant bonds.  

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They said, oh, you're loaning money with no money, down 100% of the financial risk to a guy with no income, no job, no assets, who has a history of not paying his debts. Oh, sure, let's just pool all these together and pretend that it's risk free. And if we close our eyes and say it enough times, it'll be risk free. Totally ridiculous. And it was so obvious what would happen.  

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Of course, real estate prices fell, borrowers defaulted on their mortgages. Banks lost billions, and a lot of banks went under, which because the financial system is so interconnected, it dragged down almost the entire banking system in 2008 and early 2009, which nearly dragged down the entire global economy. It was the worst financial crisis since the Great Depression. Wasn't an accident. It wasn't like just some hurricane comes out of nowhere, there's a giant earthquake.  

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All of a sudden, this is something that the experts engineered. They created the people that were paid to keep watch. They not only missed it, but they actually helped engineer it, right? The warning signs were there. Everybody could see this.  

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The credit markets were starting to break down a year before the crash. Home prices were declining more than two years before the crash, but everybody missed it. And you've got when you think about the people that were involved in this system, you got the banks, right? Supposedly the financial experts, we all trust the banks. The banks are risk free.  

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They know what they're doing. These guys were engaged in the most reprehensible, irresponsible, unethical, probably illegal behavior, right? A lot of lies, lots of deceit. Then you have the rating agencies. These guys have a legal and ethical obligation to provide an honest risk rating.  

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They're brought assets, and they're supposed to say this is a risky asset or it's not a risky asset, and they say it's B rating or an A rating or AAA rating. And so not only did they not they didn't provide an honest risk rating. They didn't notice that there was no risk, and they kept slapping these AAA ratings on all these risky loans and risky bonds. Just absolutely outrageous behavior. Then you have government watchdogs once again asleep at the wheel.  

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They didn't notice. They didn't see any of this going on. They just closed their eyes and said, la la la. And they didn't notice any of this. My favorite one to beat up on, though, is the Federal Reserve.  

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And the reason I say that I say that seriously, I actually think it's very important to beat up on the Federal Reserve because the Federal Reserve, the central bank in the United States, is the most cared for agency. Nobody says an unkind word about the Federal Reserve, right? If you look at all, you look at all these other government agencies, people beat up on the SEC. They beat up on the, on the you know, they beat up on the White House. They beat up on Congress.  

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They beat up on everything else in government. They beat up on the national parks. They beat up everybody in government. But not the Federal Reserve, right? Technically, the Federal Reserve is independent from government, but it obviously has this huge role in the US.  

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Economy, and there's a lot of overlap between the Fed and the government. But nobody says an unkind word. Nobody scrutinizes the Fed. Nobody criticizes the Fed. The press gets together.  

[00:15:20.360]

They have these press conferences, and everybody just sort of bows down to the Federal Reserve. The Federal Reserve says, let there be 0% rates, and it was good. And nobody questions the almighty Federal Reserve, partly because I think people afraid of looking stupid, because so many people, the reporters, these are the same people that cover they write stories about Justin Bieber and whatever. They don't understand central banking, so they're going to sit in a room with a guy who's the chairman of the Federal Reserve. This is the great and powerful Oz, and they're terrified of the man behind the curtain.  

[00:15:53.880]

So they don't want to look stupid, so they just go, okay, well, the Fed raised rates. The Fed cut rates. Nobody really questions any of this, but they should, because what the Federal Reserve does over and over and over again, they engineer these bubbles. They engineer huge consequences. They're totally asleep.  

[00:16:09.680]

They fail to notice. And we see this over and over again. In the 2008 financial crisis, it was the Federal Reserve that created the fuel and lit the match. To begin with, you probably recall there was a recession in 2000 followed by 911, right? That was pretty devastating for the US economy.  

[00:16:25.220]

The US. Economy was down. So what did the Federal Reserve do? They cut interest rates, right? This is what central banks do when the economies slow down.  

[00:16:32.460]

They cut interest rates. So the Federal Reserve slashed interest rates down to 1%, basically, which at the time was like people are like, oh my God, that's so low. Interest rates throughout the 90s have been quite high, in the 80s have been really high, in the 70s have been high. For the Fed to slash rates down to 1%, there was hardly anybody alive that even remembered rates being so low. And obviously, when rates are that low, borrowing was cheap.  

[00:16:55.660]

It was cheap to borrow. And so, of course, things like real estate boomed. Suddenly. People thought, oh my God, mortgage rates are so low. I can afford to pay more for my house if I'm in the market.  

[00:17:07.190]

And I used to think I could afford X, well now I can afford a whole lot more than that because rates are so low. Rates came down, it makes my monthly payment lower, so I'm just going to buy a bigger house, right? And so real estate boom. Real estate went through the roof, and it quickly became a bubble. Real estate, really, all asset prices, stocks went up, bonds went up, commodities went up.  

[00:17:26.770]

But real estate in particular, there was so much money, so much activity in the real estate market. And a lot of you guys probably remember this. I mean, it was like everybody was becoming a real estate agent. It was ridiculous. Every single person.  

[00:17:38.820]

People were quitting their jobs to become real estate agents because it was just so easy. People were going and signing up, flipping houses, off plan. Some developer would go and announce a project to say, oh, I'm going to develop some condos in Miami. And people would go clamoring to go and sign contracts to buy these condos. The same condo would be flipped four, five, six times before, in some cases before the building even broke ground.  

[00:18:05.190]

I mean, that's how the ridiculous amount of activity that was in the marketplace. Real estate agents were getting commissions, housing contractors, people that were in construction were making tons of money. Plumbers are making three, four $500,000 a year. They were in such high demand. It was such a boom that was clearly a major bubble.  

[00:18:25.950]

But the Fed didn't understand any of it. They didn't see, they didn't, they never stepped back and said, gee, wow, we we slash rates so low that made houses really cheap. So now this entire housing industry is just on fire. I guess we don't have anything to do with that. Well Corey, you created the conditions for that.  

[00:18:43.510]

You're completely responsible for it. They didn't see how what they were doing, that they were facilitating this outrageous and really dangerous lending practices. They didn't see real estate prices booming, housing activity is booming, and everybody's in on it. The banks are in on it, the rating agencies are in on it, the mortgage companies are on it, the mortgage brokers are in on it. Real estate, everybody is making so much money from this and it's leading to this outrageous and again, very dangerous conditions.  

[00:19:09.930]

Lending practices. People are saying, oh, normally 80% banks provide 80% of a home's purchase price. And they said, oh well, we'll provide 90%, we'll provide 100%, we'll provide 105%. I mean, it was getting so ridiculous and the Fed again just closed its eyes and said la la la, nothing to see here. And in the same time, not only did they not see how they sort of created this whole bubble to begin with, the Fed then in 2005 would say, oh wow, there's inflation now, right?  

[00:19:37.660]

Suddenly 20 03, 20 04, 20 05 inflation is rising. And they started raising interest rates in 2005 and they failed to see, they said, well, we slash rates to 1%, and failed to see how that would cause any problems, failed to see how that would cause a bubble in 2005. They quickly raised rates, failed to see how that would have any consequences. And this is where, again, the Fed, they really, I mean, there's some real doozies here. In February 2006, for example, actually go back in July 2005, chairman of Federal Reserve said we'd never had a decline in house prices on a nationwide basis.  

[00:20:12.710]

February 2006, he says house prices will probably continue to rise, right? This is an epically bad prediction because home prices started to fall two months later, right? So he says house prices will probably continue to rise two months later. They started to fall in November 2005, he says talk about financial derivatives, insisting that financial derivatives are safe. And he says derivatives with respect to the safety derivatives for the most part are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and use them properly.  

[00:20:45.770]

This is one of the things that nearly blew up the entire global economy two to three years later, in February 2007, he said delinquency rates on most consumer loans remain low. The next month, dozens of subprime lenders had gone under due to rising delinquencies in May 2007. He said, we don't expect any significant spillovers from the subprime market into the rest of the economy. Three months later, the entire financial system was frozen. Inner bank lending had ground to halt.  

[00:21:13.100]

Bank runs had started. And this was worldwide at this point. There was Northern Rock in the UK. Had a bankruptcy. It's a big bank in the UK.  

[00:21:20.340]

And people were queued up in line, standing outside to get their savings out of this bank. Banks across the world were reporting billions of dollars in losses on the subprime debt. But again, three months earlier, the guy said, oh no, there's nothing to see here. Everything's going to be fine. January 2008, the guy says, Fannie Mae and Freddie Mac, these big US federal housing agencies, fannie Mae and Freddie Mac will make it through the storm.  

[00:21:41.610]

They failed two months later and had to be nationalized by the federal government in June 2008, he said, the risk of recession appears to have diminished. Three months later was the worst economic crisis since the Great Depression. So these guys, they engineered this bubble by slashing interest rates to near record lows, right? In the early 2000s, after 911, they just slashed rates and they engineered this bubble. They failed to see it, right?  

[00:22:07.590]

They failed to see what they were doing. They failed to see the risk. They failed to look at jeez, that doesn't make any sense. They're loaning money to unemployed homeless people getting million dollar mortgages. There was a guy named Johnny Moon.  

[00:22:19.920]

That's his name, johnny Moon got a million dollars in home loans. He's a homeless guy, right, with no history of any credit whatsoever. Was able to go out and get all these no money down loans. No money down loans. This is absolutely ridiculous.  

[00:22:33.420]

And the Fed just didn't notice. And then they rapidly increased interest rates, caused that bubble to burst. Totally failed to anticipate any consequences whatsoever. And the whole time, three months before the worst financial crisis, the Great Depression says, oh no, everything's going to be fine. It's not going to be fannie Mae and Freddie Mac are going to be fine.  

[00:22:53.420]

Nationalized two months later. Risk of recession appears to have diminished. Worst crisis since the Great Depression. Three months later. I mean, these guys just it's just so it's just almost comical how much they get it wrong.  

[00:23:07.440]

And even though, again, the warning signs were there along the way they should have seen in 2007, said, oh my God, there's bank runs, there's banks reporting billions of dollars of losses. I mean, it was so obvious. They should have seen it. They could have seen real estate prices were declining in 2006, two and a half years before the real crisis started. What did they do about it?  

[00:23:26.210]

Nothing. Did they notice? No, they didn't do anything. They didn't do anything. They didn't even notice.  

[00:23:31.970]

They're so bad at what they do. And they were extremely intelligent people. It was like Jan Block all over again. They're extremely intelligent people, giving speeches, writing about it, warning about it, and some people even betting on a collapse of the financial system. But the fed was totally and completely clueless.  

[00:23:50.250]

Now, we've seen over the past few weeks, same thing, bank runs, right? It's the same issue again, shouldn't have been a surprise. The warning signs were there. In fact, a lot of people saw this. Readers of Sovereign Man probably saw this coming because we were writing about this.  

[00:24:04.210]

I was writing about this going back several years now. I actually wrote some time ago, I wrote, quote, it's just assumed that banks are stable, sound and conservative. Nothing could be further from the truth. Banks get to keep pretending that they're safe, but they're gearing up to take a huge bath as the values of their bond portfolios collapse. That's exactly what happened.  

[00:24:22.480]

That's exactly what happened a couple of weeks ago with Silicon Valley Bank and Signature and First Republic and all these it's basically the same situation as the GFC, right? As the global financial crisis. We go back to the early 2000s. Post 911, the Fed creates this giant asset bubble. They slashed interest rates down to 1%, which again, at the time was people thought, oh my God, 1%.  

[00:24:41.440]

That's crazy. The Fed slashes interest rates down to 1%. So asset prices boomed, stocks went up, real estate went through the roof, bonds, commodities, everything went up. But the fed didn't understand. They didn't see the risk that they were creating.  

[00:24:54.200]

And then they reversed it. They suddenly started ratcheting up interest rates because inflation was heating up. And they failed to anticipate that there would be any consequences of that. That's what we've been seeing here. The Fed after the GFC, the Fed basically just repeated the same mistake all over again.  

[00:25:09.600]

They slashed rates in the early 2000s. There were consequences. Failed to anticipate the consequences when they raised rates. So what do they do after the GFC? They slash rates again.  

[00:25:18.170]

Kept them. Instead of 1%, they said, oh, who needs 1%? I'm not going to be a coward and go down to 1%. I'm going to go down to 0%. So they kept rates at 0%.  

[00:25:27.900]

Over in Europe, they slashed rates down to below 0%. Europe and Japan rates were negative, right? It was insane. It was insane. And they kept them there for years.  

[00:25:38.590]

Completely failed to anticipate any consequences of that. Completely failed to notice any consequences of that. And it was silly stuff that you had governments. Argentina was able to sell a 100 year bond. You have a country that has defaulted so many times on its debt, was somehow able to go and raise money, billions and billions of dollars at 100 year bond.  

[00:26:01.820]

You had the famous case of the Art Basel banana duct taped to a wall that was considered art, sold for six figures. You. Had startups with no hope of ever turning a profit that were being valued at tens of billions of dollars. There was ten plus trillion dollars in government bonds with negative yields. It was just there were so many outrageous stories of this giant asset bubble.  

[00:26:22.240]

All these assets, bonds, stocks, real estate, everything trading at record high prices, the Fed didn't notice any of it. The Fed didn't notice any of it. There was nothing about this. Well, jeez, that's unusual. Banana duct taped to a wall, sold for more than $100,000.  

[00:26:35.900]

That's unusual. That seems like something drunk. Didn't notice any of it. And so, of course, because interest rates are so low, they slash rates down to zero on all of this, created an enormous asset bubble. Everything went up in value.  

[00:26:49.650]

The Fed didn't notice any of it. And then finally, the Fed started, after completely failing to see this, they started raising rates again, really aggressively raising rates last year, and also totally failed to anticipate the consequences of that. And this is what happened during the boom. Banks did what banks do. They take their customer deposits and they buy things.  

[00:27:13.120]

They buy assets. They buy bonds usually. They buy bonds, usually liquid, highly tradable bonds. And that's what these banks did. In this case, we're not even talking about some crazy super high risk bond.  

[00:27:25.130]

They bought Silicon Valley bank bought us. Treasuries, US. Government bonds. That's what they bought. There wasn't any toxic asset.  

[00:27:32.100]

It wasn't anything like that. It was US. Government bonds. But because they bought these bonds at record high prices during the boom, and then all of a sudden, the Fed started raising rates. And when they raise rates just in the same way that when they slash rates, asset prices go up.  

[00:27:46.260]

When the Fed aggressively raises rates, asset prices fall really quickly. And so the banks paid record high prices for their bonds. And then all of a sudden, interest rates are a lot higher, and those bond prices plummeted in value, and banks are sitting on huge losses. But the Fed didn't notice that either, which is really curious because the Fed is one of the primary bank supervisors in the country. But the Fed, even though they're supposed to be supervising these banks, they have an entire division devoted to bank supervision.  

[00:28:13.590]

They didn't notice. They didn't pay attention. People just looking at these reports, these monthly reports of banks seeing these huge losses, what do they do about it? Nothing. Nothing.  

[00:28:23.120]

And now there's this basically full blown banking crisis where there been bank runs and banks have gone under because exactly what the Fed has done. They slash rates to zero. They engineered this asset bubble. Banks loaded up on assets at record high prices. Now the Fed has aggressively raised rates.  

[00:28:40.300]

Asset prices have fallen. Banks are sitting on huge losses as a result. And the Feds goes, oh my God, how could this have happened? Wow, what a surprise. What a shock.  

[00:28:49.250]

No, it's not a surprise. It's not a surprise. The people, just like Yon Block said, the people paid to keep watch failed again. They failed to predict. They failed to acknowledge anything about it.  

[00:29:00.050]

They failed to acknowledge their complicity in creating this. They steered this again, not an accident. They steered the entire financial system directly into this disaster. I'm actually reminded of the Hague Convention in this case because remember all these guys got together and they created all these treaties and their institutions, their International Arbitration Court, it's the same thing. After the 2008 financial crisis, congress and the regulators, they all got together and said, we got to prevent another bank crisis from ever happening.  

[00:29:28.550]

And so they created all these institutions. They created the Consumer Financial Protection Bureau and watchdog agencies. Then they created all these rules and so forth, just like in The Hague. They did all these things that ended up doing absolutely no good. In the same way, all their watchdog agencies and all their new institutions and all their new banking regulations weren't able to prevent the banking crisis.  

[00:29:49.010]

The guys in the Hague weren't able to prevent World War I. The whole thing ended up being completely and totally useless. And then you look at the response. We talked about this before. The Federal Reserve has basically stepped forward and taken over.  

[00:30:01.810]

They said, oh well, oh banks, you bought an asset for a dollar, now it's worth fifty cents, and now you're about to go under. Tell you what, why don't you post your 50 cent asset as collateral, we'll loan you money against it as if it's still worth a dollar, essentially taking on 100% of the financial risk for all the bank's losses. It's over $600 billion. And they've basically taken that risk away from the banks. The banks have no risk now, and they pass that risk on to every single person alive who uses US.  

[00:30:31.200]

Dollars. It's not only unethical, I don't see how it's legal. There's nothing in the Federal Reserve legislation, the Federal Reserve Act, or any subsequent legislation that actually authorizes them to do this. But they did it anyways. They didn't ask Congress.  

[00:30:42.580]

They didn't have a hearing. They just went and did it on a Sunday afternoon. They came up with a half a page term sheet and just created this program. I don't know how that's even legal, but this is what they did. For her part, the Treasury Secretary has been hilarious.  

[00:30:55.980]

She stepped forward at first and said there's not going to be any blanket government guarantee of bank deposits. Then the next day she said, oh yeah, sure, we would definitely look at doing that, especially for smaller institutions. Then the next day she said, no, just kidding, we're not going to do that at all. They can't even stick to a policy. Just come up with something what is true and what is not true and just stick to it.  

[00:31:16.060]

But they can't even do that. What I want to do now is I think it's important to talk about what else is lurking out there. What are the other examples of this? We talked about World War One, we talked about the GFC, we talked about these bank runs that we've seen over the past few weeks. These were all obvious risks that the people, the watchdogs who were in charge, who should have seen coming, not only did they not see it coming, they actually steered everybody into these disasters.  

[00:31:43.240]

So what else is lurking out there where you've got the people in charge, the warning signs are there. The people in charge are clueless and they seem to be actively steering everybody into this disaster. What else is there? And there's a few that I want to talk about. Number one is still more fallout from these interest rate hikes, right?  

[00:32:00.250]

The Federal Reserve has been raising interest rates. That's what has caused I mean, among other things, that's what has caused these bank runs because banks lost a lot of money on their bond portfolios because of the interest rate hikes. They paid record high prices because interest rates were so low. Now the interest rates are a lot higher. They've lost billions of dollars in their bond portfolios and they need to be bailed out.  

[00:32:19.560]

They're crying about, oh well, we can't go under. And so the federal government and the Federal Reserve has stepped in. But what else is lurking out there with the interest rate hikes? Well, plenty, because if you think about it, this is going to affect so many heavily indebted corporations, businesses, governments, local governments, state governments, the federal government, anybody with a significant amount of debt. And if you think about it like this, let's look at the federal government.  

[00:32:42.400]

Every single year the federal government federal government has 30 plus $31 trillion in debt. And soon as they raise the debt ceiling, which they certainly will, that's going to go up significantly. The amount of us. Federal debt is frozen right now because they hit the debt ceiling. But that's only a matter of time before they raise that.  

[00:32:58.010]

So every year the government, a portion of the government's debt matures and it has to be in theory it's supposed to be repaid, right? So that they have if they issue ten year government federal treasury notes today, in ten years those notes are going to mature and will need to be repaid. But of course the federal government doesn't have any money to repay anybody. So what do they do whenever old bonds mature instead of repaying them with cash? All the government does, they go out and they sell new bonds to repay the old bonds.  

[00:33:25.810]

The key difference being is that whenever they sell the new bonds they have to pay whatever the current interest rates are. So think about it like that. Ten years ago there were some the government was selling debt or selling treasury securities, ten year, ten year treasury notes at basically 0%, they're getting eight basis points, 20 basis points, 30 basis points they were paying, now they're paying 400 basis points, right? So you're talking about 4% higher rates. When the debt that they issued ten years ago matures this year, the government's going to have to take out new debt and pay today's interest rates to pay off the old debt, right?  

[00:34:05.230]

And so when doing that, if they borrowed, you know, if they borrowed, you know, for example, they gotta pay. And again every year the government pays back $5 trillion on average five to $7 trillion of debt that matures. So if they have to repay $5 trillion of debt this year and the interest rate that they pay is let's say 4% higher, right? 4% higher than it was ten years ago, five years ago, three years ago, whatever. Well that $5 trillion now that they have to refinance is going to cost them 5 trillion times 4%, that's $200 billion a year in additional interest expense, right?  

[00:34:39.880]

So if you think about that, by the way, that's before. Now they're saying like, oh, we're going to spend $3 trillion, have a $3 trillion deficit this year, right? So you got to refinance, let's call it five to $7 trillion plus another $3 trillion on top of that. So a minimum of eight, maybe $10 trillion that you're going to have to take on with at, you know, 4%. So if it's $10 trillion at 4%, that's $400 billion in additional interest expense this year that they're going to start paying every year $400 billion, right?  

[00:35:09.990]

And now do it again next year and the year after that and the year after that, right? So in four years that's $1.6 trillion in additional interest above and beyond the interest expense they're already paying. You just can't do that. You just can't do that. It's going to get to the point here very quickly where the problem becomes exponentially worse.  

[00:35:29.970]

And if interest rates stay at this level, the federal government is very quickly going to be paying the vast majority of tax revenue just to pay interest on the debt. It is just not sustainable. And it's not just the federal government. State governments are going to be in this position. Local government is going to be in this position.  

[00:35:46.030]

Heavily indebted corporations are going to be in this position because it's the same with heavily indebted corporations. They issue bonds, the bonds have to be repaid. They repay those bonds by issuing new bonds, but they have to pay the current interest rates on those new bonds. All these companies that borrowed money at 0% basically ten years ago, well now when they refinance they're going to have to pay four, five, 6% or more. And that's going to be crushing for these companies.  

[00:36:08.920]

It's going to be bankruptcies, government bankruptcies, corporate bankruptcies. So this is one of these things that's important to watch out for and of course the biggest risk of all is this leading into the federal government. It's not going to be for the federal government. They can withstand this for a year, two years, but the longer they go, with interest rates being this high, it's very quickly going to be an absolutely horrendous problem that they cannot get out of. The first people to suffer this are going to be corporations, maybe local governments.  

[00:36:35.240]

And so those are sort of the canaries in the coal mine to see of the sort of the next. Not necessarily the next, but another shoe to drop in this crisis from the Federal Reserve has managed to engineer and been completely clueless about. That's another issue, a second one that's obviously worth discussing. We've talked about this a whole lot, is Social Security. Social Security and Medicare as well, by the way.  

[00:36:57.690]

Medicare's primary trust fund is expected to run out of money in three years. Social Security is in about ten years, right? This is another multitrillion dollar problem. The government is saying, the Social Security trust fund is saying, they themselves are saying this in their annual report. They're saying we will run out of money.  

[00:37:14.600]

This is going to happen and when we do, we're not going to be able to pay 100% of the benefits that we've been saying. Maybe we'll be able to pay 80%, 70, some odd percent, something like that. But there will have to be cuts and that's based on their estimates today, it could actually get much, much worse, especially if inflation continues to rain, make the problem much, much worse. And so if you look at this, you go, this is at a minimum a multitrillion dollar problem on top of everything else. That is a looming crisis.  

[00:37:44.070]

Again, this isn't a next year crisis, this is a three to probably six year crisis. But it's one of these things that's looming out there. It's lurking and people are going to pretend that it's a surprise. Suddenly the meeting is going to go, oh, how could anybody see this coming? It was so obvious.  

[00:37:59.400]

It was so obvious. The Social Security Board of Trustees puts out the report every single year. You can practically circle a date on your calendar for when this is going to run out of money. And so this is another one of these things that's lurking out there that people are going to pretend to be surprised about, but the people in charge not only fail to see it, but are actually engineering this problem and steering everybody directly into the disaster. What's another example?  

[00:38:21.810]

I hate to say it, but war is actually another potential risk. I don't think it's inevitable. I'd certainly like to hope that it's not inevitable, but let's be honest, the world is closer to a major war than it has been at any other time since really the end of World War II. We can argue about maybe the Cuban missile crisis and so forth, and what that really was. But if you look at all the tensions that are out there, and not just Russia and so forth, but you've got China now and so many others, this is a really big deal.  

[00:38:56.010]

And there's so many things that are completely obvious here. We could do an entire podcast again just on that, and perhaps we will one of these days. Again, it's not one of these things. I don't think this is a risk tomorrow, but I think it would be very foolish to close our eyes and go la la la. And there's nothing going on here.  

[00:39:13.250]

And there's absolutely no risk of war. There's clearly more risk of war than there has been in a really long time. And these risks are obvious. And what are the people in charge doing about it? They're actually steering us closer to war rather than away from war.  

[00:39:27.030]

And that's a huge problem. This is, again, the example that we see the people that are supposed to be responsible for preventing these things. They seem completely clueless, asleep at the wheel, and getting us closer, not farther away from a disaster like this. Another one that's worth pointing out is energy us. Oil production.  

[00:39:42.740]

This is especially in the US. But I think in many respects this is an international problem, not necessarily purely global, but Europe has already seen this. US. Oil production is starting to dwindle, and we see this particularly in the shale fields. It is impossible to overstate how important shale oil production has been to overall US.  

[00:40:03.280]

Oil production in the petroleum industry. And I'm really talking about oil, but I also should include gas in this as well. I mean, it's been absolutely enormous for natural gas in 20 06 20 05 20 06 you might remember oil prices really going through the roof and oil production in the US. Was dwindling as well. I mean, it was really kind of bottoming out.  

[00:40:21.370]

And this was about the time that shale producers got in and really started producing all this shale oil. Now, for a lot of people, shale oil is controversial. There's no reason to get into that right now. But it's just important to point out that this is single handedly the biggest factor in US. Oil production.  

[00:40:39.030]

Shale oil production essentially brought on the equivalent of an entire Saudi Arabia's worth of oil production into the United States. That's how big it was. It propelled the US. To being the dominant oil producer worldwide, so important in US. Energy independence.  

[00:40:54.670]

And that has now peaked. And there are a lot of reasons for that. Honestly. You've got an administration that has essentially been waging war on oil companies. They never miss it.  

[00:41:03.920]

The President of the United States never misses an opportunity to go out of his way to shame the oil companies. ExxonMobil. It's so ridiculous. This guy doesn't understand anything. It's one of my favorite sort of biden quotes.  

[00:41:17.580]

He goes around and says ExxonMobil is making all this money, as if that's somehow not okay. This is the guy who claims to be a capitalist, but is lamenting that ExxonMobil is making all this money. He says, I'm going to make sure that everybody knows how much money ExxonMobil is making. And it's like, Dude, this is a publicly traded company. They're supposed to let everybody know how much money they're making.  

[00:41:36.510]

They have to report their profits to the marketplace and to the whole world. I mean, he just doesn't understand anything. It's embarrassing. But he goes on and on and on. He refuses to lease federal land and make the oil concessions that he's supposed to is required by law.  

[00:41:50.980]

All these things constantly thwarting passing new taxes, passing new regulations, specifically to thwart the oil company. Oh, what a surprise. The oil companies aren't going out yet. You got all the high priests of oil. You got the Greta Thunbergs of the world and Klaus Schwabs and Larry Finks and all these guys that are withholding capital from oil companies.  

[00:42:09.500]

Oil companies need capital in order to explore for new oil. They need capital to make new discoveries. But all that capital is being withheld because the banks now they're not allowed to invest in oil companies because Greta Thunberg is going to be upset with them. And Larry Fink, a guy that runs trillions of dollars over at BlackRock, he's refusing to give money to oil companies. He's got these activists that have taken over the boards of oil companies.  

[00:42:31.780]

And so, wow, what a surprise. They're not investing in new discoveries. So therefore, oil production is starting to fall. Shale production in particular appears to have peaked. This is a huge deal.  

[00:42:43.000]

And one of these things that whether it's next year or the year after or the year after that, at most, it's going to be major declines in US. Oil production based on this trend right now. And the people in charge are going to go, oh my God, what a surprise, what a surprise. We weren't aware of this, of course. You should have seen this.  

[00:42:59.210]

It was so obvious. The oil companies report this information. They show that they're not investing. Their production is dwindling. Their best performing rigs are actually in decline.  

[00:43:08.590]

It's so obvious the information is out there, but the people in charge refusing to pay attention and continue to steer into this dwindling oil production. And they're absolutely to blame in this. The last one that I want to mention, I think is what is so completely obvious is decline in the US. Dollar. This is a really, really big deal.  

[00:43:29.090]

We've talked about this before. The US. Dollar is the global reserve currency, and this is not uncommon. Reserve currency basically means that other countries in the world use the US. Dollar in their transactions.  

[00:43:39.980]

They hold us. Dollar as their official foreign reserves. They transact in us. Dollars in global trade. When France buys oil from Saudi Arabia.  

[00:43:49.040]

They buy oil in us. Dollars. Every country in the world holds US. Dollars. Every central bank in the world holds US.  

[00:43:54.560]

Dollars. And that's a really big deal, because in order to hold US. Dollars, basically, I have to hold the biggest and most liquid US. Dollar asset in the world, which happens to be US. Government debt.  

[00:44:05.950]

And so this reserve currency status essentially enables the US. Government to get away with the most outrageous fiscal shenanigans imaginable. They can go and close their thumb and their index finger together and say, this multitrillion dollar spending package, quote, costs nothing. They can go out and have $3 trillion deficits every year and do that with a straight face and not have to ever suffer any consequences because the world just gives them a pass. Because it's the reserve currency.  

[00:44:33.040]

People say, well, we got to hold US. Dollars, so we just got to put up with it the reserve currency. The idea of reserve currency goes back a really long way. The Greek drachma in the ancient world, classical Greece, was the reserve currency. Around the Mediterranean, we had the Roman daenerys, the Byzantine gold solidus, the Spanish real de ocho, the British pound.  

[00:44:52.100]

Throughout history, there's always been some kind of reserve currency, and that reserve currency usually goes to the dominant superpower. But now you've got, with the United States a superpower. That's an obvious decline across the board. You've got social decline. You've got military decline.  

[00:45:06.810]

You have obvious fiscal decline, the decline of the currency itself. You got a central bank that's completely clueless, has managed to engineer inflation, managed to engineer a banking crisis. Completely clueless, has no idea how any of this could have possibly happened. It's a sleep of the wheel. I mean, it took them a year to realize that inflation was actually a thing.  

[00:45:24.470]

The whole time, they kept saying, it's transitory, it's transitory, it's transitory. And then finally we go, oh, my God, it's not transitory. And now it says, oh, my God, we've got to do whatever it takes to resolve inflation. So they've ratcheted interest rates up so fast, so high, that they caused a banking crisis. And if you're a foreigner looking at this, can you possibly have any confidence in any of these people?  

[00:45:44.260]

Can you have confidence in the White House? Can you have confidence in the Treasury Department that goes, yeah, we're going to guarantee bank deposits? No, we're not going to guarantee yes, we are. No, we're not. Every single day they change their mind.  

[00:45:55.000]

Can you have confidence in the Federal Reserve that doesn't have a clue what it's doing, and now went and signed up $600 billion in potential financial risk so that the banks wouldn't have to suffer any losses? I mean, can anybody possibly have any confidence in the US. They look at the military and they could see all the headlines, all the reports, all the analysis about a decline in military readiness and decline in training, a decline in the readiness of the equipment in the naval vessels and the fact that the Air force can't get enough flight training hours for their pilots and all these things. All this is all just publicly available information. You got to look at this.  

[00:46:32.690]

You got a decline in military power. You got all this just extreme social conflict that is just completely ridiculous an economy. You got people that just refuse to go to work anymore looking for bailouts, looking for just free money from the government. All these things. Could people really have the same level of confidence in the United States that they would have had ten years ago, 20 years ago, 30 years ago?  

[00:46:56.310]

And at a certain point now where people are foreigners are suffering their own losses, all the stuff with the interest rate hikes, they're foreign banks that have suffered losses as well. They're not going to get bailed out by the Fed but foreign banks that went and bought US government bonds, they're sitting on billions of dollars in losses. They're not particularly happy about it. Right? So you have all these foreign governments, foreign banks, foreign central banks, they're looking this going guys what are we doing?  

[00:47:19.610]

I'm sick of it. I'm sick of it. Meanwhile you got the Chinese, they're showcasing a very powerful military. They're going around the world. They say oh well we just negotiated peace between Saudi Arabia and Iran.  

[00:47:31.980]

They're going all over on goodwill missions across Africa, across the Middle East, across Latin America, Honduras, everywhere to Russia even supposedly to negotiate a peace. And they're showing the world that they are a dominant power to be taken seriously. And they are actively having conversations with Saudi Arabia to start selling oil in Renminbi in their own currency rather than in US dollars. Not to say that US dollar oil contracts would go away but that the US wouldn't have complete and total market share, that all oil contracts would be sold in US dollars. That there would actually be some oil contracts sold in Renminbi.  

[00:48:10.200]

This is a really really big deal because every country in the world needs to be able to buy and sell oil. And if oil, if the vast majority of oil contracts around the world are priced and sold and settled in US dollars it means that every country in the world has to have US dollars. But if all of a sudden there's an alternative right? And this is the largest market in the world to say most widely traded commodity in the world, one of the most important commodities in the world and if all of sudden a there's an alternative. If all of a sudden people say oh well I could actually also buy and sell oil in Renminbi, well jeez, I guess I'll start holding at least some of my reserves in Renminbi instead of US dollars.  

[00:48:47.980]

And so all of a sudden it starts chipping away at the US. Dollars, market share in terms of the global reserves. And suddenly, if that happens, suddenly the US government isn't able to get away with these things. Suddenly, when the US government remember I was talking about they have to refinance five to $7 trillion worth of their debt every single year. Well, suddenly now that $5 trillion comes due, and you got these foreign bondholders to say, you know what?  

[00:49:11.070]

I just want the cash. I don't want to refinance this. I don't want to repay this. Just give me my money back. Now the government's got to go and scramble, looking for somebody, please, somebody.  

[00:49:19.160]

1. Banks, US. Individuals, somebody, please. We need $5 trillion to pay back certain foreigners and so forth. I mean, this is potentially a really, really big deal.

 

[00:49:27.910]

And without that foreign support, the US government isn't going to be able to get away with all these things that they've been able to do for years, decades. The multi trillion dollars cost nothing. $3 trillion deficits. Nobody else in the world is able to get away with that. France can't get away with that.  

[00:49:45.290]

Spain can't get away with that. Singapore can't get away with that. The UK can't get away with it. And you got to bring up the UK, because we just saw this six months ago in September. The British government essentially had to resign because the Prime Minister and the Finance Minister, the Chancellor, stepped forward with an economic plan that involved cutting taxes and running small deficit.  

[00:50:07.390]

And investors freaked out. They said no. Absolutely not. We can't support this. And so investors started dumping British government bonds called gilts.  

[00:50:15.750]

1. Government bonds were dumped. The British pound got dumped, and the government had to resign. The Prime Minister of a sovereign nation, a major one of the top economies in the world, had to resign because the bond market didn't like her economic plan. This is the thing that's going to happen in the United States if the US.

 

[00:50:34.000]

Loses its reserve status, because what they do consistently is so fiscally irresponsible, outrageously irresponsible, that if they don't have that reserve status, at least in the same market share they do, they start losing market share to China. They're not going to be able to get away with this stuff anymore. And that is going to be life changing in the United States. I don't want to overstate it. And it's not the end of the world.  

[00:50:56.440]

It's not to say that the US. Ceases to exist or the government goes under any of these sorts of things, but my God, there's going to be serious cuts. Social Security is going to get cut, and they're going to say, hey, sorry, tough luck, everybody. We're not going to be able to fund this anymore. They're going to have to scale back on military spending.  

[00:51:13.770]

They're going to have to significantly raise taxes, going to have to do all these things, really cut government services, start paying down. The debt, all these things that they're going to have to do. They cannot live in this sort of fiscal fantasy land anymore. And that's going to definitely have an impact. It's going to have an impact, and it's going to happen sooner than later.  

[00:51:31.100]

They don't have ten years. The President of the United States, the guy who shakes hands with thin air, recently released a budget for next year. Talk about, again, multi trillion dollar deficit. And they said he actually had the audacity to look at the camera and say that this new budget will reduce the deficit in ten years. Over ten years it will reduce the deficit.  

[00:51:52.300]

And you go, Dude, you don't have ten years. This stuff is probably going to come to pass way before that. You don't have ten years because when they say we're going to reduce the deficit in ten years, that means you're still running a deficit ten years from now. You don't have ten years to balance your budget. You don't have ten years to get your shit together.  

[00:52:08.410]

You've got to do it now. You've got maybe a couple of years at most before this stuff starts happening, before foreigners, instead of buying dollars from you, start shipping those dollars back home, causing a serious, serious issue to the dollar, to confidence in the dollar, confident in the government, confidence in the treasury market. That's going to have major financial implications not only to the government, but in global financial markets, the stock market in the US. Everything. It's going to matter so much.  

[00:52:33.820]

They don't have ten years. They've got a couple of years at most. But they're la la la la. They're completely clueless to me. That is the number one most obvious threat.  

[00:52:43.630]

All the warning signs are there. And by the way, this is one. The canary in the coal mine here is Saudi Arabia does start selling oil to China in Renminbi and starts issuing renminbi denominated oil contracts. And that's almost a foregone conclusion at this point. Saudi Arabia has already been meeting with China to set this up.  

[00:53:04.590]

So this is already in progress. Another one might even be that Saudi Arabia decides to repeg its currency, right? So right now it has been for so long, kind of baked primarily on the US dollar. And we start seeing, oh well, maybe we should change this again and repeg this. So these are some of the canaries in the coal mine.  

[00:53:22.120]

And a lot of this is in some respects, almost a foregone conclusion. It's already happening. It's already in the works. They don't have ten years. They've got to dial it in now, get their fiscal house in order, be prepared for this.  

[00:53:33.350]

But they are totally clueless. The people in charge aren't paying attention, and they're steering directly into this financial disaster. So that one is a really, really big deal. This is why we talk so much about taking control back, why we talk about having a plan B pre made decisions. And I think we'll probably have to do a whole other discussion about that in the future.  

[00:53:51.040]

But I'm going to go ahead and stop for now. We've been at this for about an hour, so I want to, again, as always, appreciate you guys taking a listen to this, and we'll speak to you again soon.   Close Podcast Transcription

Throughout history, whenever there has been a major shift in the world, it has usually been accompanied by a single iconic event that is associated with that change.

For example, historians often point to 476 AD as the year that the Western Roman Empire fell, when Odoacer and his barbarians forced the abdication of the Emperor Romulus Augustus— even though it was obvious that Rome was in decline way before 476.

People also often associate the start of the Great Depression with the stock market crash of 1929 (even though there were many signs of economic distress well in advance of that).

But these clean, precise dates are only chosen in retrospect. People experiencing the events at the time rarely understand their significance.

I think it’s possible that future historians may look back at Silicon Valley Bank’s collapse as one of those iconic events that signals a major shift… potentially the end of American geopolitical and economic dominance.

I’m not making this assertion to be dramatic; rather I think that anyone who takes an objective look at the facts—

• the appalling $31+ trillion national debt
• the government’s addiction to spending and multi-trillion dollar deficits
• social dysfunction and “mostly peaceful” protests
• the decline in military strength
• rampant inflation and central bank folly
• extreme government incompetence
• insolvency in major programs like Social Security

— will reach the same conclusion that the United States is past its peak and in decline.

Now on top of everything else we can add a loss of confidence in the US banking system.

Obviously I take no pleasure in acknowledging the US is in decline. But that doesn’t make it any less true. And this has been Sovereign Man’s core ethos since inception back in 2009.

Back when I started this company it was considered extremely controversial when I said the US was in decline, or that there would be larger problems in the banking system, or that the breakdown of social cohesion would only get worse.

But today these challenges are so obvious that they’re impossible to deny.

You can never solve a problem until you first admit you have one.

And most of the corrupt sycophants masquerading as political leadership are incapable of admitting problems, nor discussing them rationally, let alone solving them.

But you and I do not have that disability. We are free to exercise the full range of human ingenuity and creativity with which we have been fortunately endowed.

So while the people in charge continue to never miss an opportunity to demonstrate their uselessness, we have a whole world of freedom and opportunity at our disposal.

This is the topic of today’s podcast.

First I review the huge issues with the Silicon Valley Bank collapse. Honestly when you look at it from a big picture perspective, it’s littered with mind-numbing incompetence.

The politicians who received donations from SVB’s Political Action Committee missed it. The Wall Street hot shots missed it. The credit ratings agencies missed it. The regulators missed it. The Federal Reserve missed it.

But now the Federal Reserve has launched a new program that exposes the US dollar— and everyone who uses it— to significant risk.

Think about this from the perspective of foreign governments and central banks.

Foreigners bought boatloads of US government debt over the past few years, especially in the early days of the pandemic.

In fact foreign ownership of US government debt has increased by $1 trillion since the start of the pandemic, and now amounts to more than $7.6 trillion.

But thanks to Fed policy, these foreign institutions are in the same boat as Silicon Valley Bank— they’re sitting on huge losses in their bond portfolios. They’ve also suffered from pitiful returns, high inflation, AND exchange rate losses.

In short, any foreign institution that bought US government bonds over the past few years is sitting on huge losses.

Plus now they’re watching with bewilderment as US politicians prove completely incapable of solving their debt crisis.

And on top of everything else they’ve just witnessed multiple bank runs in America, followed by the Federal Reserve’s pledge to put the dollar at further risk.

If you were a foreign government or central bank, would you want to continue buying US government debt? Would you want to continue holding your national savings in US dollars?

Probably not. Rather, they’re probably sick to death of all these histrionics.

We won’t know until years into the future, but SVB’s collapse (and the Fed’s response) may end up being the final nail in the coffin for the US dollar’s dominance.

You can listen to the podcast here.

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[00:00:00.970]

Today we're going to go back in time to Thursday, October 24, 1907, precisely 01:30 p.m.. It's a guy named Ransom Thomas. Great name ransom Thomas. He was the head of the New York Stock Exchange. And he's frantically rushing into the offices of JP.  

[00:00:17.720]

Morgan. And I'm not talking about he's rushing into the, like the bank, JP. Morgan. I'm talking about he's going into the office of the guy J. Morgan.  

[00:00:25.440]

1. P. Morgan is the banker of bankers. He is the head of the New York banking establishment. And ransom.

 

[00:00:31.630]

Thomas tells JP. Morgan there's about to be a massive financial catastrophe. Now this is one of these things. J. P.  

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Morgan must have rolled his eyes and said, oh my God, here we go again. Because in this period of time, this is actually known as the Panic of 19 Seven. The Panic of 19 seven was a really big deal in US. Financial history. It had started just a couple of weeks before where some stock speculators, they were trying to get control of this copper company and they'd actually basically run the company in the ground.  

[00:01:00.220]

They shorted the stock all the way down where the stock collapsed. And when the price of this copper company stock collapsed, it actually brought down a bank, right, because there was this bank that had actually had been exposed to this copper company. And now with the copper company stock down, the bank said, oh my God, we've lost all our capital. And so the bank went under. Well, this is the way it works in the banking system.  

[00:01:22.410]

It very seldom does one bank, especially a fairly large bank, go under by itself. Sometimes banks, especially large banks, are so big that other banks have business with them, other banks are exposed to them. We saw this in 2008. You had these huge companies, these huge banks that went under and it caused this chain reaction. Lehman brothers went under.  

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And then all of a sudden, everybody that was doing business with Lehman Brothers suddenly now they lost billions of dollars. And then they lost billions of dollars. They went bankrupt. And then when those secondary banks went bankrupt, everybody that was doing business with them went bankrupt. They started chain reaction.  

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And this is what happened in 1907. There's a chain reaction. This one copper company goes under, the stock price collapse, one bank goes out of business, which meant another bank went out of business. And then another and another and another start a chain reaction. And JP.  

[00:02:08.960]

Morgan had actually stepped in to try and prevent that. It was a couple of weeks before, about a week before JPMorgan. Had stepped in. He said, okay, you know what, guys? We got to do something about this.  

[00:02:17.790]

So he calls up all of his wealthiest friends and said, let's start making deposits in these banks. Let's start trying to provide confidence. Let's start telling everybody that we're confident in the banking system and actually putting money in all these troubled banks. And they did that. Actually, JP.  

[00:02:30.680]

Morgan put lots of money in this case, actually a lot of his own money. He convinced his rich friends like John Rockefeller to go and put money in some of these struggling banks and calling reporters and giving press conferences saying, I'm going to pledge so much of my wealth to make sure that the banking system doesn't fail. Everything's fine. If I'm confident, then all these the little people out there should be confident as well. And so they thought that they had kind of gotten that under control.  

[00:02:55.720]

But now here, a couple of days later, thursday, October 24, now all of a sudden, the head of the New York Stock Exchange comes running into his office and he says, we got a problem. So imagine you just imagine JPMorg. Just the exasperation go, what is it now? Oh, my God, we just put so much money to shore up the banking system and restore confidence. What is the problem now?  

[00:03:15.600]

Well, now there's a problem on the stock exchange. Now there are all these brokerages and these broker houses that they were about to go under because they couldn't get financing from the banks, and it was going to be a total catastrophe. And so the head of the stock exchange, he says, we need $25 million. And that was a lot of money, obviously, back then. This is 130.  

[00:03:33.110]

And so Morgan, immediately he starts summoning all the other bank presidents on Wall Street, said, you guys need to come to my office right now. So everybody was running up when JP. Morgan said, you need to come to my office now. Everybody stopped what they're doing and they ran over to JPMorgan's office, and he got everybody together in a room. It's 02:16 p.m..  

[00:03:54.560]

He gets everybody together in a room, and he said, we've got to raise $25 million, like, now, like now, in a matter of minutes. And so they did. And by 230, about 2023, $24 million basically managed to reach the New York Stock Exchange. And they saved the day. And the stock exchange didn't have to close, and the markets were able to continue functioning because I think everybody knew that this was just going to be another thing, that if the stock market had to close early, the market failed.  

[00:04:23.660]

There was some kind of huge issue with the stock market that would again be one of these things that caused everybody to panic, and they'd start taking their money out of the banks, and it would have been a total disaster. And so this continued for quite some time, and eventually things calmed down. Eventually things calmed down. Took several weeks of I mean, it must have been incredibly tense. Incredibly tense.  

[00:04:43.780]

But finally everything calmed down. And the panic of 19 seven, as bad as it was total, full blown financial calamity was averted. And in the aftermath of all this, of course, politicians being politicians. There were hearings and committee meetings and all these things. And one of the things that they decided to come up with was they said, we need a central bank.  

[00:05:04.070]

We have to have a central bank, we have to have some lender of last resort, we have to have some function in there that somebody that's able to provide essentially limitless amounts of liquidity. So in the event that there is another financial panic, we've got this central bank that's able to go out and make emergency loans to prop up the financial system, emergency loans to prop up the market, emergency loans to prop up the banks. And this is essentially what ended up happening, that all these bankers got together in Jekyll Island later on, and in 1913, they passed the Federal Reserve Act and they created the Federal Reserve. Now, the story behind that is actually much, much longer. We could do an entire podcast just on that.  

[00:05:41.450]

Honestly, it's almost like a murder mystery. There's just so much intrigue in this and how that was actually passed and how it came to pass. But I want to focus on that. This is actually the birth of the Federal Reserve is now 110 years old, and the Panic of 19 Seven is like many events throughout history. It is the event, it signals a new era.  

[00:06:05.390]

It signals something so important. The Panic of 19 Seven was sort of the end of this, let's say, unregulated financial era. And it ushers in the era of the central bank, where now everything's regulated and all these rules and supervision and so forth. And this is the thing that happens so often throughout history, is that there is often some iconic event or series of events that essentially signal this major shift or transition. And we've seen this again over and over throughout history.  

[00:06:35.070]

An easy example, 476 Ad, you've got this barbarian king, Otoeser, comes down and deposes the Western Roman Emperor, this kid, Romulus Augustus. And this is the iconic event that historians circle and say, that was the end of the Western Roman Empire. Now, what's interesting is that at the time, if you were in the Western Roman Empire, if you were in Italy at the time, and you heard about this and say, oh, Ramos Augusta was deposed. Is it Tuesday again? Oh, wow, another Roman Emperor has been deposed.  

[00:07:03.250]

Big deal, big whoop, who cares? It happens all the time. It was kind of regarded as just a passing event. Nobody really cared. It wasn't a big deal.  

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Nobody looked at that and said, ghastly event, that the Western Roman Empire has now fallen. Nobody viewed it that way. Things are already so bad in the Western Roman Empire. Nobody really cared, right? But historians view this.  

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That's the iconic event that signals the transition and the end of the Western Roman Empire. In the same way the Panic of 19 Seven sort of signals this shift in US economic history, the stock market crash in October 1929. There's actually a series of crashes over a period of several days. But it's often what people think about the stock market crash in October 1929 as that iconic event that signaled the Great Depression. There are a lot of signs of the Great Depression really unfolding and really major economic crisis well before the stock market crash in October 1929.  

[00:07:57.180]

But the stock market crash is the thing that sort of that most people think of when they think about the Great Depression. We talked about last week. We did a whole podcast. We talked about the Reformation. We talked about Martin Luther.  

[00:08:08.800]

And even though there were plenty of signs of the Reformation in advance of Martin Luther, it's this iconic event of Martin Luther. The legend, the mythology of Martin Luther marching to the church door in Wittenberg and proudly nailing his 95 Theses to the door and sparking this major movement in human history. That's the iconic event. And I think if you go forward in time decades from now in the way that if you went forward in time decades after the Great Depression, high school students read about the Great Depression, they read about the stock market crash and all these things. I think if you go forward in time decades and decades from now, what will future historians circle about our own time?  

[00:08:52.200]

I think it's actually possible that one of the things that they circle is the Silicon Valley bank collapse from last week. They may, in fact, say March what was it been? March 10, 2023? Silicon Valley bank collapse. This might be one of those things that we read about, just like the stock market crash or Romulus Augustus or Martin Luther.  

[00:09:11.670]

This might be one of those iconic events that signifies this major it's that signal of this major trend. And God knows there's so many of them, but the major trend that we're talking about, so many signals, so many different events. We could go back and we could say, oh, well, there was the debacle in Afghanistan, the helicopters over the embassy in Kabul. We could look at, you know, we could look at COVID, we could look at the Pandemic. We could look at so many different things that might signal that.  

[00:09:37.390]

But the major trend is essentially the decline, the peak and decline of the United States, the dominant superpower. And you could say, really, the west in general, but specifically the US. Is the dominant superpower. And I don't think it's controversial anymore to say that the US. Is in decline.  

[00:09:57.890]

I started saying this when I started Sovereign Man back in 2009, and it was a very controversial thing to say back in 2009. But I was one of the people saying it in 2009, saying, look, this is not a pretty picture. You got a lot of debt, you got a lot of deficits, you got wars, you've got really funny stuff happening with the currency and the central bank and so many things that just don't make sense. This is obviously a place that's past its peak, and I don't take any pleasure in saying that, but I think it's important. Again, I went to West Point.  

[00:10:26.440]

I served in the military. I have absolutely no pleasure in saying that the United States has passed its peak. But I think any rational individual who's being intellectually honest has to take a very sobering appraisal of the facts, the actual objective facts, not the political spin, but the actual facts and data that are publicly available and out there for everybody to see and make an honest assessment. Because if you understand these trends and you understand again, throughout history, you could see there's never been a dominant superpower that's lasted forever. You can go back to the empire of Alexander the Great, the Romans, the Mesopotamians, the Assyrian Empire, the Ottoman Empire.  

[00:11:07.840]

I mean, there's just so many of these instances throughout history. Regional powers. What we can see is that power, great powers, rise and fall, reserve currencies, rise and fall. They come and go. These things happen over and over and over again.  

[00:11:20.200]

History is so cyclical. Rise and fall, rise and fall. And it's silly. Quite often, most dominant superpowers, the Romans and the French and everybody at a certain point just simply assume that their power and dominance would last forever. But it never does.  

[00:11:36.060]

It never does. And if you understand those cycles of history, you understand, you take really an intellectually honest approach to examine the facts and circumstances that are publicly available for anybody to see. I think any rational person would draw the same conclusion, saying, this is a place that's in decline, it's past its peak, and that doesn't mean the world is coming to an end. It doesn't mean that civilization and life as we know it is going to fundamentally disappear forever. No, of course not.  

[00:12:04.810]

That would be super dramatic. There are, of course, people out there talking about the collapse of this and the collapse of that and all this sort of stuff. But that's silly. That's silly. The world isn't coming to an end.  

[00:12:15.530]

Nobody's going to spontaneously combust. But a shift to transition away from US. Dominance, a shift in transition away from the dominance of the dollar as the main predominant reserve currency in the world, that's a really big deal. It means that people, I think, especially in the US. Or people that are really exposed to US.  

[00:12:36.050]

Dollars, have some thinking to do, have some planning to do, have some things that you really got to make some plans, and you got to take some steps to reduce the risk and your exposure to some of that, because it's a really, really big deal. Again, if you look to history and you see the economic effects of transition from being the dominant superpower to going in decline, it's usually a really big deal. The french and the British and the Romans and there's so many examples of this. Very seldom, if ever do we have an example of some dominant superpower that goes into a period of decline and everything's just fine. There's no economic consequences, there's no social consequences.  

[00:13:17.370]

That's a really rare feat. So this has been the ethos of sovereign of our organization really since inception. And again, to say these things back in 2009 was considered really quite radical or quite controversial. I think now it seems pretty clear. Most people could understand, yeah, this is a place that's in decline and if we go back, if we think about the future and we think how are future historians going to regard our time?  

[00:13:45.270]

There's going to be something that they circle on the calendar. It's going to be some iconic event that's going to say this is what really signaled the decline. What will that be? Will it be the withdrawal from Afghanistan? Will it be COVID-19?  

[00:13:58.000]

Will it be so many different things? I think they could point to, they could point to elections, they could point to whatever, they could point to so many different things. But to be fair, I think it's possible that the Silicon Valley Bank collapsed last week. Could be one of the things that they circle as that iconic event. I'm not trying to be dramatic in that but I think it's important to understand that the Silicon Valley Bank collapse and the subsequent consequences, this is a really really big deal and I think a lot of people don't fully appreciate how big of a deal this really is.  

[00:14:29.930]

And this is what I want to talk about. I've been writing about this a lot this week and what I want to do is kind of briefly summarize some of those points because the long term implications for this are really extraordinary. Number one, it's important to remember silicon Valley Bank did not go bust because they had bought some crazy high risk investment. This is banks notoriously take their customers money and they go and buy stuff with it. They go and buy assets, they make loans, they buy bonds, they do all sorts of stuff.  

[00:14:55.940]

Back in 2006, 2005, banks were going out and buying these ridiculous super high risk mortgage bonds. They were out making loans to unemployed homeless people and they were doing it with your money, with our money, with depositors money, taking these crazy risks and pretending like there was never going to be any consequence to that whatsoever. Obviously it was stupid. It almost brought down the entire US economy, the entire US financial system, the global financial system, which is why they called the global financial crisis the GFC. When it finally busted in 2008, silicon Valley Bank wasn't doing any of that.  

[00:15:29.880]

Silicon Valley Bank didn't go bust because they'd been making loans to unemployed homeless people. They went bust because they bought US government bonds. Supposedly the safest investment in the world but it turns out there's no such thing as completely and totally risk free. Even US government bonds which are supposed to be the safest investment in the world do carry risk. There is a risk that the government will not pay you back and I think the longer term bond you get if you get a 28 day T bill you're probably okay.  

[00:15:55.000]

If you buy a 30 year bond, you're really taking a lot of risk there. Because the US. Government finance is getting worse and worse. And now, obviously, they have this debt ceiling fiasco, so who knows what that looks like down the road? But US.  

[00:16:08.230]

Government bonds can also lose value in the same way that any other bond can lose value. Now most people understand the stock market pretty intuitively. You understand that companies have stock prices stock prices go up and down sometimes they have dividend yields and so forth. A lot of people don't fully understand bonds and bond prices. Well, the number one rule to understand is that bonds lose value when interest rates increase.  

[00:16:29.810]

And if you think about it really it actually makes a lot of sense. Bonds bonds are basically it's essentially usually considered fixed income. Sometimes bonds can be variable but for the most part you have this sort of fixed rate of return. You buy a bond and you get some certain yield and that yield lasts throughout the maturity of the bond. Again, every bond is different but this is the way, for example, most US government bonds work.  

[00:16:54.260]

There are some exceptions to this tips and things like that. But if you go out and buy like a ten year treasury for example, basically you're going to get this fixed rate of return for ten years and that's the way it works. And so ten year yields were basically nothing. If you go back to 2000 and 22,021 I think the all time low was like eight basis points that some poor bastard bid on US ten year Treasuries back at the very beginning of COVID And so if you think about eight basis points remember a basis point is one 100th of 1% so eight basis points means basically a yield of 0.8%.  

[00:17:35.810]

If you bought a government bond at an eight basis point yield that means that that's all you're going to make. Your rate of return is locked in for ten years that's all you're going to make is eight basis points. You're going to make an 8% yield every year. I mean obviously that's nothing that's horrible. Now interest rates are obviously significantly higher so you've got this bond that you bought now a couple of years ago that's making 0.8% the government's now issuing new bonds the new ten year Treasuries that the government's issuing are paying three and a half, four, four and a quarter percent.  

[00:18:08.890]

So if somebody can go out and buy a new bond that yields let's say 4% or 400 basis points right and you've got your bond that's stuck locked in at eight basis points. And now all of a sudden you decide, hey I want to sell my bond. Well why the hell would anybody want to buy your bond? It's only yielding eight basis points. Somebody could literally go out and get 500 times as much.  

[00:18:29.650]

They get 400 basis points or 4% from the new bonds. So why would anybody want to pay top dollar for your bond that's yielding eight basis points when they can go out and buy a new one for 400, right? It just doesn't make any sense. So if you want to sell your bond that's stuck at eight basis points locked in for the next several years at eight basis points, it means the only way you're going to be able to sell it is if you heavily discount the price. Your bond has lost value because interest rates have increased.  

[00:18:56.550]

Makes sense, right? So this is what happened with Silicon Valley Bank. These guys went out and it was stupid, but these guys went out and they bought all these long term government bonds and agency debt, et cetera. And they did so at a time when interest rates were basically nothing. So Silicon Valley Bank is now sitting on these long term Treasuries and US housing bonds and so forth and the rates are like nothing.  

[00:19:22.770]

And now all of a sudden interest rates have increased substantially. Well guess what? The value of their bond portfolio has declined significantly. Significantly. So this is a really interesting thing because back in 2007, 2008, when these banks started collapsing, 2009, the new lexicon emerged.  

[00:19:42.020]

People started calling them toxic assets, right? All these terrible the Ninja loans and the loans to homeless and unemployed people and all these things they call those, this became known as the toxic securities. Well the new toxic security now apparently is the US government bond because one of the largest banks in the country went bust buying these supposedly safe US. Government bonds. That's how extreme interest rate changes can be.  

[00:20:07.430]

It can wreck havoc in financial markets to the point that a bank can go under by buying US government bonds. Pretty crazy. But again the government here, I mean if you step back and you look at this, the government had spent years trying to prevent another crisis like this. The government spent years after the 2008 crash, the 2009 crisis, dozens and dozens of banks went under. The government steps in, they create these new laws, these new rules, these new regulations.  

[00:20:32.550]

And one of the things that came out of it was stress tests. They said banks, regulators need to, need to make sure that banks pass stress tests to make sure that these banks are going to be able to stay solvent in the event of some kind of economic adversity. Well guess what? Silicon Valley bank followed all the rules. They followed the regulations.  

[00:20:50.190]

There were some rules that they bent they went for a long time without a chief risk officer, which was, I mean, not only a bonehead thing to do, but this is something that the regulators totally missed and apparently we're fine with. I mean it was just another example of all these guys being asleep at the wheel. But Silicon Valley Bank, in its own financial report, they say, quote, this is the most recent financial report from December 31 of last year. They said, we conduct capital stress tests as part of our annual capital planning process. These stress tests allow us to assess the impact of adverse changes in the economy and interest rates on our capital adequacy position.  

[00:21:26.440]

So Silicon Valley Bank was in fact stress testing its entire portfolio to say, what's going to happen to our portfolio if interest rates rise? And it's not like they did this in a vacuum. They were being supervised by the regulators. So the regulators saw them taking these stress tests, undergoing these stress tests and said, oh great, you guys are good to go. So this is such a hilarious failure of the regulators.  

[00:21:54.110]

Once again, you got Congress, they went and passed all these laws, didn't do any good. The regulators supervising all this didn't do any good. The banks complying with this stuff didn't do any good. The mountain of regulation and scrutiny amounted to nothing. And one of the really ironic parts about this, of course, is that the guy that wrote the cornerstone banking legislation is called the DoddFrank Act, partly named after this guy, Barney Frank.  

[00:22:20.310]

Barney Frank was a hardcore left leaning, hated big businesses, hated big banks, loved high taxes, all that sort of stuff. He was the guy who was the architect behind the legislation that requires stress testing and deeper supervision and scrutiny of banks. Well wouldn't you know it? This guy, after he retired, suddenly discovers capitalism, embraces his newfound love for capitalism, goes and joins the board of, became a director on the board of directors of one of these banks that just went under. This is the guy that wrote the legislation, and a lot of good that did.  

[00:22:54.980]

And it's just another example of politicians just don't actually understand the problem. They might have had good intentions, but it doesn't matter because they go and they create these rules. Fast forward ten or 15 years and it turns out all the rules ended up doing absolutely no good whatsoever. What's going to happen now? They're going to come up with new rules, right?  

[00:23:14.170]

This is what they always do. They come up with new rules. They go, oh well, the old rules didn't work, so what do we need? We need new rules. So they come up with more rules and more rules and more rules and this ridiculous cycle never ends.  

[00:23:26.310]

Yes, Silicon Valley Bank was stupid about the way they did it. They bought $120,000,000,000, most of that in bonds. Most of that was long term bonds with maturities going ten to 2030 years at a time, 30 year maturity. I mean they were taking on huge interest rate risk. At some point somebody in that bank should have been like, hey guys, you realize if interest rates go up to like three 4%, we're going to be totally screwed.  

[00:23:52.900]

But apparently nobody realized that. So they just kept buying these ultra long term government bonds. And again the regulators saw it. It's not like the regulators didn't have access to that information. The regulators were supervising them the whole time and said, oh great job Silicon Valley Bank.  

[00:24:06.420]

Nothing to see here. You're doing a great job. So Silicon Valley Bank is not some innocent babe in this whole scenario. They were totally stupid. And obviously the fact that senior management was selling stock before the collapse, it looks really bad, but a lot of things they're doing look really bad.  

[00:24:24.710]

But you got to look at the government's role in all of this, passing all these rules that amounted to nothing. The regulator's rules. The regulators saw all of this information and not just a couple of months ago. It's going back two years. I mean the regulators should have seen in 2020, hey, you guys are loading up on a lot of long term debt that's going to expose you to interest rate risk.  

[00:24:44.240]

But they didn't. Nobody said a word. All the Wall Street analysts said nothing. In fact when Silicon Valley Bank released its earnings report in mid January about two months ago, and their earnings report said very clearly, hey, we're basically insolvent because our unrealized losses on our bond portfolio are so vast, our entire capital is wiped out. What happened to the stock price?  

[00:25:06.070]

It went through the roof within a matter of days of them announcing basically that they were insolvent. All these hotshot wall street traders and investors and analysts bid up the Silicon Valley Bank stock price from in a matter of days after announcing essentially that they were insolvent on a mark to market basis. So there's just so much head scratching, incompetence and stupidity. Go look at all the regulations you passed. The guy who wrote the regulations is on the board.  

[00:25:35.920]

Now discovered capitalism is on the board of one of these failed banks. The Wall Street guys didn't see it. The regulars were totally asleep with the wheel. And then of course now you've got the Federal Reserve. The Federal Reserve is another basically bank regulator.  

[00:25:49.140]

They supervise all of their member banks. So the Federal Reserve, the central bank in the US, which is the Federal Reserve, is what came out of the panic of 19 seven. They said we need a central bank. We need a bank that's going to be a lender of last resort. So when there's a crisis like this they can go out and make emergency loans.  

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This is what the Fed does. The Fed is there in part to supervise the financial system. They have an entire. Department whose responsibility is to supervise banks across the US. Banking system.  

[00:26:16.260]

The Fed had access to this information months ago. What do they do about it? Nothing, right? They did nothing about it in advance, and now all of a sudden, Silicon Valley Bank went under. Bear in mind, the chairman of the Federal Reserve three days before Silicon Valley Bank went under, testified to the United States Senate Banking Committee that there was no risk.  

[00:26:35.060]

He says, quote, nothing in the data suggests that we've tightened too much nothing in the data suggests that we've raised interest rates too much too quickly. Nothing to see here, people. Everything's fine. Three days later, one of the largest banks in the United States went under because they had bought US. Government bonds, right?  

[00:26:52.320]

That's one of the reasons why I think if you step back and how future historians are going to look at this, this thing is just boiling over with incompetence in every step of the way. Where people think, future historians, you just got to look at this and go, how did you not see this? How did the regulators not see this? How did the politicians not see it? How did the bank not see it?  

[00:27:11.450]

How did all these people, how did the central bank, how do these key officials of the Federal Reserve, where the guy went and testified in front of the Senate and said, everything's fine, there's no risk in the financial system. I mean, talk about just mind bending incompetence. This is why this may be not guaranteed, but it may be the event that future historians circle and say, that's the iconic event that really signaled the decline of the United States. When you see, like, these are supposed to be the experts of experts of experts, the central bankers, the hotshot Wall Street guys, the financiers, all this, and nobody saw it coming. In an era where they're going and doing stress tests and following all the rules, how did this possibly happen?  

[00:27:55.660]

This is ridiculous. None of these guys saw it. And so how do they respond to it, right? How do they respond to it? Well, the first thing they did is they had to roll out the guy who shakes hands with thin air.  

[00:28:06.360]

They put him on camera to say, oh, the banking system is strong, and I have full confidence in the banking system. They sent out the Treasury Secretary to do the same thing. I have full confidence in the banking system. And then what happened, right? The FDIC stepped in and said, we're going to fully guarantee all bank deposits at Silicon Valley Bank.  

[00:28:24.470]

And that's a departure from what they usually do. They usually guarantee deposits up to $250,000. But in this case, we're going to make an exception. Or as I like to say, we're going to make an exception. Again, it's yet another exception from the FDIC.  

[00:28:38.530]

And so the FDIC then made an exception. We're going to guarantee all deposits, even if your deposit balance is above $250,000. So this sparked widespread controversy, said, oh, they're bailing out the depositors, and this is a taxpayer funded bailout. Again, we need to be intellectually honest. It's not a taxpayer funded bailout.  

[00:28:58.030]

I'm no fan of a lot of these parties involved, but the reality is being intellectually honest, the FDIC is funded by banks, right? The FDIC's got $128,000,000,000 insurance fund. And the real irony here is that where does the FDIC invest its insurance fund? They invest all the $128,000,000,000 in US government bonds, right? Which, by the way, have massive unrealized losses, just like Silicon Valley Bank.  

[00:29:23.660]

So maybe the FDIC needs a bailout now because these guys are underwater on their bond portfolio. But the FDIC gets this money, this $128,000,000,000, by charging fees to its member banks. So these big Wall Street banks pay fees to the FDIC. The FDIC then pools all that money together into an insurance fund, basically. And then when a bank goes under, they dip into that insurance fund to make depositors whole.  

[00:29:47.240]

In this particular case, instead of just smaller deposits with $250,000 or less, they decide to bail out everybody. So essentially, this is not a taxpayer funded bailout. This is a bailout where Wall Street banks are bailing out wealthy West Coast depositors in Silicon Valley bank. That's essentially what this is. It's not a taxpayer funded bailout.  

[00:30:05.930]

But the real bailout is not the FDIC. The real bailout is from the Federal Reserve. And the Federal Reserve. This is the extraordinary thing. And also one of the reasons why I think future historians, or even economic historians in particular, would look at this and circle this as the iconic event, because it's also about the response, not just the blundering incompetence of all the people that are involved, the Wall Street analysts, the bankers, the central bankers, all these people that are involved.  

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It's the response. And so the Fed stepped in and they just created this new program. They invented a new program called the Bank Term Funding Facility. Sorry. Bank Term Funding program.  

[00:30:43.250]

Btfp. I think it's what it's called. Btfp or bank term facility program, something like that. Anyways, it doesn't matter because I say it's believe the fiction people. That's really to me what it actually stands for, when in my mind, Btfp stands for believe the fiction people.  

[00:30:56.930]

My friend Carl says, Believe the fake paper. I like that one, too, because the idea is they're just making it up. They're just making up everything. So the idea is, let's say you're Silicon Valley Bank, right? You spend $120,000,000,000 on bonds.  

[00:31:09.350]

You spend $120,000,000,000 on bonds. And by the way, you spend $120,000,000,000 of your customers money on bonds. And so this is your customers money. And $120,000,000,000 now, it's worth like $100 billion. At this point, their last financial disclosure, they had about $17 billion in losses.  

[00:31:27.520]

Maybe they're probably up to $20 billion in losses now. So let's say out of that $120,000,000,000 you've lost 20 billion. Now you're down to it. Your bonds are now worth $100 billion, no longer 120. Well, what does the Fed say?  

[00:31:39.200]

No problem, bro, no problem. We will loan you money based on the entire, the original $120,000,000,000, right? So this is the way this works. Remember the Federal Reserve was created out of the panic of 19 seven. It took them a few years.  

[00:31:53.750]

All the bankers had to again, it's like a murder mystery story, has all sorts of intrigue and secret trips and all these things. But they got this Federal Reserve Act passed in 1913 and part of the charter of the Federal Reserve, that part of the whole point of its existence. The reason it came into existence was to act as a financial stabilized, to act as a lender of last resort. So that if there is some problem in the banking system, banks are going under, markets are going under, financial players are going under. The bank's able to step in and just start putting liquidity in the system, say no problem, here's some money, here's some money, here's some money.  

[00:32:31.140]

They make loans, emergency loans to banks to stabilize the financial system. They think about how loans work. Well, when you and I go to the bank and get a loan, we've got to post some kind of collateral. People want a mortgage, right? They use their house as collateral and the bank loans the money using the house as collateral.  

[00:32:48.570]

When you get a car loan, you put your car up, the car is collateral, the automobile is collateral. You put down a down payment and the automobile is collateral. People get loans when they buy jets, when they buy businesses, buy factory equipment, all sorts of things, right? So a lot of times these loans that we make, consumer loans are often secured. They have collateral backing them up.  

[00:33:09.070]

It's the same thing when banks borrow money, commercial banks borrow money from the central bank. When a commercial bank's got to borrow money from a central bank, this is actually written into the law, the Federal Reserve Act. The bank is supposed to post some kind of collateral, right? So the bank says, oh well, here I've got this bond portfolio as collateral. I've got $120,000,000,000.  

[00:33:29.490]

I got a bond portfolio that I paid $120,000,000,000 for but is now worth 100. So I'll post that as collateral. So now, ordinarily a central bank would say, well if your bond portfolio is worth you bought it for 120, it's worth 100. But we need to reduce our risk as a central bank. So we'll loan you like 90 billion, we'll loan you 80 billion based on the market value of your bond portfolio.  

[00:33:55.060]

So we're going to get $100 billion in market value of assets. We're going to loan you $80 billion. So that way if you commercial bank default, then that way we still have some margin of safety and we're not going to take a loss. But that's not what the central bank is doing now, what the Federal Reserve is doing with this Btfp, believe the fake paper, believe the fiction, people is they're saying, oh, you've got $20 billion in losses. Well, we're just going to pretend that you don't.  

[00:34:20.150]

We're going to pretend that your bonds are worth more than they're actually worth right now. We're going to pretend they're worth as much as you paid. We're going to pretend that they're worth even more technically that you paid. Because actually, the program, I mean, this is actually so ridiculous. The part that's really offensive is that the Fed put so much thought into this that all they could come up with was a half page term sheet.  

[00:34:38.860]

There's a half a page, basically, of explanation on what this Btfp really is. It does most of these things, these bureaucracies that go on for hundreds of pages on what it is and the law and the regulations, all this stuff. It's half a page. Half a page basically saying, we'll give you 100 cents on the dollar of the face value of the bond. Most of the time when banks buy bonds, they don't actually pay full face value.  

[00:34:59.550]

They pay a little bit less than face value. So not only is the Federal Reserve going to loan more than the bond portfolios are worth, they're actually loaning more than the banks paid. They're loaning more than the banks paid. So this is total insanity. This is complete total insanity.  

[00:35:15.790]

This is as stupid as the subprime lending crisis back in 2006, 2007, when banks were going out loaning money to unemployed homeless people, right, what were banks doing? They were saying, oh, because banks are all in competition with each other, everybody wanted to write these mortgages. And so you had one bank saying, well, we'll give you a loan that's equal to 80% of the home's value. And the other bank would say, oh, well, we'll give you 90%. And the other bank said, we'll give you 100%.  

[00:35:40.060]

And it got so ridiculous. There were banks that were making loans for 100 and 510% of a home's value. A lot of times even it was they'd say, oh, I'm going to buy a house for $300,000. The purchase price was $300,000, but the home's value might be they say, oh, the value of the house. The appraiser would come in and say the house is actually worth $320,000, and the bank would go in and give somebody 105% of the value of the house, not even the purchase price.  

[00:36:07.580]

I mean, it was so stupid. It was so high risk. The bank is loaning more money than the house is worth more money than the buyer is actually supposed to pay, right? So who's on the hook in that scenario? If the buyer doesn't pay or the home declines in value, who's on the hook?  

[00:36:24.670]

Well, the bank is on the hook. But when you think about it. No, the bank's not on the hook. The bank is just some middleman in this whole scenario. Who's on the hook?  

[00:36:32.180]

The depositors are on the hook because the bank is making these insane loans with their depositors money, right. And so this is really the issue because what the Fed has done here is they've said, hey, no problem. We'll loan you just like the subprime crisis where people are loaning more money than the house, is worth more money than people are actually paying for the homes. The Fed's saying, hey, we'll loan you more money than your bonds are worth. We'll loan you more money than you paid for your bonds, even.  

[00:36:59.880]

That's how crazy we are. We're crazy fed right? So we're going to loan you more money than the bonds are worth. And bear in mind that the total potential losses in the banking system right now due to the total sort of lost bond value, according to the FDIC, is between 600 and $650,000,000,000. So that's how much risk the Fed is essentially taking on right now.  

[00:37:21.290]

The Fed is taking on almost $650,000,000,000 in potential losses that these commercial banks just are essentially just getting to pass on directly to the Federal Reserve, right? The Fed is taking on this financial risk, not the banks. The banks get a free pass, as always. The banks get a free pass. The banks get to pretend that they don't have any losses so the banks get to pretend they don't have any losses and pass all that risk directly on to the Fed.  

[00:37:46.760]

The Fed's giving them more money than the bonds are worth, more money than the banks actually paid. And you look at the I challenge anybody to go to the Federal Reserve Act or any of the subsequent legislation and find any part of the Federal Reserve Act that states expressly that they are allowed to just make up whatever value they want for the collateral. It doesn't say that in the Federal Reserve Act, does not give them the authority to do that. The Federal Reserve Act is actually very explicit in what it says because Federal Reserve Act, they knew when they, when they wrote that law, they knew that part of the whole reason why the Fed needs to exist, according to their thinking at the time, was they need a lender of last resort. And so they actually spelled out, this is how you will be a lender of last resort.  

[00:38:26.990]

You can make loans to financial institutions. Sure, that's your role as a central bank. You can loan money to banks, but you have to accept collateral. And they actually say, here's exactly the kind of collateral that you can accept. I mean, actually it says this right there in the law.  

[00:38:41.930]

Nothing in the law gives them the authority to just go and make up whatever value they want to do. So when you think about it, they're making up the value for the bonds. They're making up the authority to do that. To begin with, it's all just make believe values, make believe authorities. This is so full of pretend make believe nonsense.  

[00:38:59.970]

I fully expect the Fed Chairman, in his next press conference, is going to dress up as Big Bird in front of reporters because this is all about pretend and make believe. This is so ridiculous. Nothing about this is actually legal. Congress did not provide the authority for the Federal Reserve to do this. But the Federal Reserve, in the same way that when I explained when banks did this, they're going out making these risky loans, right?  

[00:39:22.790]

They're essentially passing that risk on to their depositors, which as a depositor, you're essentially a creditor of the bank. That's really what you are. You're a creditor of the bank. So the banks, when they're making loans to unemployed homeless people, 105% mortgages, loaning more money than the house is worth, loaning more money than the buyers are actually paying, they're passing that risk on to their deposits, to their creditors. Well, the Fed is doing the same thing, right?  

[00:39:46.170]

Because the Fed is again, they're just a middleman in this. That's just some organization who's ultimately on the hook. Who's ultimately on the hook. People say, oh, the taxpayers on the hook? No, the taxpayers aren't on the hook.  

[00:39:56.280]

It's not the taxpayers because the Feds, if you pull out a US dollar, right? What does it say? What does it say on the US dollar? It says Federal Reserve note. Now, I don't want to get into kind of an existential discussion about the dollar and get philosophical about all this, but realistically, US dollars are the liabilities of the Federal Reserve.  

[00:40:20.640]

The Federal Reserve, if you look at the Federal Reserve's balance sheet, right, it's got assets and it's got liabilities. The Federal Reserve's assets are things like government bonds and housing bonds and all these sorts of things. Its liabilities are US dollars, the money supply across the country. In fact, when the Fed prints money, essentially what they're doing is they're just creating more liabilities for themselves. And so what the Fed is basically doing is they're passing on all this financial risk, $650,000,000,000 to its creditors, which is essentially the US dollar, people that use the US dollar, which is every single man, woman and child in the United States of America, every single foreigner who holds US dollars.  

[00:40:57.940]

And I'll come back to that in a minute. But the Federal Reserve was able to do this, was able to pass on 600 plus billion dollars in potential risk and potential liabilities to make sure that the banks don't lose any money, right? So we're going to pass on all that risk from the banks through the Fed, to every single person in the world, including in the United States, that holds and uses US dollars. And they did it all without any approval from Congress. There was no vote, there was no committee meeting.  

[00:41:26.740]

There was no people on the floor of Congress arguing, debating whether or not the Fed should have this story. They just made up the authority to do it. They're making up the values of these bonds and again, doing this without any actual legal authority whatsoever. It's completely and totally ridiculous. I'm amazed that and this is not the first time the Fed has done this, by the way.  

[00:41:46.310]

The Fed routinely makes up authority to do this, to do all sorts of things. They just make up stuff that they shouldn't be allowed to do. But it's astonishing to me that nobody cares. I wrote about this the other day. I said that the Fed just hijacked American democracy.  

[00:41:59.180]

And yes, there were people always say it's a republic, yes, it's a republican democracy, representative democracy. But the point is, there's supposed to be a say that people, through their elected representatives, have a say in what these officials are allowed to do. But you've got a bunch of unelected people at the Federal Reserve who, by the way, have been wrong about virtually everything. These are the people that three days before Silicon Valley Bank collapse said, there's nothing to see here, there's no risk, everything's fine. Who last year, my favorite quote ever of the Federal Reserve was, now we finally understand how little we understand about inflation.  

[00:42:31.650]

The same people who the previous summer, in 2021 said inflation is transitory, it's going to be over in a couple of months, who a few months prior to that, in February 2021, said, Inflation. There's no inflation. There's not going to be any inflation. What are you talking about? You must be insane.  

[00:42:45.470]

They have been wrong and wrong and wrong and wrong, and now they've been raising rates. They can't get their arms around inflation. They still don't understand inflation. And now what are they going to do? They've just made up the authority they've made up the authority to give themselves the authority to make up whatever value they want to loan $650,000,000,000 and stick every single person in the country who uses US dollars, virtually everybody, with all the risk and all the consequences.  

[00:43:14.690]

It's utterly disgusting. And you can start to see why. I think if people take an honest assessment of this in the future, they're going to look at this and go, wow, this is a really big deal. This may be that iconic event. The longer term implications here, I think, are important to understand.  

[00:43:30.950]

Now, I want to talk about foreigners, right? This is just another sign of rust for the US dollar. And think about it's not just US banks. I was saying, kind of tongue in cheek, who's lost money on their US government bond portfolio. I got Silicon Valley Bank, but I wrote earlier this week, I said, look at Silicon Valley Bank has lost a ton of money.  

[00:43:51.740]

So has everybody else. So has everybody else, every other bank. And all you got to do is just look at their financial reports. Wells Fargo has lost $50 billion. They have $50 billion in unrealized losses according to their own financial statement.  

[00:44:04.040]

This isn't some conspiracy theory. Just look at their financial statement. You can see $50 billion in unrealized losses in their bond portfolio. Every bank, because interest rates have risen so quickly, is sitting on huge losses in their bond portfolios. The FDIC's Insurance fund is sitting on massive unrealized losses in this bond portfolio.  

[00:44:23.530]

The Federal Reserve has $300 billion in unrealized losses in its bond portfolio. Bear in mind, the Federal Reserve only has a few billion dollars in statutory capital. So the central bank of the United States is completely and totally insolvent. Is that a good thing? Probably not.  

[00:44:41.370]

Probably not, right? And so it's everybody in the financial system that holds these bonds, and there's so many of them. And that includes foreigners. It includes foreign banks, foreign governments, foreign central banks, foreign institutions, foreign corporations. These guys bought government, bought US government bonds as well.  

[00:44:58.400]

They bought US government bonds at eight basis points and they've lost their asses. And on top of that, they bought US government bonds at eight basis points. Now those government bonds are way down in value that they bought. So they've lost a lot of value in those government bonds. So basically now they're taking a loss on their investment.  

[00:45:16.670]

On top of that, these bonds are in US dollars. US dollar has lost seven, eight, nine. If you think about going back two years, I mean the rate of inflation over two years, they're down another 1215 percent just because of inflation. On top of that, they're sitting on a US dollar asset. Well, the US dollar has gotten weaker against their home currency, right?  

[00:45:38.590]

You think about something like the renminbi, since over the last couple of years, renminb is probably about 5% stronger than the US dollar. The Singapore dollar is about 8% stronger. Even the Mexican peso is stronger than it was against the US dollar a couple of years ago. So foreigners, they've lost because the bond has lost value. They've suffered inflation on top of that.  

[00:45:59.250]

They've suffered exchange rate risk on top of that. These guys are looking around, they're going, okay, I am so tired of this. Right. Think about a foreigner. It's like you've got all these issues, so many of these issues.  

[00:46:15.750]

Your central bank is insolvent hundreds of billions of dollars in unrealized losses. Now you've signed every holder of the US dollar up for 600 plus billion dollars in risk to backstop the banks, even though by the way, you're running around telling everybody the banks are strong. Well if the banks are so strong, why are you backstopping $600 billion worth of risk? You wouldn't have to do that if the banks are strong. But hey, we'll just move on from that.  

[00:46:36.430]

You got all these issues. You got 31 and a half trillion dollars of US government debt. These guys cannot get their act together. They can't fix anything. They can't stop the spending.  

[00:46:46.060]

They got multitrillion dollar deficits every single year. You got all this risk in the financial system, so many issues, the bickering, the inability for the federal government to do anything positive, to do anything, to actually solve any problem. They can't even acknowledge problems, let alone understand them, let alone discuss them rationally, let alone actually solve anything. And now they just want to spend trillions of dollars more every single year. Who wants to deal with that anymore?  

[00:47:13.680]

If you're a foreigner and you're looking at this going, god, are you kidding me? I don't want to deal with this anymore. I'm sick of it. I am so sick of it. I don't want to deal with this nonsense anymore.  

[00:47:24.500]

Who needs it? Who needs this US dollar, the inflation and the nonsense from the central bank, who needs it anymore? Right? Why would anybody want to keep doing this? And meanwhile you got the Chinese running around the world preaching the gospel of the renminbi, their own currency.  

[00:47:39.550]

They're going around doing deals, making peace between Saudi Arabia and Iran, going around saying, hey, we want to broker a peace in Russia and Ukraine. A lot of people are really starting to take them seriously. A lot of people saying, well, hey, they got a strong economy. They don't do all these crazy things. Maybe we should give their currency a try.  

[00:47:56.550]

I'm not saying that China is the answer or it's a good idea. My point is that people are so sick and tired if they look at you, step back and you look, if you're a foreign institution, you're a foreign central bank, you got to be so sick and tired of this just constant bullshit with the dollar and the US. Economy and the US. Government. Who needs it, right?  

[00:48:17.460]

Why would you keep doing this? Why would you keep taking these losses? It just doesn't make any sense. And the Chinese are going around. They're saying, hey, let's set up oil contracts.  

[00:48:27.500]

Right now most oil contracts are in US. Dollars. Let's start buying and selling oil. Let's start transacting oil markets in our currency in renminbi. Let's start transacting in other financial securities in renminbi.  

[00:48:39.200]

Let's start doing interest rate forwards in renminbi. Let's start doing all these other things in renminbi, actually give people a reason to buy and hold renminbi. And people are going to see, again, foreigners seeing this thing, this crisis in the US. Banking system, and they're going to say, yeah, maybe that's actually a good idea. Maybe we should actually diversify a little bit.  

[00:48:57.640]

We've got too much exposure to the US. Dollar and who needs it, Matt? Who needs this crazy level of just stupidity and incompetence? And this is why. This is why future historians, I think, may actually circle this Silicon Valley bank when they write the economic textbooks in the future.  

[00:49:14.030]

And the way that people look at the stock market crash in 1929, they may say Silicon Valley Bank collapsed 2023. Of course, there are plenty of warning signs of the Great Depression way before the stock market collapsed in October 1929. There were lots of signs of it before that. In the same way there were lots of signs of decline in the US. A decline in appetite for the US dollars, the world's reserve currency.  

[00:49:38.060]

Lots of signs before that. But maybe this becomes that iconic event. We don't really know. But this takes me back to the beginning again. I have written extensively about this.  

[00:49:47.740]

I recorded podcasts about this. We did one a few weeks ago talking about that the war in Ukraine may in fact end up shifting the tide away from the US dollar, because wars often do that throughout history. Wars often signal the changing of the guard from the dominant superpower. And when that happens, the change in the reserve currency isn't that far behind the changing the guard between one superpower and another. They don't even need to be opposing each other.  

[00:50:13.090]

They don't need to be even fighting against each other in the war. We saw this in World War II where the US. Sort of took the mantle of world leadership from the UK. They were on the same side in World War II, but it still happened because wars often do that. Major crises, financial crises often do that.  

[00:50:29.530]

We're seeing both of those at the same time in this whole period of turmoil. Again, the war, of course, the shameful Afghanistan withdrawal, the humiliating helicopters over Kabul, the guy that shakes hands with thin air, the debt ceiling fiasco, now this unraveling of the US banking system. Again, it's not that the US. Is just going to disappear into the night. The world isn't coming to an end.  

[00:50:50.190]

But it is time to acknowledge rationally that the dominant superpower has peaked. It's well past its peak, and we can go back and just take a rational approach of the data of the events that we've seen unfold, and realize, like, yeah, this is what's happening. And it doesn't mean that the world is coming to an end, nor does it mean that anything's going to happen tomorrow. And nothing goes up and down in a straight line. History is very cyclical, but it's not constant in that way.  

[00:51:17.420]

Nothing goes up or down a straight line. We did a couple of podcasts about this. There was a Roman emperor, Aurelian, who took Rome back from the brink and brought Rome back and made Rome reestablish Rome's dominance and power. There were periods of history. I did one about the UK coming into the early 18 hundreds in England.  

[00:51:39.140]

You got Napoleon's at the gate, and you got a guy, the King of England, the King of Britain at the time was a guy who was, like, literally crazy. A guy had lost his mind. I mean, there are all these incredible. Stories about King George supposedly shaking hands with an oak tree, believing that it was the King of Prussia. I mean, it's just ridiculous things.  

[00:51:57.190]

The economy was in the dumps, they had a currency crisis, and yet after that was the most powerful, the most prominent, the most prosperous time in the history of Britain in the 18 hundreds, the PAX Britannica. And there was so much prosperity. Nothing goes up or down in a straight line. So is this in some bleak picture where we've got to get our affairs in order because the world's coming to an end tomorrow afternoon? That's not at all what I'm saying.  

[00:52:21.240]

Nothing goes up or down a straight line. There will be good years and bad years and periods of recovery and periods of decline. But it is important to understand that the United States is very clearly past its peak. That has a lot of implications, lots and lots of implications. Decline ultimately is inevitable, because this has happened over.  

[00:52:39.640]

There has never been an instance in history where the dominant superpower has remained the superpower. If that were the case, then the ancient Sumerians would still be the dominant superpower today. The Romans would be the dominant superpower today. But it just doesn't happen. Superpowers always rise and fall.  

[00:52:54.170]

Reserve currencies rise and fall. And it doesn't mean the world is coming to an end. It does mean, however, that if you're not the superpower, if you don't have the reserve currency, then you can't get away with these ridiculous things that you're getting away with. If you think about all this stuff that's going on right now, the debt ceiling fiasco is a great example. The debt ceiling fiasco is a great example, because you got these people, they can't agree on the debt soon, they can't agree, like, they can't get spending under control, they can't do any of these things.  

[00:53:20.160]

Multitrillion dollar deficits and politicians that actually have the balls to look at the camera, close their thumb and their index finger together and say that it costs nothing. It's the most ridiculous things ever. No other country could get away with that. And we're not even talking about, yeah, Costa Rica is not going to be able to get away with that. But not only is small countries not going to be able to get away with that, big countries aren't going to be able to get away with it.  

[00:53:41.600]

The United Kingdom can't get away with that. The United Kingdom can't get away with endless multitrillion pound deficits. They can't get away with some massive, constantly rising, never falling government debt. They can't get away with it. And we know this to be true.  

[00:53:57.360]

This isn't some wild speculation. We saw this firsthand just six months ago, if you remember, the bond market. Bond investors completely crushed the UK. They caused the pound to go into freefall. They caused us British government debt, known as Gilts, to go into freefall.  

[00:54:14.290]

And the leader of a sovereign government, one of the largest, most powerful economies in the world. The Prime Minister had to resign. Had to resign because investors didn't like her economic plan, right? So this is the sort of thing, this is the reality, right? You don't get away with standing in front of the cameras saying that it costs nothing.  

[00:54:30.180]

You don't get away with trying to dress up multi trillion dollar deficits and 31 and a half trillion dollars in debt and say everything's going to be fine in ten years. They say we're going to cut the deficit by a few hundred billion dollars over a ten year period. Give me a break. Over ten years, cutting the deficit means you still have a deficit. You're saying that even in ten years you can't figure out how to balance your budget over a ten year period?  

[00:54:55.850]

That is disgusting. That is such a horrendous amount of incompetence. And you're just not going to get away with that anymore. That's the whole point. This is the sort of thing that's in store, is that the government is going to be forced to learn how to live within its means.  

[00:55:09.720]

Means there are going to be cuts. There's going to be cuts to Social Security, and we can see when they make cuts to these programs. Look what's happening in France right now. The whole country is on fire. People out in the streets torching cars, they got the garbage strike, all these things.  

[00:55:24.100]

This is the sort of thing that happens. You got strikes, people go on strike cutting essential services. People go out in the streets protesting these things. It creates a lot of social turmoil when you start cutting, start making just sensible modifications to social safety net programs. Same thing.  

[00:55:39.230]

Less spending on defense, which is essentially relinquishing just handing the keys to the castle. You're relinquishing global dominance to the Chinese. Less spending on just about everything, right? They're going to have to live within their means because nobody's going to loan them money anymore and say, oh sure, we'll keep buying your bonds at rates way below the rate of inflation. We'll keep getting killed because of inflation, because of exchange rate differences, because of these terrible yields that we're getting on your bonds.  

[00:56:08.030]

Sure, let's just keep doing that forever because hey, we like you so much, we're just going to keep losing money because we like America. That's just not going to happen. You can't continue to depend on that. And so this has got to change. That's ultimately what this means.  

[00:56:20.890]

It means there's going to be cuts, higher taxes, all these sorts of things. It's going to be a fundamental shift in US economic life. It doesn't mean the world's coming to an end. And by the way, I would add that there are plenty of reasons to be optimistic. I think that the US and the world could be looking at a massive energy renaissance, which I actually hope to discuss with you soon.  

[00:56:43.270]

And it's not the end of the world. They will eventually find the right balance of having strength with economic stability, but they're not there right now. Right now, it's nothing but weakness and it's instability. It's the debt ceiling fiasco. It's all sorts of crisis and uncertainty.  

[00:56:59.200]

And now on top of everything else is a banking crisis, which is why I think down the road, at some point, decades in the future, historians could look at this and circle this and say, march 10, 2023, silicon Valley Bank went bust. And that becomes the iconic event that defines signals the shift of US. Dominance in the world. This is a huge, huge story, and I think people need to be prepared for this. People need to understand the implications.  

[00:57:24.130]

It's not the end of the world, but we cannot continue to do the same things that we've always done, especially to our money, with respect to our investments, with respect to our businesses. It makes sense to really expand our horizons and think critically and differently about what this world is going to look like post US dominance. It is virtually a certainty. And again, future historians may look back and circle this as the moment. Thanks so much for listening, and we'll speak to you again soon.   Close Podcast Transcription

Last June, during the European Central Bank forum, the host asked the chairman of the Federal Reserve about inflation.

The Fed Chairman responded, “I think we now understand better how little we understand about inflation.”

“Uh, that’s not very reassuring,” the host chuckled.

Talk about an understatement. It’s downright terrifying.

This is the Fed Chairman— the High Priest of finance— who has the power to control virtually everything in the economy.

He can conjure trillions of dollars out of thin air practically at will, raise and lower interest rates, push businesses and banks into bankruptcy, and cause people to lose their jobs.

And here he is acknowledging that they didn’t have a clue about inflation.

Thank goodness that was 8 months ago! Certainly by now they’ve really learned everything they need to know.

Wrong. They still don’t have a clue.

This week Fed officials have been busy giving speeches in advance of their interest rate policy meeting later this month.

And they keep complaining that the unemployment rate is too low. Too many people have jobs!!

The Fed is trying to put more people out of work… under the assumption that if more people are unemployed, there will be less spending in the economy, and therefore inflation will fall.

But this is such idiotic thinking.

They may very well be successful in pushing millions of people into the unemployment line.

But everybody knows that as soon as this happens, the government will step in and bail those people out with generous unemployment benefits.

Think about it— the government did this in the 2008 recession, doling out luxurious unemployment benefits that lasted for YEARS.

And during COVID they paid people to NOT work and stay home.

So it’s practically a given that the government will dish out fresh new benefits to newly unemployed workers.

And where will the government get all that money from to pay unemployment benefits? From the FED! Duh. How do these Fed officials not understand this?!?!?

Another thing the Fed has totally missed is the ‘quality’ of the employment numbers. They fret that there’s too much job growth in the US— because they’re just looking at the QUANTITY.

But if you take even a casual look beyond the headline numbers, you’ll see that most of the job growth is for waiters and bartenders. The US labor market doesn’t have red hot job growth for software engineers, biomedical researchers, or senior investment analysts.

America is essentially becoming a bartender economy now.

This is going on in front of their very eyes, but the Fed can’t see it.

If you look at the official minutes and records from the Fed’s policy meetings, you can see what they actually discuss… and it becomes even more obvious they still don’t understand inflation.

They STILL blame inflation on Putin and the evil virus.

There is ZERO discussion about how the government destroyed the economy and labor market with lockdowns, or how oil companies are being chased out of town (leading to higher energy prices), or all the idiotic new rules penned by the woke capitalism mob.

And of course there’s zero discussion about the Fed’s own role in slashing interest rates to zero (and keeping them there for the better part of a decade), or printing more than $8 trillion since the 2008 recession.

There’s no discussion of the $31+ trillion government debt, or last year’s $4 trillion deficit, or the impact of idiotic legislation like the poorly named “Inflation Reduction Act”.

Ultimately they consistently prove that the people in charge of managing the US dollar have still learned absolutely nothing.

When you think about it, that goes for nearly every major institution.

The White House appears to have learned nothing, the media has learned nothing, the high priests of climate change have learned nothing.

The good news though, is that everyone else— who feel the impact of these destructive policies— is learning very quickly.

And people are finally starting to declare independence from the expert class.

This is the topic of our podcast today.

We start by going back in time more than 500 years ago to another period in history when people were under the thumb of the expert class… which routinely proved itself tone deaf and out of touch.

But a revolution took place. Historians call it the Reformation, and people stood up and declared their own independence from the expert class.

This is one of the reasons why I remain so optimistic… because it was from this independence movement that we saw the Age of Enlightenment, the Scientific Revolution, and more.

I think we’re on the cusp of a new movement… and one that will unfold MUCH faster.

Scientists have already successfully conducted nuclear fusion experiments, the most recent was back in December. It’s no longer a pipedream.

And just earlier this week, a group of researchers claimed they had created a superconductor that works at near-ambient temperature.

This is just the tip of the iceberg. There are real advances that are taking place which can actually solve so many of the problems that the political and media elite have gotten us into.

And in many ways, as more and more people realize this, it’s almost like we’re entering a New Reformation.

You can listen here.

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[00:00:01.050]

Today we're going to go back in time to June 27, 1519 to a place called Pleysenburg Castle in Leipzig, Germany. Now, this is the air of the Holy Roman Empire. And the Emperor Maximilian I had died a few months prior, and there was to be a new emperor elected the following day. And there in Plysonburg Castle, all the workers were there. They were getting ready.  

[00:00:22.600]

They were hanging tapestries and the great hall and putting up chairs and so forth, getting ready for this really big event. And you would think that that event would have something to do with the election of the new emperor. That would be the talk of the town. Oh, my God, who's going to be the new emperor? That's going to be the new emperor chosen?  

[00:00:37.710]

Who's going to be nobody cared, at least not in Leipzig. Perhaps everywhere else across the whole room and empire. They were thinking about that, but not in Leipzig because something far bigger was happening in Leipzig the next day. It was, curiously enough, a debate, which sounds kind of boring. Who cares about a debate?  

[00:00:53.340]

But for these guys, it was like the Super Bowl. It was a huge event because it was a battle between the world's most powerful institution and somebody who we would probably consider today essentially a celebrity influence, an up and coming celebrity influence. And somebody had recently shot to stardom. And they were going to debate together in the great hall of Pleysenberg Castle. And it was such a big deal.  

[00:01:17.910]

Nobody cared about the election of the emperor and who was going to be chosen emperor because it was all about this debate. They were talking about things that up until that moment were basically taboo. You just didn't talk about these things. There was a fierce exchange over the nature of free will. You didn't talk about free will back then.  

[00:01:33.950]

That was a taboo subject. You didn't talk about these things. And it was things that just had never been discussed in public before. And it was a big deal. It became known as the Leipzig debate.  

[00:01:43.720]

And again, on one side, you have the most powerful institution in the world, the Catholic Church, which at that point basically controlled virtually everything. Controlled politics and even warfare and finances across Europe, controlled moral thinking, intellectual development, all these things. What you could and could not say, what you could and could not do. And the Catholic Church was represented by this scholar, this religious scholar named Johan Ek. On the other side, again, this new celebrity influencer who had shot to stardom.  

[00:02:17.370]

He was an academic. He was a professor at the University of Wittenberg. He's a 36 year old guy. His name was Martin Luther. Of course you know the name.  

[00:02:25.120]

And the two debated, and Luther destroyed Ek in this debate. Destroyed Ek. Luther was powerful. He was brilliant. He was insightful, he was funny.  

[00:02:34.830]

And by comparison, eck. Looked just like a stooge compared to Martin Luther. But the thing is that winning the debate wasn't actually Johanneck's goal. Johanneck was really trying to trap Martin Luther into committing some sort of blasphemy. Martin Luther was a thorn in the side of the Catholic Church.  

[00:02:50.560]

He was a problem. And they were trying to figure out a way to make him go away. At first, they thought like, oh, let's just excommunicate him. But they couldn't quite do that because Luther was so popular. So they needed to trap him.  

[00:03:01.150]

They needed to get him to say something was so outrageous, so blasphemous, that the Pope could easily have grounds to excommunicate him. And so Eck was trying to lure Martin Luther into a trap. And they brought up another philosopher, a guy that had actually been burned to the stake by the Church, branded as a heretic. And so they said, Martin Luther, do you agree with this guy who was burned to the stake? And Lou said, well, yeah, actually, there are some things that he said that were completely plausible and reasonable and maybe we should consider them.  

[00:03:31.890]

And so, of course, X, you know, thinking to himself, I got this guy, I got this guy. And so they go back to the Pope and, you know, he tells the Pope said, look, he agreed with this heretic. He agreed with the guy we burned at the stake, and he said it in public, and everybody heard him. So now we got him, right? Now we got him.  

[00:03:47.510]

And he got to sort of pause. Now, we didn't talk about the Pope because the Pope is a the Pope is kind of a very interesting guy in this whole scenario. The Pope is a guy named Leo the 10th. Leo the 10th was born Giovanni Demetici and of course, these from the famous Medici family. And he was actually the son of the most famous Medici of all, lorenzo Dietici, who is known as Lorenzo the Magnificent.  

[00:04:09.450]

Now, Lorenzo the Magnificent was one of the most powerful figures probably in the history of Europe, certainly at this time. And Lorenzo was I mean, he had his fingers in everything. He had been I mean, banking and government and warfare and everything. And of course, why not the Church, right? So he he goes and he has he has a very clear, long term plan about making his son Pope.  

[00:04:30.620]

He pushes his son into religious service starting from the age of seven. And if you could even imagine this, I mean, Lorenzo was so powerful that when his son Giovanni is just 13 years old, he has giovanni made a cardinal. That's how powerful Lorenzo was, is that Giovanni was made a cardinal when he was just a kid, 13 year old cardinal. I mean, what do you think about it today? It's ridiculous, but that's how much power Lorenzo Medici had.  

[00:04:54.460]

And so here there's this 13 year old kid who's made basically a senior executive within the bureaucracy of the church at 13 years old. I mean, the guy's still got pimples all over his face. He's a cardinal now. It's ridiculous. And it wasn't long after that Giovanni de Medici was made Pope Leo the 10th.  

[00:05:16.300]

He was 37 years old. I mean, think about it today. That's incredibly young to be made pope. And he became Pope Leo the 10th. And as you would imagine, he used church resources.  

[00:05:26.000]

He was a Medici, so he used Church resources to advance the interests of his family, to support all his different relatives in banking and government, et cetera. He waged ridiculous wars. There was a war. He waged war against France. There was no reason why they should have gone to war against France.  

[00:05:40.760]

He started joining other wars and basically just shoving his fingers into European politics and completely destroyed Church finances to do so. And while at the same time this guy had extravagant taste, he was legendary for his extravagant this guy had a pet elephant. He had a pet elephant who would wander around Rome. The pet elephant's name was Hanno. I mean, this isn't some crazy story.  

[00:06:03.490]

This is actually a real thing. The guy had a pet elephant. I mean, they were dining like kings, and there was spending so much money. And there was also a lot of rumors about this guy's unquenchable sexual appetite. Some historians debate that and say, well, there's not really any clear evidence, but it's not like they would have written that stuff down.  

[00:06:23.050]

But Leo, he was a human being, right? He was a human being. This isn't about all these things that I'm saying, by the way. This is nothing about the Catholic faith. We're talking about human beings who are basically politicians running a very large institution, who the historical record shows very clearly, at a minimum, abuse their authority.  

[00:06:42.150]

And Leo is no exception to that. There are a lot of people who came before him, a lot of people who came after. And the thing about Martin Luther is martin Luther knew it. Everybody knew it. Everything that Leo did, everything that previous popes did, everybody knew it.  

[00:06:56.210]

And Luther was actually a bit of an apologist for Leo the 10th. He said, but he said, oh, the pope's a good guy, and he had a troubled childhood, sort of like Prince Harry. It's like, oh, boohoo, I'm a royal millionaire, and I've had a difficult life. And that's kind of the way people sort of apologize for Leo. And so Luther was kind of on his side, but where he had a real problem, where he had a real problem, at least at first, he was on his side.  

[00:07:18.830]

But where Luther had a real problem was with the financial corruption. This thing you probably heard of this idea of the selling of indulgences. Now, in the Middle Ages, the concept of an indulgence was very different from what was today, 500 years ago. The indulgence, this in practice was essentially that you were trading eternal salvation in exchange for money. And there's actually a formal.  

[00:07:40.190]

You'd get like a certificate. You get this piece of paper saying, we absolve you of these things. It basically became this snake oil industry. It got so ridiculous. You had a priests and bishops and the Pope himself going out selling these things.  

[00:07:55.460]

There were professionals who would go out and basically broker these deals. There were professionals who would go out. They were called professional partners. And they would go out sometimes they would front run. They would go out and get a bunch of these certificates upfront.  

[00:08:06.880]

They would go and pay the clergy for these certificates and then go out and resell the certificates. It was sort of like sort of like getting like a blank indulgence certificate and then go out and resell the stuff. These people were pardoners. They were professional partners. They go around to people and say, well, oh, are you a center here?  

[00:08:22.590]

Come and give me some gold, and I'll give you this certificate. And everybody knew they were so sick of this stuff. It was so legendary. If you've ever read or at least heard of jeffrey Chaucer's Canterbury Tales in Canterbury, tails is actually one of the tales, is the partner's tale. And the partner actually goes and admits, like, oh, yeah, I totally fleece people.  

[00:08:41.980]

It's so easy to fleece people when you're promising them eternal salvation. And this basically made its way into popular literature at the time. That's how outrageous it was. Everybody knew it. Everybody knew it was bullshit.  

[00:08:54.560]

Everybody was sick and tired of it. And this is the thing that Luther again, this guy, he was a professor of moral theology at the University of Wittenberg. He had a huge problem with this because he thought, why are we lining the pockets of the clergy and these snake oil salesmen? We could do a lot better with that money. Hell, we could just give it to the poor.  

[00:09:10.000]

Poor. If the whole idea is to do something good with this money, instead of giving it to the clergy, just give it to them directly to the poor. Cut out the middlemen, and maybe we'll do some good here. This was Luther's view, and he felt that this concept of selling, of indulgences was extremely immoral from his position as a professor of moral theology. But he viewed it almost as an academic lens.  

[00:09:30.160]

Luther wasn't a revolutionary. He never intended to be a revolutionary. The big story in 1517, Luther writes the 95 Theses, and he goes to the church door in Vittenberg, and he nails the church door, and there's sort of this historical story, like he's marching to the church door with hammer in hand, ready to start a revolution. But that's not what it was at all. Luther was an academic, and his 95 Theses was essentially an academic paper.  

[00:09:58.580]

It was just written almost as something to say, oh, here's some discussion points that maybe we can talk about at some point. And he puts it on the door or the church door in Vinberg because the church door was essentially like a bulletin board. That's where you say, hey, I lost my dog because anybody's seen my dog? And you nailed that to the church door. It was just this community bulletin board.  

[00:10:19.900]

And it wasn't this thing to say, I'm starting a revolution. It was really just this very harmless, innocent sort of event. But what ended up happening was he touched a nerve. Luther touched a nerve. He wasn't the only one.  

[00:10:33.630]

There was somebody he had actually a colleague, a guy named Carlstatt who just a few months prior wrote 152 theses against indulgences. It didn't really catch on because 95 theses was the right number. It was a catchier title or something like that. But, you know, Carl status didn't really catch on. Martin Luther's did.  

[00:10:50.060]

Martin Luther's did. It touched a nerve. There was this there was this, you know, relatively new technology. The printing press. It had been around for a while, but but it was getting more and more popular.  

[00:10:58.440]

And Luther's work was copied and copied and widely circulated. And people were reading this, going, yes, yes, this is exactly what it is. This guy, he nailed it. No pun intended. He nailed it.  

[00:11:09.880]

Luther really touched a nerve. Everybody knew what was going on. Everybody knew the selling of indulgences was a really terrible practice. Everybody knew. It was immoral.  

[00:11:17.680]

It was unethical. These guys are on the take. They're basically stealing money from poor people and living high off the hog. They got an elephant running around Rome. They're eating feasting like kings at the expense of the poor.  

[00:11:30.500]

And everybody knew it. And Luther was one of the guys that said something about it. Again, not intending to be a revolutionary, but he was really talking about it from an academic perspective. But it was the public that got hold of this and the public said, yes, Martin Luther, you are our champion. And the thing about Martin Luther that separated him from other people again, people like Carl Stat and others that were also saying this martin Luther became the champion of the cause partly because he was brilliant.  

[00:11:55.980]

Carlstadt was at that debate as well. But Carlstatt got destroyed. But Luther was brilliant. He was eloquent. The other thing about Martin Luther, though and this is something that a lot of people, I think, don't really appreciate about Martin Luther this guy loved to fight.  

[00:12:10.670]

He loved to fight, and he had huge balls. He didn't care. He would he would go up against the Catholic Church. He went he went and poked his eye, you know, poked his finger right in the eye. The Pope, right in the eye of the Catholic Church.  

[00:12:23.860]

Did not care. Love to fight. Love to fight. Everybody else is a little bit no, we shouldn't ruffle their feathers. Let's not rock the boat.  

[00:12:32.760]

Everybody just wanted to kind of placate, maybe reach a compromise. Luther didn't care. Luther wanted to fight. And that's something I think a lot of people don't really know or really appreciate. Luther really loved to fight because of that, and he was brilliant and he was eloquent.  

[00:12:45.330]

He became the champion of this cause. So the thing that really kicks off the revolution at first, Luther again, he tried to say, well, look, the Pope, he had a tough time, he had a tough childhood, all this Prince Harry stuff, right? It was really silly, but it was the way that the Pope responded. And this is the thing that really people just furious. The first thing that the Pope's, they communicate, they issue these things called bulls, right?  

[00:13:13.790]

The papal bull. It's this sort of official proclamation, and the Pope issues this bull, and he says, I haven't done anything wrong. Everything I've done is completely right, and there's nothing to see here. There's no improper selling of indulgences. There's no financial corruption, and nobody has done anything wrong here, and there's nothing to see.  

[00:13:32.000]

And that made people furious because it's like, don't insult my intelligence. We all know what's going on. But he followed that up with yet another one. This was now after the the great debate in Leipzig. And again, Johanne Eck had lured Martin Luther into committing blasphemy, said, Ah, he agreed with that guy that heretic that we burned at the stake.  

[00:13:53.860]

And so they he goes back to Pope Leo. Now, Johanneck, he said, hey, we got Martin Luther. We got him. We nailed him. He's he's he's committed blasphemy.  

[00:14:00.500]

He agreed with that guy. We burned the stake. He agreed with the heretic, so let's excommunicate him. So Pope Leo issues another bull, and this other bull comes out on June 15, 1520. Things moved a little bit slower back then, right?  

[00:14:12.530]

So they had the debate in 1519, and now it's 1520, things move a little bit slower. So Populous issues this other bull, and they actually name the bull the Bull. I love this name. Ex sergey dominate means arise, O Lord. And in this papal bull, excerjay dominate.  

[00:14:28.070]

He condemns exactly, precisely 41 of Martin Luther's statements. And as a result of this heresy that Martin Luther had committed in these 41 statements, he orders the public burning of all of Martin Luther's works. And he gives Lutheran ultimate and he says you have 60 days to come to Rome and publicly recant your 41 condemned heretical statements or else we will excommunicate you and you will burn in hell forever and ever until the end of time. And you will be shunned as a heretic by all the faithful and civil authorities will take you into custody and deliver you to Rome and all these things. And again, people were furious.  

[00:15:07.240]

People were furious. That was really a breaking point, because, again, rather than to admit to say, yeah, you know, what? We've made some mistakes. Martin Luther. You're right.  

[00:15:18.260]

You're actually right about a lot of things. And we should have a discussion, and maybe we bring you into the fold here and help us, help advise us on how to clean this up. And we're working on cleaning it up, and we want to clean it up, but hey, you know what? We're just humans, and it's not about us. It's about our faith.  

[00:15:31.120]

And let's focus on that, and we'll try and do better. Instead of doing that, they double down on the lie. They have this completely tone deaf response and say, the guy who says the things that everybody knows are true, they say, you're a heretic. We're going to excommunicate you. You have to publicly recant.  

[00:15:49.590]

And they double down on this lie and prove they have learned absolutely nothing. And that was the final straw. That was the final straw. And that story ends with Martin Luther. He actually so he's given 60 days to come to Rome.  

[00:16:02.070]

He waits 60 days. And on the 60th day, he knew that he had tremendously popular support from the people, people who understood the truth, and especially younger people, people that were studying academics, and they were reading this stuff, and they go, Come on, we all know. But I mean, even the lowliest peasant, they all knew what was going on. They all know. They're giving their money to the clergy.  

[00:16:22.500]

And the clergy, wow, they sure do have nice lives. You see this today? Well, those guys sure do. They sure do have nice cars. They sure do have nice houses, even though they're men of the cloth.  

[00:16:32.920]

That's a little bit strange. Luther publishes this open letter. It's written in German instead of Latin. Latin was the academic vernacular at the time, but he writes this letter in German to German people, right? And it's an open letter.  

[00:16:47.670]

And he basically says, you know what? Forget about these experts. We can't we can't leave our own, you know, personal and moral philosophy to the expert class. Every person has the right to interpret, you know, the Scriptures and the Bibles in his or her own views. And number two, by the way, there ought to be an investigation and examine.  

[00:17:07.250]

Why do all these big shots in Rome? Why do so many members of the clergy live better than the richest kings in the world? Doesn't that seem strange? Why should we, as Germans, continue to support this theft? Why should we keep sending our money to these people in Rome who are going to live high off the hog and have these luxurious lifestyles and so forth?  

[00:17:22.720]

I mean, again, this is what you see. You still see a lot of this stuff today, not necessarily in the Catholic Church so much, but a lot of these other denominations. You gotta a lot of very wealthy people in religion with extremely nice houses, extremely nice cars. They go out and get money from poor people. This stuff still exists today, and it's the same thing everybody sees today, says, well, that's so obvious.  

[00:17:43.170]

It was obvious in the 1005 hundreds. It just happened to be the Catholic Church back then. And Luther raised a big red flag about that and said, we should have an investigation about this. And he went on and actually blasted the Pope specifically and said, Why do you keep burning heretics? Basically saying, if you have to burn somebody alive because they disagree with you, then your argument clearly has no merit.  

[00:18:06.580]

Luther said, quote, we should vanquish heretics with books, not with burning, which is a very powerful statement back then. Again, these are still the days of the Inquisition, and they would just resort to violence. And Luther said, no, that's stupid. If you have to resort to violence, your argument has no merit. The last thing he said, and this is when it was on, this was when it was clearly war, is he said, There should be no special treatment for the clergy.  

[00:18:28.950]

We're all human beings. We all fall into the same sky, and there should be the same rules governing the clergy as the rest of society. There should be no special legal treatment. They should have to follow the same rules as all the rest of us. The Pope saw this and said, oh, no, you can't say that.  

[00:18:44.680]

Of course we get special treatment. And you can't say that we don't get special treatment. You can't say that we should be investigated. And so, of course, that's pretty much the end. Now Luther, the whole thing just spirals out of control and begins really what history calls the Reformation.  

[00:18:59.190]

Martin Luther is credited with starting this Reformation, but it was essentially a revolution. You got to think about the Catholic Church at the time. It was basically a supranational authority, a supranational theocracy. Yes, there were kings and queens. You had monarchy in Spain and monarchy in France and monarchy in England and the Holy Roman Emperor and all these things, but essentially, the Pope was there over everybody.  

[00:19:23.300]

The Pope had the ability to wage wars and make pieces and so forth, and really could meddle in all over European politics. And that's one of the things people were rejecting. They said, no, it was almost sort of like a proto European Union headed by a religious leader, right? And people said, no, we don't want that. We want our own sort of sovereign independence.  

[00:19:43.250]

And at the same time, we think that we don't need this powerful institution to tell us every single thing how we can live and what we can do and what we can say and what we can read and so forth. Like, no, we're tired of that. We're tired of this expert class telling us how to live our lives. And it was, in that respect, a revolution. It was almost a political revolution against the supranational authority.  

[00:20:05.260]

It was an intellectual revolution, that it was through this intellectual revolution that we got things like the Age of Enlightenment and the Age of Discovery and all the different scientific advance and so forth that came from that. It was from the Reformation, this intellectual revolution. And Martin Luther, again, is credited with starting it. But you got to also look especially at the Pope and realize they just didn't get it. They had learned nothing.  

[00:20:32.810]

They knew their credibility was declining, had been declining for centuries. They knew this, but they did nothing about it. And their response to this whole thing, again, instead of saying, yeah, we've made mistakes. We shouldn't be doing it. It wasn't just Poplio.  

[00:20:45.060]

Everybody had come before him was selling indulgences instead of actually admitting it and admitting mistakes and saying, we got to get better, and let's figure out how to do that, their response was totally tone deaf, and they proved to everybody that they had learned nothing. And that's what leads me to today, curiously enough, this is what leads me to none other than Woody Harrelson, the actor who you might have seen recently went on Saturday Night Live. He told a joke. This is a comedy show. He told a joke about COVID-19.  

[00:21:13.500]

He made this joke. He said that his agent gave him a movie script, and Woody Harrelson saying basically he said the movie script is the biggest drug cartels in the world. Get together and buy up all the media and all the politicians and people around the world basically forced to stay locked up in their homes and can only come out if they take the cartels drugs and keep taking them over and over again. It was a joke, obviously, about COVID-19 essentially telling the story of what happened during the Pandemic. And so almost on cue, you had the usual, you know, the Washington Post and Newsweek and all these countless others coming out and saying, he's a conspiracy theorist, and you got to look at it.  

[00:21:51.920]

They called him an antivaxxer. And you go like, wait a minute. He didn't even say the word vaccine. There was nothing about vaccines and the monologue at all. He didn't say anything about vaccines.  

[00:22:02.640]

He didn't say, don't take them. He didn't say that they're unhealthy. He didn't say that people shouldn't use them. He didn't say anything about it, didn't even use the word vaccine. But these activists who masquerade as journalists are so sensitive, they're so tightly wound.  

[00:22:16.960]

You say anything at all, they just jump on antivaxx, antivaxx. He's an antivaxxer, even though he didn't say anything about it. And then, of course, the other one they roll out is conspiracy theorist. You go, well, hold on. I would love to find out which exactly which part is conspiracy theory, because he talks about the biggest drug cartels in the world.  

[00:22:33.650]

You go, okay, maybe you could have said oligopoly rather than cartel, but cartel is actually you look at the American American heritage dictionary definition of cartel. Quote, a group of parties united in a common cause certainly seems applicable to the major drug companies during the pandemic. As a group of parties united in a common cause. There are drug cartels, there are the banking cartels. It's not a conspiracy theory to use the word cartel.  

[00:22:58.650]

Sure, okay, maybe you could use oligopoly. But this is hardly a conspiracy to say that the drug cartel certainly meets the definition they say, oh, they bought up all the media. How is this not true? Check out the university of Texas school of media. Actually has a really great review of top advertisers on cable and network news.  

[00:23:17.870]

Guess who consistently ranks as number one? The drug companies. And we know this. And you watch turn on the CBS nightly news. What do you see at every commercial break?  

[00:23:27.080]

Talk to your doctor to find out blah blah blah is right for you. It's all the drug companies. It's ridiculous. Any foreigner that comes and turns on American television and sees all these drug commercials got to think that the United States is the sickest country in the world. And maybe it is, right?  

[00:23:43.750]

Then he has this comment about buying up all the politicians. Really? Is this a conspiracy theory? Big pharma. You can see this yourself.  

[00:23:50.730]

You go to opensecrets.org and check out lobby groups by industry, and you can see that big pharma is far and away the number one industry among lobby groups, completely dwarfing the number two industry by almost 70%. Number two, you may not be surprised to find out the number two industry lobbying washington is, wait for it big tech. Big tech. But big pharma spends 70% more money than big tech, right? Then, of course, there's the incredibly well documented revolving door between the pharmaceuticals industry and key politicians and bureaucrats.  

[00:24:22.520]

These people that go in the most senior positions, CDC and the FDA, and even in congress, they go back and forth. They go, oh, you just left the FDA. Come and join our board of directors. Oh, we have somebody who's a senior executive in our drug company. Oh, now you're going to be on this board of commissioners.  

[00:24:38.160]

It goes and approves drugs from our very company. So how is this a conspiracy theory? What else? They say people were forced to stay in their homes. I'm sorry, that's a conspiracy theory?  

[00:24:50.450]

Did you sleep through it like that's? Literally what happened? And that people would only come out if they take these drugs. Well, this is what Tony fauci said. He kept being asked, when are the lockdowns going to end?  

[00:25:01.590]

When are the mask mandates going to be lifted? When can we go back to normal? And he would always say it was a function of uptake. He said, oh, it depends on how many people take, which got 50% of people got to take the vaccines 70% of people got he kept moving the goalpost, but that was literally. The things that he was saying is that we can go back to normal and we can end the lockdowns and end the mandates as soon as enough people take the drugs.  

[00:25:20.890]

So exactly which part is the conspiracy theory? So all these people go antivaxxer conspiracy theory. And to me, it just reminds me of Pope Leo. It reminds me that these people who over the last three years I mean, these are the guys if you think back three years ago, they were the cheerleaders, this whole thing, they were responsible. It's just so much of the destruction.  

[00:25:42.790]

What do we know now, three years later? We know the lockdowns were totally destructive. They were a very prominent, courageous scientist that stepped up early in the pandemic and said, no, we can't do this. These lockdowns are dangerous. They're going to have terrible consequences.  

[00:25:55.790]

We can't do this. We have to protect the most vulnerable population and let everybody else go out and live their lives. And those people were destroyed. They were canceled. Zero apologies have been issued.  

[00:26:05.750]

Zero retractions have been made. But we know this now. We know the lockdowns were destructive. We can see the mental health toll. We can see the destruction of an entire generation of young people that got left behind in school that didn't learn.  

[00:26:18.070]

We can see the alcoholism and the drug abuse and the economic devastation. We can see all these things now, right? The media was there the whole time saying, we got to lock down. We got to do all these things. Zero polygy tissue, zero retractions.  

[00:26:32.470]

Remember back in the days where they canceled anybody who said, oh, I think it was a Wuhan lab leak. Canceled. Canceled. This is now not only mainstream idea, the government is even saying this. They canceled anybody who dared to say that a vaccinated person could still get COVID.  

[00:26:47.190]

Do you remember those days early on, somebody dared to say, well, you could actually still get COVID if you're vaccinated canceled. But this is obviously everybody knows this now. You could get 10,000 vaccines and you could still get COVID in the same way you can still get all sorts of things if you get vaccinated, because no vaccine is 100%. That's not misinformation. That's just true.  

[00:27:06.840]

Right? They canceled all these people for all these things, and it was the media leading the charge. And now we know that all these things are wrong. We know all these things that they were saying were wrong. Have they learned anything?  

[00:27:18.320]

No, because as soon as somebody comes out and even says it as a joke, they jump all over this guy who says things that are actually all true, says it as a joke, and rather than go, okay, yeah, that was funny. Oh, yeah, hey, we were wrong. Jeez, we're not going to do that again. We're going to try and do better. Oh, no.  

[00:27:35.300]

They jump all over this guy and say, conspiracy theorist. He's an antivaxxer, proving that they have learned absolutely nothing. Now, we could do that all day, right? I mean, you could look at I love to look at the Federal Reserve, right? Federal Reserve central bank that responsible for the Federal Reserve of the United States, largest central bank of the world, managing the largest currency in the world, got totally off caught off guard by inflation 2021.  

[00:28:01.050]

We started seeing some inflation, and they started off just rejected it outright. It was March, April of 2021, and people were saying, like, hey, what about this inflation? They say inflation. What are you talking about, inflation? I mean, just gaslighting people.  

[00:28:14.460]

You're crazy. You think there's inflation? You're stupid. You don't understand anything if you think there's inflation. Finally, they sort of say, all right, there's inflation, but it's transitory, right?  

[00:28:23.300]

And then they finally said, okay, maybe it's not transitory. And now they they started this like, oh, my God, we have to do something about this. We have to cause widespread unemployment to fix this. What's incredible is the Federal Reserve gets together, and they meet from time to time. They take dozens of people in the room, all these very smart people, all these experts, PhDs and so forth, and they get together in a room, and they actually I mean, they they release the minutes of these meetings.  

[00:28:47.040]

You can actually see what they talk about, and it's, you know, talk about people that have learned nothing. I love reading these minutes. It's sad, but kind of hilarious, because they talk about inflation, and what are they blaming inflation on? Putin and the virus and all these things. And it's like, oh, my God, it's so just face palm.  

[00:29:06.790]

How do you not get it? How do you still not understand? Even a high school economics student knows that price levels are basically the result of supply and demand, where supply and demand intersect. And what did they do during the pandemic? They destroyed supply.  

[00:29:19.910]

They paid people to stay home and not go to work. They paid people literally to not work. Gee, what a surprise. The supply of goods and services absolutely cratered. The supply of goods and services declined because they paid people to stay home and not work, to not produce goods and services.  

[00:29:37.500]

So what a surprise. There weren't enough goods and services. There were shortages of things. Duh. And those lingering effects still exist today.  

[00:29:45.050]

You had people that because of COVID they just exited the labor market entirely, said, I'm out. I'm not going to work anymore. I'm retired. Whatever. And so, of course, when things started to open back up again, there were fewer employees available to hire.  

[00:29:57.880]

And so then all of a sudden, business is like, oh, we can't find employees anymore. Because it's not like those people just disappeared. They are still there, but they just don't want to work anymore. They just fell out of the labor market entirely. And all these things, they just don't understand.  

[00:30:10.880]

They don't understand the impact of all these anti capitalist, anti productive regulations. I mean, all these ridiculous things. You got an administration that goes and appoints these hardcore woke activists to key positions. You get the head of the Federal Trade Commission, which is basically one of the government's chief divisions to regulate large corporations. The person they appointed to be the head of the FTC is somebody that absolutely despises large corporations.  

[00:30:34.530]

And so everything they do is they're constantly going and suing big businesses. I mean, now you got the Justice Department. Why is it the Justice Department's role? They got the Justice Department going and suing, trying to stop a merger between two discount airlines. We can't let two private companies merge together that for some reason the government's got to get involved in all these things that are so anti capitalist, anti productive.  

[00:31:00.220]

They got this horrendous energy policy. They've declared war on oil companies. Every time he has the opportunity, the President, United States aviator, sunglasses in chief, goes and shits all over the energy company, says, oh, they're horrible people. They're making too much money. We don't like them drilling.  

[00:31:14.460]

We think what they do is evil. He goes and denies them federal land leases to go and drill for more oil. Oh, wow, what a surprise. Oil production in the United States is dwindling. Gee, who could have possibly predicted that?  

[00:31:29.230]

When you constantly dump on the energy companies and you do everything you can to prevent them from producing, who could have possibly predicted that oil supplies, oil production in the US would start dwindling? Who could have possibly seen that coming? These are the sorts of things that never show up in the Fed minutes. They never talk about any of this stuff. It's they say, inflation, Putin and the virus.  

[00:31:50.770]

You just have to look at this. Go, have you not learned any of this? They don't understand how they destroyed supply. They don't understand how at the same time, while destroying supply, they artificially boosted to band. They say, oh, let's cut interest rates to zero.  

[00:32:03.130]

Let's print trillions of dollars and shovel all that money into the economy. Let's actually enable and facilitate the government paying people to stay home and give this endless stimulus and all this stuff to people and states and so forth. And obviously, when you shovel that much money in the economy, what are you doing? You're artificially boosting demand. You're just putting money in people's pockets.  

[00:32:23.030]

They're going to go out and spend it, but now there's fewer goods and services to spend the money on because you destroyed supply. So, gee, what's going to happen? We destroy supply. We increase demand by shoveling money into the economy. What do you expect is going to happen?  

[00:32:36.120]

Lower supply, higher demand. You're going to create inflation. A 15 year old economics student in high school is going to understand that not the Federal Reserve, that all these PhDs, they can't possibly understand. A lot of people predicted this. I was one of the guys that predicted this.  

[00:32:50.040]

Even as early as April 2020, early in the pandemic, I wrote something, said, hey, look, we're going to see, quote, significant price inflation in the coming years. Explained all this stuff, about trillions of dollars being printed and so forth. And I was not even anywhere near the only one. A lot of people figured this out. Nobody at the Fed could figure this out.  

[00:33:06.570]

Nobody could see this coming. It's all about Putin. It's about the virus. And now, of course, their only solution. So, oh, well, how do we fix inflation that we help facilitate?  

[00:33:15.010]

We are there every step of the way to help facilitate is to cause a recession. Their view is if fewer people have jobs, there will be less spending. And if there's less spending, there will be less demand. And that's going to bring down inflation, which is actually totally stupid. And the reason it's stupid is because their solution I'm doing air quotes focuses only on the demand side.  

[00:33:34.720]

In no way are they addressing the supply side of things, which is really crucially important. They destroyed supply, and it hasn't come back. They're only focused on demand. And the thing is, they fail to realize that the government is going to bail those people out anyhow. If your whole thesis is, we got to, we got to, we got to increase unemployment so there will be less spending, the government is just going to step in and bail those people out.  

[00:33:57.050]

The government's going to step in with unemployment benefits. So it's like, those people aren't going to get money. Instead of getting money from their job, they're going to get money from the government. The government's just going to give them money. And where is the government going to get that money from?  

[00:34:07.850]

They're going to borrow it from the Fed. So that the Fed doesn't even understand. It's like, dude, you're going to be in this anyways. You're going to be printing money. Give it to the government.  

[00:34:16.260]

The government is going to give it to the people anyhow that you that you've just put out of work. So what is the point? What is the point? But they just don't understand any of this. They don't even understand the unemployment statistic.  

[00:34:25.900]

It's hilarious. We can see white collar jobs are dwindling, high paying jobs dwindling. We see a lot of layoffs, et cetera. But they say, oh, the unemployment rate is still low. They're furious that the unemployment rate is low.  

[00:34:36.630]

They want more people need to be out of work. Then they're furious that the unemployment rate is low. But they only look at the quantity of jobs. They look at the quantity of the unemployment rate. They never look at the quality.  

[00:34:48.160]

They don't actually look at the numbers and realize, oh, wow, all those new jobs that are being created, it's all for waiters and bartenders. That's what's surging. It's jobs for waiters and bartenders. It's not software engineers. It's waiters and bartenders.  

[00:35:00.840]

America is becoming a bartender economy. But the Fed hasn't figured this out. What a surprise. They've learned nothing. Just like the media, they've learned nothing.  

[00:35:09.440]

And again, we can do this all day. We can look at all these institutions. The White House, the administration of aviator sunglasses in chief learned nothing. They keep doing the same destructive things. Again, they've declared war on the oil companies.  

[00:35:21.700]

Oil production is dwindling. Wow. Who could have possibly predicted so what do they keep doing? They keep dumping on the oil companies. They've learned nothing.  

[00:35:29.200]

They helped create inflation by spending too much money. So what do they do? Just yesterday, aviator sunglasses in chief, the guy that shakes hands with thin air, just released a new budget for $7 trillion. $7 trillion. It's such a staggering amount of money.  

[00:35:46.740]

And you just look at this. Go have men. Have you learned nothing? Have you learned nothing? Of course he's learned nothing.  

[00:35:52.850]

Guy's been in government for 50 freaking years. He's learned nothing that entire time. If you spend $7 trillion, that's going to be inflationary duh duh. How do we know that? Because they spent almost 7 trillion.  

[00:36:06.700]

They actually spent less than that during COVID-19 and created tons of inflation. Now they want to spend even more money and think that that's not going to cause inflation. They've learned nothing. These woke corporations have learned nothing. These woke corporations go and alienate their customers.  

[00:36:20.720]

They wag their finger. Their customers say, you're a terrible person, right? And they take these idiotic sort of woke ideological positions that only appeal to a small handful of very silly crybabies on Twitter. But they just keep doing it over and over again. They keep wagging their fingers and alienating their customers, and they've learned nothing.  

[00:36:39.470]

The progressives learn nothing. They keep losing elections. These progressive prosecutors keep turning violent criminals out on the street. They keep getting recalled even in places like San Francisco. But they continue to insist on their terrible policies.  

[00:36:53.310]

Again, these terrible policies that only appeal to a handful of very silly crybabies on Twitter. But they keep doing the same things. They've learned nothing.  

[00:37:03.110]

The high priests of climate change, the John Kerry's of the world, have learned nothing. They completely ignore willfully, I'm convinced, ignore the abundance of obvious solutions. Are they even talking about nuclear power? Absolutely not. All these things that are out there, they go, no.  

[00:37:22.930]

What is John Kerry talking about? And I quote, money, money, money. I think we'll have to do a whole podcast just about this. And, oh, we got to keep all the peasants from using gas stoves. They're so out of touch, they fly into Davos on their private jets to talk about keeping the peasants from using Gaste, talking about money, money, money.  

[00:37:41.970]

They've learned absolutely nothing. So tone deaf. They've learned absolutely nothing. And again, we can keep doing this all day, wiggling all these institutions, all these people, and just show they just haven't learned anything from their own stupidity, from their own mistakes. They keep making the same mistakes over and over and over again.  

[00:37:59.660]

In a way, it's kind of textbook insanity. Now, if we go back to 1520 again, this is Pope Leo issues that tone deaf Papple Bowl of his own. This is at that point, the Reformation roars to life. People declared their independence. People declared their intellectual independence and realized they could take more control over their lives from an institution that up till that point had controlled virtually every aspect of their lives.  

[00:38:22.500]

What you can do, where you can go, what you can believe, all these things. And it was a big deal because, again, it was from that movement we got the age of enlightenment. We got the scientific revolution. We got so many things that really propelled humanity forward. And frankly, I see the same elements today.  

[00:38:40.550]

People are sick to death, these institutions who control their lives. And we see this. We see the numbers of the polls. The trust levels are at all time lows for all these institutions that tell us to stay at home and cower and fear in our basements, to tell us what we have to put in our bodies, to tell us that we aren't allowed to have an opinion about how our children are educated while they go and they teach five year old kids to embrace victimhood and work towards the, quote, disruption of Western nuclear family dynamics. And you think I'm kidding.  

[00:39:07.060]

That's actually a direct quote from the Virginia Teachers Union, something that just actually came out very recently. These are the people that create inflation with their own idiotic and short sighted policies. And then when inflation comes around, they reject it. Then they say it's transitory, and then they say the only way to fix it is for you to lose your job. They go and they spend trillions of dollars these people call a press conference and they stare at the camera and actually have the audacity to close their thumb and their index finger together and say that trillions of dollars of this legislation will, quote, cost nothing.  

[00:39:40.220]

They tell us what we're allowed to believe. They try and control what we're allowed to say, that if you have an opinion about something, they'll call you the worst things in the world, including now, even a domestic terrorist. These are the people that tell us that violent criminals should be turned back out onto the streets in the name of social justice. And yet, over and over again, despite the complete and total abject failure of their policies and their ideas, they prove time and time again that they've learned absolutely nothing. But the good news here is that people are finally starting to reject these idiots.  

[00:40:13.260]

We're starting to see it in little ways again. They have recall elections in San Francisco to throw out progressive prosecutors. People fired the mayor of Chicago. We're starting to see these signs, and not just in politics, but again, we see the trust in institutions at all time blow. We see this just as it was in the 1000 hundreds, in the 1005 hundreds.  

[00:40:34.020]

Their big institution trust was at an all time lowe. People were sick of it. And people stood up and said, you know what, I'm capable of forming my own opinion, thank you very much. I'm taking back control over my own life. And this is what's happening.  

[00:40:45.310]

What a surprise. News media is seeing like record lows. I mean, their viewership has just dropped off a cliff. Nobody's watching CNN anymore. Nobody cares.  

[00:40:55.580]

Nobody's watching MSNBC anymore. Nobody cares. They burn through all of their credibility. Nobody listens to what they have to say. Nobody cares.  

[00:41:03.130]

And we realize that we have options. If you don't like what the media has to say, you just got to turn off the TV. And there's plenty of other alternatives. In independent media, it's not hard to find other sources of news. If we don't like big tech, great.  

[00:41:16.620]

Delete the app, delete the TikTok, stop using Gmail. There's plenty of other alternatives out there, including even going and hanging out with people in person. Or plenty of other email alternatives that don't actually involve somebody that's going to constantly spy on you. If we don't like silly woke corporations, great. We just stop using their products.  

[00:41:36.400]

Plenty of alternatives. Plenty of small businesses out there. If you don't like McDonald's because they got silly and they got woke and they put bizarro pink fluid in their hamburgers and also there's plenty of small businesses out there that could make you a hamburger. It's not hard to find alternatives to things like that. If we don't have confidence in our central bankers, right?  

[00:41:57.720]

We look at these people and go, oh my God, they are clueless. They don't have, they don't have the foggiest idea what they're doing. Great. We're not constrained by our central bankers. We can do whatever we want.  

[00:42:08.750]

We can take a portion of our savings and we can put it in other instruments. There are a lot of options out there. If you're looking for better stores of value, you've got one of the oldest currencies in the world, like gold, some of the newest currency in the world, like crypto. They've got a lot of options in between. They're fantastic investments out there.  

[00:42:23.550]

Income generating opportunities, really great businesses that are trading at steep discounts to intrinsic value. There are so many different options out there. Better stores of value, all these things to counteract all their foolhardy ideas. All those things are out there. We have options.  

[00:42:37.380]

We have options to educate our kids. We even have options in terms of other places to live if we really want to, even just if need be as a plan B. There are plenty of options out there. All these things that we can do to take control over our lives. We really do have tremendous control, and we can start to see the early stages of people beginning to exercise that control.  

[00:42:59.050]

Obviously, all these people, the media keeps howling. They think people are actually paying attention to them. It's hilarious. They're not. The expert class keeps howling.  

[00:43:07.710]

Fewer and fewer people are paying attention. This is basically a new reformation. It's like the 1005 hundreds all over again. We might not be at 1520 or 1530 yet. Maybe we're still at 1510 15.  

[00:43:20.850]

But the seeds of a new revolution have already been planted. It's here. We can already start to see it coming. And this is actually a very exciting time because it's ultimately how our society is finally going to start moving forward again. Thanks very much for listening, and we'll speak again next week. 20230310-B_podcast Close Podcast Transcription

Two weeks ago, I told you that the US government had just published its annual financial report.

The government by its own admission lost $4.1 TRILLION in FY 2022. And this is 34% worse than the the previous year’s $3.1 trillion loss.

And the rest of the financial report only gets worse from there…

They describe Social Security’s extreme insolvency, projecting total unfunded liabilities of the program to be $76 trillion.

And they forecast that US government debt will one day reach 566% of GDP.

I’ve written about this extensively over the years, because history tells us that the consequences of this type of financial mismanagement are severe.

This is not the first time that a country has had a lot of debt, nor the first time incompetent leadership has consistently failed to recognize and solve big problems.

So in today’s podcast episode we go back in time thousands of years to heed the lessons of one of history’s biggest scumbag rulers.

Unsurprisingly, he raised taxes, debased the currency, violated the rule of law, confiscated property, eliminated dissent, vastly expanded the government, and created all sorts of idiotic and destructive laws.

BUT, this is fixable.

And today we actually discuss some common sense ideas to demonstrate how easy it should be, at least conceptually, to take giant leaps in the right direction once again.

Unfortunately, the people in charge seem to have zero interest in doing any of that.

So I wouldn’t hold my breath waiting for politicians and bureaucrats to ride to the rescue.

But at the same time, as I often point out, this is not a bad news story.

The world is not coming to an end.

In fact, I believe the world is still full of abundant and incredible opportunities, despite the trajectory of its largest superpower.

And we close this episode with the core central message of this organization: we have control over our own lives.

Regardless of what they do or how badly they screw up, you do not have to go down with a sinking ship. You have the power to solve these problems for yourself.

You can listen to today’s podcast here.

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[00:00:00.810]

Today we're going to go back in time to the 26 September in the year 480 BC to a very critical island in the Mediterranean. Now, if you know your history, you might be thinking, I know what he's going to talk about, because 480 is a very famous year. 40 BC is a year where Greece, which I'm going to do Greece and air quotes for right now. I'll explain why in a moment. Greece and Persia, they're at war with each other in a in a war that historians is often described as this epic battle between eastern civilization and western civilization.  

[00:00:28.900]

If Greece loses against Persia, there is no Socrates, there is no Plato, there is no Western civilization. So it's a really important year. 480 BC was the famous battle of thermopole 300 Spartans fending off the Persian. There are other people there as well. There's 700 Thespians and some others as well.  

[00:00:44.910]

But this very small number of people in this, like the battle of the Alamo, fighting off the whole army so that everybody else can live and regroup and defeat the Persians, this is followed by the Battle of Salamis, this famous naval battle. Salamis was a very important island in the Mediterranean. And this battle of Salamis where the Greeks vanquished this much larger Persian fleet and embarrassed Xerxes, and it was the turning point in the war, again, supposedly took place on September 26, 480 BC. I say supposedly took place. This is according to very painstaking astronomical calculations.  

[00:01:16.970]

It's not like the Greeks tell us, oh, it was September 26. There was no such thing as September in 480 BC. So the people have gone back and done these astronomical calculations to figure out the date of this based on information that we know. And they said, well, we think the Battle of Solomon's took place on September 26, 480 BC. But that's actually not what I wanted to talk about.  

[00:01:37.630]

There was something else going on on September 26, 480 BC, also in Greece. But what I mean by Greece remember a lot a lot of people say Greece talk about ancient Greece, and ancient Greece is really just a catch all word that we use today to really lump together dozens of these independent city states. You know, the Athens and Sparta, Corinth, thebes Ithaca, Argos, Troy. These are all different city states, but they're all totally independent from one another, right? Just because Athens is doing something doesn't mean that Ithaca or Argos is doing it as well.  

[00:02:08.730]

These Greek city states typically shared a common language, common religion, common heritage, et cetera. But they're vastly different from one another. They don't share the same internal politics. One might be democratic, the other might be might have a monarchy, right? They have different systems of government, they have different economies, different everything, and they're all independent.  

[00:02:26.420]

Saying Greece in the ancient world is like saying Latin America today. Again, there are things that are common. Typically a shared language and typically, maybe shared religions and culture and so forth. But Panama is totally different than Bolivia in the same way that Athens is totally different than Ithaca. And just because Athens and Sparta were at war with Persia again, doesn't mean that all of Greece big, g greeks, all of greek civilization was at war with Persia.  

[00:02:53.520]

And this is where I want to talk about, because far to the west of the Greek mainland, there's another island. And I talked about this as this important, critical island in 40 BC. Well, there's another island that wasn't salamis. There's another island that was part of greek civilization. This island was Sicily.  

[00:03:09.450]

Sicily had been the greeks been coming in since 735 BC. But there were a lot of people that had come before. There's a neolithic civilization, early bronze age civilization, even in the 2000s BC. The phoenicians. We talked about the phoenicians before this really great seafaring trading culture set up outposts all over the Mediterranean.  

[00:03:27.630]

They had been coming into Sicily. The carthaginians were really interested in it. Everybody loved Sicily. Why? Because Sicily was a paradise.  

[00:03:37.100]

It was everything that the mainland greeks wished that they had had, especially in athens. The Athenians are like, oh, my god, this place is incredible. In athens, the soil was terrible. It was rocky, it was hot, it was very little nutrients. It was really hard to make it work in athens.  

[00:03:50.560]

In Sicily, they had incredible soil. They had a lot of rain. They had the agricultural production was off the charts. They had fruit orchards just bursting with trees, vineyards, beehives flowers, huge grassy plains where they had plenty of carrying capacity for livestock. They got a cattle and sheep and everything they wanted.  

[00:04:08.510]

They had endless forests with timber in the hillside. They could build anything they want. They had fish everywhere, and the fish reproduced faster than anybody could fish them, anybody could eat them, and it created a lot of wealth. There are people that were, I mean, almost perplexed by the level of well, Plato was disgusted. Plato went to Sicily.  

[00:04:25.820]

It was almost disgusted by just the level of wealth that was there. There's another philosopher, a guy named empedocles, and empedocles remarked he went to a city in Sicily called accra GENTO, and he said, these people here, quote, devote themselves to luxury as if they were going to die tomorrow. But they furnish their houses as if they're going to live forever, basically saying, there's just no end of the spending here. They just go out and gorge themselves every single night, the banquets, the wine, the liquor, everything. And then they go and they just have the most incredible extravagance in their homes.  

[00:05:00.100]

And for people, it was perplexing, but as a result, this was the big prize. Sicily was just this this big prize. It was this big paradise. And the ultimate prize in this was the city of syracuse. Syracuse was started off as just a tiny village.  

[00:05:15.340]

The Corinthian Greeks had come there and they start, they started this little outpost, this tiny village, but relatively soon it become this major center of wealth and trade. And people there were incredibly rich, just the richest of the rich. There was one story, a guy that supposedly had a clothing collection worth 120 talents, which would be worth basically $15 million in today's money, right? Again, Plato wrote about this. He said, yeah, there's just women everywhere, people looking for rich husbands, constant banquets, performances, nightlife, and this was the envy of the region.  

[00:05:51.400]

Everybody wanted who wouldn't want that, right? Everybody wanted to be Syracuse, and everybody wanted to control Syracuse, wanted to control Sicily. And most of all, that desire was coming from the Carthaginians. We've talked about Carthage before, we're talking about them a little bit again today. Carthage at this time was the dominant power in the western Mediterranean.  

[00:06:11.210]

Again. This is before Rome and even the Roman Republic. And Roman Empire. Rome was just really getting started at this point. And Carthage was the dominant power in the western Mediterranean.  

[00:06:24.230]

And they had been working for quite some time. They've been thinking about Sicily, they've been thinking about Syracuse, making overtures and setting up little outposts. And finally, 480 BC, they got their shot, right? You got the Greeks in the east, Sparta and Athens, they're fighting Zerksis and the Persians, and Socarth says, now we got our chance. So they go and they invade Sicily to take the island once and for all.  

[00:06:46.340]

And this is where we opened in the podcast on September 26, 480 BC. This was literally, according to Herodotus, a story. And Herodotus literally on the same day as the Battle of Salamis, just as the Greeks in the east were thrashing the Persians in the west, there was this big battle called the Battle of Umara and the Battle of Amara. The Sicilian Greeks, led by the king of Syracuse. His name was Galon.  

[00:07:11.210]

They thrashed the Carthaginians, they humiliated the Carthaginians. And we know to this day it was a big deal because archaeologists actually found the remains, these mass graves of 10,000 plus buried soldiers that date back to this area. We know this was a really big deal. And again, according to Herodotus, literally on the same day, you have all of Greece basically being saved on the same day in the east from Persia and the west from Carthage on the 26 September, 480 BC. Now, this is really the start right in the east.  

[00:07:40.330]

The war with with the Persians didn't end immediately, but it was really the turning point. And this is the start of the classical era, the golden age of Greece, and particularly Athens, where you have Socrates and Plato and Sophocles and the construction of the Parthenon and all these sorts of things. And again, the general consensus among historians you see this say, well, none of that would have happened without the victory over persia, right? So this is a really important period of time for Western civilization that allowed Athens and democracy and all these things to flourish. And this was also a really important time for Syracuse, because frankly, it actually wouldn't be that long.  

[00:08:16.430]

Now with the Persians in the rearview, they said, oh, we vanquished the Persians. Well, Athens and Sparta ended up going to war with each other. And as Athens and Sparta were going to war with each other in the famous Peloponnesian Wars, syracuse was over here, way out to the west, sitting on its beautiful island with all of its wealth and all of its abundance and all of its banquets. And they said, you know what, this is great for us. And Syracuse became one of the biggest and wealthiest Greek cities at half a million people.  

[00:08:41.910]

People were super rich, and life was pretty great for decades after 40 BC, life was pretty great. But finally, 71 years later in 409 BC, athens and Sparta, they're still at war with each other, duking it out over who's going to be the big cheese, over all the Greeks, the Sicilians, the Syracusans are sitting there off in Sicily. The carthaginians came again. The Carthaginians decided, you know what, we're going back. Athens and Sparta are caught up with each other, so we're going to go back, we're going to invade Sicily again.  

[00:09:11.630]

We're coming after Syracuse. We're pissed. We haven't forgotten our loss. We haven't forgotten that humiliation 71 years before at the hands of the King of Syracuse, and we're coming. And they invaded.  

[00:09:21.340]

They brought this massive armada, 1500 ships, 20,000 men, and they started capturing Sicilian cities down the coastline, slaughtering survivors. And it was barbaric. It was barbaric. The Sicilian, Greeks were shocked. They said, oh my God, these people are coming to kill us all.  

[00:09:36.730]

This is crazy. And the Syracusans caught word of this. They actually interrupted their banquets for a change, and they turned to a guy. And just to give you an idea of how committed the Carthaginians were, they were very briefly stopped in their invasion because they got hit by a plague. And again, this was not terribly uncommon in the ancient world.  

[00:09:54.160]

Military history is full of plagues and so forth. We talked about the plague of Antonine from the Romans recently. So in this plague, even the commanding general, the Carthaginians, died. And the Greeks thought like, oh, thank goodness, maybe they're going to go away. Well, it didn't happen, actually.  

[00:10:10.850]

A new general took over. A new general assumed command and assumed that, well, the reason we got this plague is because the gods are angry with us. So this guy, this Carthaginian general, sacrificed his own son in order to placate the gods and said, all right, guys, I killed my own kid to placate the gods. Let's go back to war and kick their asses. And the Syracusans are freaking out.  

[00:10:29.550]

The Syracusans find out again, they stop their banquets and they turn to a guy, and they said, deliver us from this. And this is a guy who had started his career in government as a humble scribe, had risen through the ranks and become actually quite a capable general. And his name was Daunesius. And Daunisius was given by the people of Syracuse absolute power. Go and dispose of the Carthaginian threat.  

[00:10:51.800]

We trust you. They basically made this guy a tyrant. Now, that was actually not unusual. In Greece today, the word tyrant carries a very negative meaning. You call somebody a tyrant, basically, it's like calling them an evil dictator.  

[00:11:03.100]

And this has been the case for quite some time. John Wilkes Booth, when he assassinated Abraham Lincoln, jumps from the balcony in Forge theater. He screams out sick semper tyrannis. Basically because he thought that Lincoln was a tyrant, it carried that negative connotation. But thousands of years ago in the ancient world, in 40 BC.  

[00:11:21.270]

409 BC. It did not have a negative connotation, right? Tyranny was normal for the Greeks. They often, when confronted with an emergency, whether it was some kind of climate disaster, agricultural emergency, military invasion, they would invest all absolute authority in a tyrant and say, Go and deal with this. The tyrant was neither good nor bad.  

[00:11:40.590]

It was somebody that was necessary at the time. And then, of course, when the emergency subsided, then the tyrant was supposed to relinquish absolute power, and some people actually did. Dagonesius did not. Now, nobody knows entirely exactly what happened. Dionysius, as soon as he gets this absolute power, he goes and he has a meeting with the Carthaginians.  

[00:11:59.420]

Nobody knows what he said, but somehow he managed to convince them to just go away. He said, look, you got some land here in the south. We don't care about that land. That's not ours anyways. Just fine, keep it, but don't come after us.  

[00:12:11.070]

Nobody knows exactly what he said, what words he used, but the Carthaginian said, okay, fine. Remember, they were out for blood specifically for Syracuse. And yet after this conversation, this one meeting with Dionysus, they said, all right, we won't come for Syracuse anymore. And so Dionysus goes back to Syracuse, said, yeah, hey, guys, I saved us. We're fine.  

[00:12:28.720]

They're not going to come for us. And people are like, oh, my God, this guy's a hero. And of course, he's enjoying this. Hero status does not relinquish power. In fact, according to the historical record, he actually seems to have faked some sort of attempt on his life.  

[00:12:41.010]

You know, he shows up and says, oh, my God, somebody's trying to kill me. And so the Syracusans go and they give this guy, you know, he says, oh, you're, you're a hero. You're so important to us. We have to protect you. So they gave him hundreds of men as a personal guard, which he then, of course, uses these goons to go and secure power for himself and maintain his dictatorship.  

[00:12:57.680]

And this guy down east has gone down in history as one of the most villainous, horrendous rulers ever. One of the first things that he did was, of course, A, not relinquish power and B, double the pay of his soldiers just so that he could command their loyalty. He gave premium real estate to his military officers. And the whole point being that they were no longer there to serve and protect the people, but they were there to serve and protect Dionysius from the people. And they were also there to carry out his decrees, whatever he said.  

[00:13:23.580]

Now he had all these goons to go around and enforce his decrees under threat of violence. So again, we had significant expansion in the state specifically to protect the leadership and impose the government's will on the people by force. We also know that Downesis was incredibly intolerant. He did not tolerate any dissent. He ridiculed, imprisoned, exiled people, engaged in censorship.  

[00:13:44.080]

And there were rumors as even stories about Downesis trying to sell Plato into slavery. Plato, it didn't last very long. Plato was apparently soon ransomed by a very wealthy patron and admirer. But and we know these things because they were written about people wrote about Dionysus extensively, including Plato, including Aristotle, including so many. You can look at the works of Plato.  

[00:14:03.800]

He has a work called The Letters. And you can look at letter seven where Aristotle wrote a lot about Dionysus. And we'll get to Aristotle here in a minute. We also know that Dionysus was incredibly arrogant. This is guy.  

[00:14:14.900]

He he thought he was a he thought he was an intellectual. He thought he was a scientist. He thought he was a writer and a poet and just was obsessed with these things. He is rumored to have purchased the writing desk of Escalates and the tablets of Euripides, all these famous Greek playwrights. But apparently everything he did sucked.  

[00:14:33.280]

His plays sucked, his poetry sucked. And there was one famous writer who was in his court, a guy named Philoxinus. And Philoxinus was called to Dionysus in one story. And he said, philosophy, I'm going to read you this poem. Tell me what you think.  

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And Philosophis gave an honest opinion and he said, you know, it sucks. So Dionysus had him in prison, and Philoxinus is in prison, and people go later and they convinced Dionysus, hey, you should really let this guy out of prison. So Dionysis lets him out of prison, and the next time he calls him back to Courtney, says, I have a new poem I want to read. Tell me what you think of this one. This is a new poem.  

[00:15:04.590]

So Dionysus reads Philoxinus's new poem. He says, what do you think? And Philosophy says, Take me back to prison. This is actually a real story that has been passed down to us from the ancients. And this is just sort of typical of this guy, just really arrogant, really petty, surrounding himself with all these individuals again, including people like Plato, thought himself to be so smart, so brilliant.  

[00:15:27.370]

Apparently none of the intellect has rubbed off. But on top of that, we also know that he had this steadfast belief. He was so out of touch. He had the steadfast belief that he was just and he was righteous. And he wrote about this extensively.  

[00:15:39.240]

He actually wrote dionysius himself wrote that Tyranny is naturally the mother of justice. And he was constantly complaining about all the stress of my job. Oh, I work so hard. I and I alone can manage this for all these little people that can't take care of themselves. And I and I alone can do this.  

[00:15:58.310]

And I work so hard and I'm so tired and I'm so exhausted. In many respects, he wrote about death as like the ultimate, like, finally you die and you can rest because I work so hard and oh, I can't wait to die because then I can finally rest for all this hard work. If you heard the parable of the sort of Damocles, it actually comes from this era. Damocles was an attendant to the son of Dionysus. And according to the story, Damocles shows up and and says, wow, wouldn't it great to be king?  

[00:16:24.500]

Look at all this wealth and luxury you have. And the story is that, you know, the king is so offended by this. Don't you know how hard I work? I'm so stressed out taking care of all these little people that can't take care of themselves. And the story is that Dionysius dangles the sword.  

[00:16:38.580]

He says, Go and sit on my throne. Down Mcclese. And Sant Demicles sits on the throne and has this sword dangled over his head that's just suspended from a single horsehair. And of course, democracy is freaking out because he thinks the horsehair is going to break at any second. He's going to be impaled by the sword until he's screaming, please, please, I don't want to be king anymore.  

[00:16:55.340]

Just give me the humility of a normal life and that'll be fine for me. And again, it's this sense of like, oh, look at me. I work so hard. It's so hard being king, sitting on this throne and stealing and plundering all this wealth from people. And this guy really believed that he had this honorable burden.  

[00:17:11.830]

He was doing it on behalf of the people and that he was just and righteous in his cause. The guy was also super paranoid. He was convinced that even though he was sort of in many respects saying like, oh, death is going to be such a vacation for me, he was actually terrified that people were going to assassinate him constantly had him surrounded with himself, with security. He spent a great deal of public money on erecting this impenetrable fortress. And I even actually read that he is said to have slept in a bed surrounded by a moat, that he had to cross a little bridge every night before going to sleep and then pull his little bridge up into his bed because he was so terrified that somebody was going to steal into his room and assassinate him in the evening.  

[00:17:47.840]

But what I really wanted to talk about this guy down east was how domineering he was. He stole everything and anything that he wanted. He had all of his goons and he wasn't afraid to use it. And this is where Aristotle comes in. If you want to look at yourself.  

[00:18:00.380]

Some of these stories Aristotle writes, he has a work called Economics. Some people think it wasn't Aristotle. It's at least attributed to Aristotle. Book two of economics. He talks about this.  

[00:18:11.570]

He talks about Dionysis jacked up tax rates and Syracuse essentially just a great way to steal money from people spending on things that benefited himself personally. But the lengths that he went to, this is where it gets really ridiculous. One day, this is according to Aristotle, downesis calls a public assembly. He gets all the people together and he says, the goddess Demeter has appeared to me. The goddess Demeter has appeared to me and bade me to collect all the jewels and all the adornments and so forth and bring it into her temple.  

[00:18:39.340]

So everybody has to do this. And he said, look at me, I'm doing it too. I've gone into my own home. I've collected all my fancy ornaments and all of my fancy jewels, and I'm bringing it into the temple of Demeter. And anybody that doesn't comply is a heretic and you'll be damned to Hades forever and ever until the end of time.  

[00:18:53.580]

So everybody went home. They were terrified of this guy. And they gathered all their jewels and they put them in the temple of Demeter. But then, you know what? The Dionysus comes the next day.  

[00:19:03.090]

He says, hey, Demeter has appeared to me again. And she's decided that instead of her taking all of these nice fancy jewels that I should have them all, so I'm just going to go ahead and take them. And he sends his goons to the temple and he takes everybody's, everybody's wealth. So basically lies to them, tricks them into this, forces them to do this, and then goes and steals everybody's property. Totally ridiculous.  

[00:19:23.910]

There's another instance in which he decided that the state needed money. And so he goes into his palace. He brings out all of his furniture and fancy items and things like that, and he takes it out to be sold, almost like having a yard sale, you could imagine. Like Joe Biden goes out and brings his collection of aviator sunglasses and his Corvette, whatever, and brings it out to the south long of the White House and puts a for sale sign on there. And people just get to go and mill around and buy all of all of his stuff, right?  

[00:19:51.710]

So he collects all the money for everybody. But then he makes a note. He has all his goons there, making note of who's purchasing what. And then as soon as the yard sale is over, he has his goons go over to everybody's house, knock on the door and said, oh, I see you took the President's Corvette, give it back, and basically confiscates all the assets that everybody just bought from him, fair and square. Naturally, though, he kept the money.  

[00:20:13.250]

There's another instance of debasement, lots of instances of debasement. There's one instance where he goes and he mints these new coins that he makes them of cheaper materials, tin, iron, et cetera. And this is a time in the Greek world where the primary coin, the drachma, was made of silver. And the drachma was sort of like a reserve currency. Everybody in the ancient world knew about the drachma.  

[00:20:33.010]

It was a very well respected currency. The Greeks didn't mess around very much for their currency, and it was a silver coin. But he says, no, I'm going to make this of this new cheap material. But he went and had gathered another assembly and basically said, look, we have these new coins. You should accept them just as if they were silver, and basically forced everybody to do that as if they were silver.  

[00:20:55.660]

Forced everybody to do that under threat of penalty and imprisonment and violence, et cetera, and basically debased the currency by creating his own money. There's another instance where he actually forced everybody to loan him money. And one of the ways that he did that, he actually went and had everybody again under a penalty of death. He threatened everybody under a penalty of death. Go and bring me whatever silver coins you have in your home.  

[00:21:19.050]

Not the new crappy coins that he just minted, but real silver coins. And so people went and brought in the silver coin, and he basically restamped every coin with a face value of two, double the face value. So in the same way, it's like somebody brings you $1,000 in $100 bills, they bring you ten hundred dollars bills, and you take a magic marker and you scribble out 100 and you write $200. And then you give them back five of these new $200 bills and say, hey, I gave you back $1,000. You gave me $1,000, I'm giving you back $1,000.  

[00:21:47.490]

Right? So he just basically stole everybody's money, debased it, and then repaid them with his debased money and kept the rest for himself. This is typical debasement tactics. Dionysus was very, very famous for this. He was also famous for being a liar.  

[00:22:02.220]

This guy defaulted constantly on his promises. There was one I mean, think about these people. He conquered this city called Reggie. Today. It's Reggio di Calabria.  

[00:22:10.020]

This is in southern Italy, just off the just across from Sicily. And he conquered this city. And he tells the inhabitants, he said, hey, everybody, it's my right. I'm your conqueror. I can sell you all the slavery if I want to.  

[00:22:21.470]

I can enslave every last one of you. I won't do it if you just pay me this really hefty bounty. So of course people paid the bounty. They went back home, they said, oh my god, let's get our money. They pulled their money money and they paid off their new conqueror.  

[00:22:34.070]

And Dionysis went and sold them off as slaves. Anyhow totally lied through his teeth, took the money, sold them as slaves. There's another instance actually, where they conquered another town and the soldiers went in and after the successful military campaign, the soldiers plundered the local town, they plundered the temple. And down NiSi's caught wind of this and he said, oh jeez, all by soldiers made all this money. I didn't get any of that.  

[00:22:55.420]

So he goes and he tells the soldiers, he says, men, I understand that you took all this money, you took all this loot. I'll tell you what, bring me half of it, and you can keep the other half, but just bring me half. I mean, this is all free money for you anyhow, right? So just give me half and we'll leave well enough alone. And so the men said, okay, and you probably know this is going.  

[00:23:13.530]

So they bring him the first half, he gets the money, he counts as well. This is a lot. Now he says, now bring me the second half. That basically lied, stole from his own troops. What's amazing is that Downesis actually did not die.  

[00:23:25.650]

He wasn't assassinated. He actually drank himself to death. He won a poetry contest, if you can believe it. It was his shitty poetry won a contest. And he was so excited that he celebrated and partied so hard, he actually drank himself to death and died.  

[00:23:39.770]

So that's the end of Dauneesius. But we can see the key themes here. We can see taxation, confiscation, default, lying, no rule of law whatsoever. This guy, he taxed people, he confused their property, he defaulted on his promises. He did whatever he wanted with no rule of law.  

[00:23:56.330]

He debased the currency. He imposed all sorts of stupid, silly regulations. He imposed people controls. He expanded the state, and he did everything under constant threats of violence. If any of this sounds familiar, it probably should, because these are the same tactics that a lot of governments still rely on today, especially when they're bankrupt.  

[00:24:14.830]

And we've already seen so many examples of this. We talk about Dionysius tax people. Well, these people, the politicians, they are constantly howling for higher taxes. They just passed this dividend buyback tax that went into effect on January 1. Literally days later, they started saying, we want to quadruple it.  

[00:24:30.520]

They're never satisfied. They're always whining about wealth taxes, higher capital gains taxes, higher income taxes. So just like Downesis, we have this constant howling for higher taxes today. Just like down nicely is complicated property. We've talked about.  

[00:24:42.320]

At length the rise of civil asset forfeiture, where government goons come in, including state and local people, and just take whatever they want. There's no due process. There's no innocent until proven guilty. They just take, they seize property. It is a completely legal thing when the government steals from you.  

[00:24:57.100]

It's called civil asset forfeiture. Just like Dionysius confiscated people's property, just like Dionysius lied and defaulted on its promises, politicians today, they lie and they default on their promises. They default on their promise to maintain a fiscally sound Social Security program, to maintain a financially responsible government, to maintain a modest national debt, to do all these things. They completely default on their promises. Just like Downesis didn't follow the rule of law, they never follow the rule of law anymore.  

[00:25:22.620]

They don't follow the Constitution. They say, oh, the CDC is going to take over all of the US housing market, because that's just what we feel like doing. Sorry, that's not part of the law. Most recently, this idea of like, oh, well, we decided we're going to forgive student debt. You can't do that.  

[00:25:38.330]

The law doesn't say you can do that, but they just do it anyways. That was just in the Supreme Court earlier this week. So this is the sort of thing we see, just a decline in the rule of law. Just like downesis. Just like Downesis, we see the currency debasement, unprecedented inflation of the currency, unprecedented monetary expansion, 40 year highs in inflation a day.  

[00:25:55.460]

Same thing. Just like Downesias with all those stupid regulations. The same thing today. It's just countless instances of this stupidity. We talked about one very recently where the FTC has decided that they're going to fix the economy.  

[00:26:08.150]

And they decided that the thing that the Federal Trade Commission is going to do to fix the economy. The reason why the economy is SPutting right now is because there's too many non compete clauses in private labor contracts. So we're going to get rid of non compete clauses. You did it, right? You figured it out.  

[00:26:23.100]

You cracked the code. Non compete clauses are what's dragging the economy down. No, it's not the war against the energy company. It's not the insanely stupid regulations. It's non compete clauses, right?  

[00:26:34.110]

So this is the stuff that they do. They ban non compete clauses. The Labor Department imposes rules to encourage vote capitalism, all this sort of stuff. Just like downesis people controls. This guy had people, crazy people controls.  

[00:26:45.750]

We saw this during COVID-19, where you can go, what you can do, what you have to put in your body, what you have to wear on your body, how you can live, whether you can go outside, what you're allowed to say, what you're allowed to think. Just like Downesius, the expansion of the state, 80,000 new IRS agents, anybody, right? The expansion of the state. And just like Downesius, everything under constant threats of violence. You can't even apply for a passport in the United States of America without being in threat, without being threatened with fines and imprisonment.  

[00:27:11.680]

If you don't believe me, go and check out the application for U. S. Passport form DS eleven from the State Department. Go down to page four and read the text. You are being threatened with penalties, fines, and imprisonment for passport application.  

[00:27:25.650]

Like, why can't these people just chill out already? Like, Jesus, it's a passport application. Just relax. Good God. But everything has got to be under these constant threats of violence.  

[00:27:36.590]

And again, you also lose the sense that the people that are supposed to be providing security, they're not there for your benefit. Sure, it's perfectly fine. For countless people to stream across the border and whatever, that's all fine. But God forbid an angry parent shows up to a school board meeting. Those people need to be investigated by the federal government, right?  

[00:27:56.500]

So this is a familiar story. Dionysis wasn't the first guy. He was one of the more famous tyrants throughout history. But these tactics, they haven't gone anywhere. I mean, they're still very, very prevalent, very front and center.  

[00:28:08.960]

And financial insolvency makes this worse. Countries that are heavily in debt and have trouble making ends meet do tend to double down on this stuff. We've seen this so many times before. You don't have to be a PhD in economics to figure out where this goes. You just crack a history book and see what Rome did during its crisis period, what the French monarchy did in the late 17 hundreds during its crisis period.  

[00:28:28.440]

You see higher taxes, more currency to basement, more money printing, more expansion of the state, more goons, more bureaucracy. They just make everything worse. And this is important because, as we've covered before, the US government, specifically the west in general, but specifically the US. Government, which we covered for, are really in dire straits financially. I think it was last week or the week before we did a podcast talk about the financial report of the US.  

[00:28:52.330]

Government, which was recently released for FY 22, showed their really true budget deficit. What they call the net operating cost was minus $4.2 trillion. That was worse than $3.1 trillion. So Joe Biden likes to say, like, oh, I brought down the budget deficit. No, you didn't.  

[00:29:10.200]

That's a complete lie. It got worse by $1.1 trillion on top of that the government's net worth. Basically is -30 $4 trillion. That's all their assets, every tank, every bullet, every acre of National Parkland put together all their assets minus the liabilities, including the national debt et cetera is -30 $4 trillion and on top of that is another $76 trillion in unfunded Social Security and Medicare long term liabilities, it's $110,000,000,000,000 negative net worth. That is extremely unhealthy.  

[00:29:43.050]

Now we talked about before.  

[00:29:46.730]

This is escapable. This is not terminal. There are ways around this. If you are a turnaround specialist, it's not hard to sort of look at this and go, okay, Jeez, first thing first. Throw all the bums out.  

[00:29:57.490]

Get rid of these people in Congress, the Federal Reserve, the White House, put in actual responsible leadership, professional managers who have experience in things like operational and financial efficiency in large organizations. Wow, jeez, what a concept. And scale down the size of government. You got to make it really fast and easy to terminate underperforming government employees. There are some really smart, really wonderful people who work for the federal government and there are a lot of dirt bags.  

[00:30:23.890]

You got to make it easy. No organization can survive if there's just dirt bags and lazy people and underperforming people. You got to make it easy to get rid of those guys. You got to drastically cut spending. You got to slash entire departments.  

[00:30:35.520]

Why do we have why is there even a Commerce Department or Housing Department? Why does the Defense Department need $800 billion in think about this. Ten years ago, in 2013, the Defense Department had a 500 billion dollar budget which is even with inflation, let's call it 600, $650,000,000,000. Today it's 25% higher than it was after adjusting for inflation than ten years ago. Bearing in mind ten years ago they were fighting a war in Afghanistan and Iraq at the same time.  

[00:31:03.880]

They're not doing either of those now, but the budget is 25% greater even after adjusting for inflation. It doesn't make any sense. You're telling me that you can't find leadership that can somehow prioritize national security over wokeness and can maintain a strong fighting for us while just scaling back to what it used to be ten years ago when we're actually fighting two wars at the same time. We're not fighting any wars today. It just seems so obvious with all the savings that you could actually you do that you get rid of some of these departments, et cetera, and some of these other basic things.  

[00:31:35.920]

Say you look at Social Security, it's not rocket science. You're going to have to raise the minimum age of Social Security. Security, it can't be 62, 63, 65 anymore. It's going to have to be 68, 70 in order to get benefits. But one of the biggest things is did you know Social Security, the trust funds, when you pay taxes and Social Security, it goes into these trust funds.  

[00:31:53.930]

The trust funds are extremely limited in what they can invest. In fact, the trust funds take that money and they invest it in exactly one thing. Guess what? US. Government debt, how much does that government debt pay?  

[00:32:04.630]

How much does Social Security actually earn in his trust funds investing US. Government debt? Less than 3%. Gee, why don't we take there's a lot of really brilliant asset managers in the United States. Why don't we unleash those asset managers?  

[00:32:18.750]

You can privatize the management of Social Security and let some of these really smart asset managers go instead of making 3% go and make I don't know, 8%, just like a normal pension fund. It makes a huge difference. It really moves the needle. If you go from making 2.6% to making 8.2% and makes a really, really big difference, it's so offensive that Social Security makes less than 3%. Anyhow, when you look at bond yields, even Treasuries right now, you can make 4%, 5% in Treasuries.  

[00:32:48.830]

So if I buy Treasuries today, I can make 5%. If Social Security buys Treasuries, they make 3%. I mean, it's disgusting, honestly. So disgusting when you look at it. Go, jeez, guys, in theory, this should be a pretty easy fix, right?  

[00:33:03.580]

There's so many of these things you can do, obviously. You got to fix things to help with productivity. You got to create the right economic incentives to create productivity, to help very talented people, frankly, from all over the world, to be able to come legally, start businesses, work, invest, contribute to overall prosperity, help people be able to start businesses, work hard, save their money, create the right kind of incentives to do that. You get rid of all these regulations that you know, and then there's almost 200,000 pages in the code of federal regulations in the United States state. Almost 200,000 pages of regulations.  

[00:33:36.450]

In the mid 1990s, there was about 100,000 pages. Now, somebody explained to me what has gone so wrong with the world over the last 30 years that we need to double the size of our regulation. I mean, were we just on the verge of chaos and anarchy in the 1990s and mid 1990s when we only had 100,000 pages of regulation? Can we not go back to 100,000 pages? Can we slash the code of federal regulations by half or even just a third?  

[00:34:02.490]

And somehow the world not come to it? It seems to me that you should be able to do that. It seems to me that if you go, well, jeez, we used to be fine with this low, lower level regulation, why can't we go back to that? I mean, this isn't rocket science. This is very simple, common sense stuff.  

[00:34:17.520]

It's the same thing with the tax code, where you go, these people are constantly saying, we need more taxes. More taxes. Well, that's a stupid idea. And this isn't like some sort of libertarian theory that's just the idea is very simple. If you look at the data in the modern history of the United States, tax rates have been all over the board.  

[00:34:35.370]

They've had tax rates at 28%, they've had tax rates at 90%. And yet, as a percentage of GDP, the government's slice of the economic pie, government tax return has basically been 18, 19% of GDP. That's it. They can raise tax rates to 90%, and you're still going to get 1718, 19% of GDP. That's it.  

[00:34:56.100]

It's not like you raise tax rates and suddenly you're getting 30% of GDP. Or if you slash tax rates, it goes down to 5% of GDP. It's always the same. The government's slice of the overall tax revenue slice. The economy is very, very constant.  

[00:35:09.480]

So wouldn't you just say, jeez, why don't we focus on what do we need to do to increase the size of the pie? If we want a bigger slice, then we need to increase the size of the pie. That way everybody wins. Duh do a win win deal. What does it take to increase a slice of pie?  

[00:35:24.310]

Well, having 200,000 pages regulation probably doesn't increase the slice of the pie. Having all these new taxes and threatening quadruple taxes doesn't increase the slice of the pie. Going to energy companies and treating them like they're the, you know, like, like they're some kind of evil force in the world that's destroying us all, like that's probably not going to increase the size of the pie. So this is all relatively common sense stuff. Are they going to do any of this?  

[00:35:48.160]

Probably not. What are they really going to do? Most likely the same thing that the Romans did. The same thing that the French did. The same thing the downesis did.  

[00:35:55.490]

Higher taxes, more regulation, more disunification. If you disagree with them, they call you all these terrible names. They try and silence you. They try and censor you. They call you antiscience.  

[00:36:05.650]

More government, more goons. These are the sorts of things that are just common. We can see this over and over and over again throughout history. Now, I'm not saying all this is some kind of bad news story. It's not.  

[00:36:18.310]

You can't rely on politicians to get it right. Maybe they do. But you can't rely on that. You can't hold your breath. You can't hold your breath for your fellow citizen to figure out priorities.  

[00:36:27.850]

There's people out there that are still convinced that the number one problem in the United States is which bathroom people can use. And look, sure, for certain people that's a dramatic part of their lives, fine, but we have bigger problems, right? The country has much, much bigger problems. And you'll notice, by the way, I didn't actually say anything about climate, climate change. A lot of people think that's the number one problem.  

[00:36:50.950]

I would say very briefly, I could do a whole podcast about this, honestly. But I don't lie. Wake and I worry about climate change. And the reason why is because those solutions already exist. Nuclear power is a real thing.  

[00:37:02.790]

It already exists. Nuclear fusion has actually already happened. Last year, nuclear fusion actually became no longer some like crazy scientific pipe dream. Nuclear fusion actually happened. Nuclear fusion has been around for decades.  

[00:37:15.280]

Nuclear has a very bright future. These solutions already exist. You want to talk about a clean energy source, low CO2 emissions, all these things, it already exists. Right now you've got a bunch of idiots. You get the Greta Thunbergs of the world that apparently get to decide what everybody is going to do.  

[00:37:28.640]

You know, they they said, no, we don't like nuclear, and they scowl the camera and tell us that we're all bad people. But the reality is all the solutions for the environment already exist. I like a clean environment. Personally. I'm sitting a place right now.  

[00:37:40.070]

I've got solar panels on my roof. I've invested a ton of my own money in planting trees, in carbon credits and all sorts of things, right? So, I mean, I like clean air. I like clean water. I like these things.  

[00:37:51.400]

I don't lie, wait at night, worry about it, because I know those solutions exist. I know it's up to the private sector to get it going. And I know because it's up to the private sector, sooner or later it's going to happen, right? The problem is all these economic issues, they rely on these crooks in the public sector. They rely on these incompetent buffoons, the guys who shake hands with thin air.  

[00:38:10.030]

That's who the economic issues come down to. And there's very little momentum in the right direction. In fact, most of them is in the wrong direction. And so you can't rely on these guys to get it right. You can't rely on your fellow citizen to figure out the priorities, because there's still people that are saying, our number one priority has got to be bathrooms.  

[00:38:27.070]

Our number one priority has got to be whatever, all these things. But those aren't really existential risks, the economic problems. Social Security goes bankrupt. That's an existential risk. The currency, we have a currency crisis.  

[00:38:41.090]

We default on our debt. Those are existential risks, right? So this is something that it's a big deal. But I don't want to cast this as a bad news story, because the reality is you actually do have an enormous amount of control. We can go back and look at all these consequences and say, okay, jeez, look at what happened in Rome.  

[00:38:57.140]

Look what happened in Downesis. Look at what happened to the French. Look at what happened all throughout history. Every time governments got into dire straits, what do they do? They raise taxes.  

[00:39:06.120]

They inflated, they defaulted. They did all these things. Well, guess what? You have so much control over your life, you can take steps. They're going to raise taxes.  

[00:39:13.880]

You can take steps to reduce what you owe completely, legal steps. Social Security is going to have problems. It's going to raise the age. They might have to default. They might have to reduce benefits.  

[00:39:23.330]

You have all the control in the world. You can take steps to reduce that impact on your life. They're going to inflate the currency. Great. You can take steps to reduce that.  

[00:39:31.210]

You can make money from that, right? You can make money from that. That actually creates opportunity. And this is really the message, is that it's up to us how we view these things. We can view it through the lens of panic and chaos and oh my God, the world's coming to an end.  

[00:39:45.200]

The world's not coming to an end. We have control. They don't like us to feel like we have control, but we have control. We have control over our health. We have control over our children's education.  

[00:39:52.940]

We have control over our finances. We have control over how we view the opportunities in front of us. Even the economic chaos has created a lot of investment opportunities, business opportunities. I mean, you look at this. I've written about this.  

[00:40:05.730]

I've talked about this. I mean, there are really good quality, well managed energy companies that are selling for nothing. Very low multiples of their earnings, very low multiples of their book value. Agriculture, businesses that you have really strong prospects that are selling for, very low multiples of their book value. These are excellent investment opportunities.  

[00:40:24.090]

We did a whole podcast about, for example, making money from carbon credits. People have a fanatical idea of coming up with solutions, and so they're pushing carbon credits. It's becoming a really, really big thing. And it's something that right now is a very nascent market. We did a whole podcast about this, and this is something that, frankly, is an opportunity.  

[00:40:43.120]

People can make a ton of money speculating in carbon credit. So there are just so many opportunities, and we can look at it through this again, this lens of panic, and go, oh my God, all these problems and so forth. And yes, there are a lot of problems. We can hold out hope and say, maybe they're going to fix it. But the reality is that we have control over our lives.  

[00:41:01.320]

We have control over how we view these problems and how we respond to them. They have control over how they respond to problems. Their response to problems is to do nothing. Their response to problems is to make things worse. Our response to problems can be to make things better at a minimum, at least in our own lives, and set ourselves up to be in a position of strength.  

[00:41:18.730]

We started this podcast in 480 BC. 480 BC. We talked about again the battles salamis the Greeks, in the east, fighting against the Persians, and in the west fighting against the Carthaginians. We started in Sicily. And 480 BC again, turns out this is one of the most important years in history for the rise of Western civilization.  

[00:41:40.910]

If we're being intellectually honest, future historians may look back and look at the 2020s so far seem to be shaving up to be among the most important years in the decline of Western civilization. I'm not saying that to be dramatic, nor am I thinking that the world is going to come to an end. I don't think that at all. I'm actually an optimist. I'm incredibly optimistic about the future of the world.  

[00:42:00.310]

But we need to be honest in our assessment about the circumstances under which we live. It is difficult. It's difficult to stomach all this. It's difficult to see. It's difficult to see the news, read the headlines and see the debt and this fiasco, the insolvency, the constant bickering back and forth, but just their inability to solve a problem.  

[00:42:18.560]

It's this obvious problem, the debt is too large, can you solve this problem? No, they can't solve the problem. They have this sort of brinksmanship approach. Instead of actually cooperating, rating and compromising saying, jeez, let's all agree we have a big problem, let's figure out what we want to do to solve it. It's brinksmanship.  

[00:42:35.580]

It's no, I'm not going to do anything. I'm going to dare you to do it. We're going to go all the way to the edge. To me, this is a criminal level of incompetence. Their failure to be able to solve problems in a way without resorting to this kind of brinksmanship, without resorting to this total catastrophe.  

[00:42:52.350]

It is a criminal way. And it's difficult to see it, it's difficult to stomach the debt. It's difficult to stomach their inability to solve problems, the political incompetence. It's difficult to see and stomach a society eating itself from within, people at each other's throats, the, the disunity, all those things. And look, you know, maybe we catch a break, maybe we get lucky and things turn around.  

[00:43:12.500]

It has happened before and we talked about like, it's not rocket science to turn things around economically and you turn things around economically, it shouldn't be that difficult to turn things around even socially. There are plenty of avenues for that, there are plenty of historical examples for that. But even if not, there will always be plenty of opportunities for you to take back control over your own life. That is my constant message to you. We cannot control what happens in the world.  

[00:43:36.120]

We cannot control what happens in our country. We can absolutely control what happens in our own lives. Thanks very much for listening and we'll speak again next week.   Close Podcast Transcription

Imagine if Elon Musk stood up one day and told the world, “My #1 goal is for Tesla stock to lose 2% of its value every year.”

First of all, people would probably rightfully conclude that Elon had finally lost his mind.

And second, everyone would dump the stock. Who would possibly want to own an asset where the management is TRYING to lose 2% every year?

Yet that’s precisely the stated goal of the people who manage our currencies. They tell us flat out that they WANT 2% inflation, i.e. they WANT the dollar, euro, etc. to lose 2% every year.

Obviously these ‘experts’ have completely failed to achieve their goal lately… but the larger point is that incentives are clearly not aligned.

In the case of businesses, managers generally have the same incentives as their shareholders. Elon’s wealth only increases if his stockholders’ wealth increases.

But the people who manage currencies (politicians and central bankers) do not share the same incentives as the people who own the currency (i.e. responsible individuals who save money).

Savers want the currency to be stable. Politicians want it to lose value. It’s a totally perverse incentive structure… but it may get a lot worse– at least for the United States.

And it has a lot to do with the war in Ukraine.

History is full of examples of former superpowers who lose their dominance. Egypt. Greece. Rome. France. The Ottoman Empire. Mongolia.

And quite often there’s a ‘changing of the guard’, a reshuffling of the world order, when a rising power and declining power are involved in a war.

Carthage was once the dominant power in the western Mediterranean. But after losing the Punic Wars, Rome asserted its dominance over the region.

Spain was once the dominant power in Europe. But after the Thirty Years War, it became clear that France was the new superpower on the continent.

The two powers don’t even need to be fighting each other; after World War II, for example, it was clear that the US had surpassed Britain as the dominant superpower, even though both nations were on the same side during the war.

Today we see the same ingredients that may result in another reshuffling of the world order: a declining power (US), rising power (China), and a war.

Today is the first and hopefully only anniversary of the war in Ukraine. And I spend some time in today’s podcast episode exploring the larger implications, specifically focusing on the US dollar.

I think it’s very probable that, whenever this war finally ends, China will emerge as a clear superpower.

That doesn’t mean America will vanish. But it would mark the start of a new era in which the US can no longer do whatever it wants… and quite possibly share the dollar’s ‘reserve status’ with China.

For decades now, the US has enjoyed the exorbitant privilege of being the primary issuer of the world’s reserve currency.

This gives the US the luxury of having endless demand from foreign investors who have to own US dollar assets, and specifically US government debt.

Because of this endless demand from foreigners, the US government has been able to get away with the fiscal equivalent of double-homicide: multi-trillion dollar deficits, a $31.5 trillion national debt, etc.

Yet despite such irresponsible spending, foreigners STILL buy US government bonds… simply because the US dollar is the world’s reserve currency.

Anyone who wants to participate in global trade, buy oil from Saudi Arabia, etc. HAS to own US dollars… and hence hold their noses every time Nancy Pelosi said “it costs nothing”.

But imagine a world where the US dollar is no longer king. Sure, the dollar would still be relevant. But not king. Maybe a duke or viscount.

Without its status as the undisputed king of currencies, suddenly the US government wouldn’t be able to get away with outrageous deficits anymore. The Federal Reserve wouldn’t be able to get away with printing trillions of dollars, or slashing interest rates to zero, while expecting absolutely no consequences.

Suddenly all the debt and all the money printing would trigger inflation… and even a loss of sovereignty.

We may be closer to this reality than anyone realizes.

Again, history is full of examples of global power reshuffling because of a war. History is also clear that reserve currencies tend to change when global power is reshuffled.

So we have all the key ingredients right now for some pretty big implications for the US dollar… and that ridiculous “2%” inflation goal.

I talk about all of this in today’s episode, starting with the story of one of the biggest parties in world history that took place in 864 BC. The dominant superpower at the time was celebrating itself. And they thought their supremacy would last forever.

It didn’t. It never does.

I also walk you through the rise and fall of empires and reserve currencies, and I explain how even a minor decline in reserve status will be really bad for US inflation and sovereignty.

But this is not a gloomy podcast. Remember the words of Marcus Aurelius: focus on the things that you can control. And we can control a LOT.

We talk about simple ways to think about the future, why diversification is so important, and why real assets make so much sense.

It’s not a question of “which is the best currency”. ALL currencies are bad. Remember the perverse incentive structure I talked about at the beginning of this letter?

It’s really a question of which are the right assets to hold that can stand the test of time… including a reshuffling of power.

You can listen to today’s episode here, I hope you enjoy.

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[00:00:00.970]

Today, we're going to go back in time to the year 864 BC, where one of the largest parties ever to be held in the history of the world was taking place, especially given world population. At that time, there were 69,574 people. I'll get back to that number in a minute. 69,574 people from all over the region, all over the known world, had to descended upon this city, this new city called Kala, located in what is today northern Iraq's Nineveh province. It's not far from the city of Mosul, if you know the region.  

[00:00:35.070]

And they were there to celebrate the opening of this city. Kala had become the brand new capital of the Assyrian Empire, what historian is technically referred to as the Neo Assyrian Empire. Now, the guy who was king, his name was Asher Nasirpal. Now. Asher NASA.  

[00:00:48.850]

Paul II technically. Now, he had ordered this new capital city to be built in 879. So it's about 15 years prior, and workers had actually managed to complete it in just 15 years. And when you think about it, that's really fast. Even by modern standards, kala had been a very small settlement a few hundred years prior.  

[00:01:07.180]

It had been sort of somewhat abandoned and in disrepair. And Nashvill NASA. Paul said, you know what? I want a new capital. The Assyrian empire had grown.  

[00:01:17.040]

It become the dominant power. I want a new capital. So they built this new capital, and it was really nice. They had very nice buildings, temples, luxurious palace, 8 walls around the city, botanical gardens. And this is Kala, a little bit south of Mosul.  

[00:01:34.180]

It's very close to the banks of the Tigris River. And so this is actually we think about a lot of people have never been to Iraq. If you've never been a lot of people think about it as it's just desert and whatever, but Iraq is actually this is one of the more picturesque areas. It's very lush. It's a very fertile river valley here.  

[00:01:51.750]

And this was a very, very nice city. And it was famous. It was referred to frequently in the Bible. I mean, this was a very, very famous place. And when it was complete, Asher Nasapal said, we're going to have the celebration to end all celebrations.  

[00:02:07.990]

And they invited 69,574 people to have this raging party to celebrate the opening of his capital. By comparison, Burning Man last year had about 66,000 people. And obviously there's a whole lot more people in the world, and it's a lot easier to, you know, have transportation and travel to places. So you can just imagine that number, 69,574 people. We know this is the case because they actually chiseled this on their stone tablet.  

[00:02:33.430]

They call these things steelies. And they wrote about the celebration, this long tablet, talking about the banquet and the celebration, and they said, we have 69,574 people there. According to the ancient Assyrian scribes chiseling this into their tablet. They went on and on about all the incredible food and the drink and just the big party that they were having to celebrate this new capital in the Assyrian Empire. Obviously, this was the peak that was the peak of the Assyrian Empire.  

[00:03:00.100]

Assyrian was the dominant superpower in the world, or at least their known world, what they consider the world. They couldn't imagine a world bigger than what they had conquered. They had subjugated nearly everybody in the region babylonia, Egypt, the Hittites, the Kingdom of Israel. And it was, at that point in history, was the largest empire that had ever existed up to that point in history, right? I mean, if you compare it to later empires, the Roman Empire, the British Empire, Mongolia, the Spanish Empire, assyria was like nothing.  

[00:03:32.580]

It was quaint. I mean, in total land mass, it was about twice the size of Texas, half the size of India. But thousands of years ago, that was unimaginably vast. I mean, people thought this was and this king thought himself king of the universe. I mean, nobody could imagine a world beyond what they had conquered.  

[00:03:53.780]

You know how royals they have often these long titles. If you think about if you watched Game of Thrones years ago, they would have Joffrey, first of his Name, king of the andals Lord Protector of the Seven Kingdom, blah, blah, all that sort of stuff's. Titles went out for hundreds of words, entire paragraphs. King of the world, no rival among rulers, heroic warrior, legitimate king. It's kind of funny.  

[00:04:18.630]

They felt it necessary to actually say that. Legitimate king. One of my favorites. They called them shepherd of all mortals, just on and on and on with all these names. And you got to feel bad for this poor Assyrian scribe that's got to chisel all these silly titles into the stone tablet just to placate this guy's ego.  

[00:04:36.730]

It reminds me of that great scene in Rocky Four where Apollo Creed is about to fight the the Soviet Beth fight Ivan Drago, the Russian boxer. And then they're introducing Apollo Creed. They've got all these nicknames. The Dancing Destroyer, the King of Sting, the Master Disaster, and of course, my favorite, the Count of Monte Fisto. And it's just all these names.  

[00:04:56.770]

This was Ashur, Nasirpal, and this is the sort of thing that happens at the Top. The rulers, they just, oh, they think they're so great. They are gods with no equal and whatever they've conquered, that's the world. And there's nothing else that could possibly exist in the world that's the top. And Assyria rode that crest for for quite some time.  

[00:05:14.550]

They actually remained at the top for, you know, really a couple hundred years, which is not unusual for dominant superpowers to last even a couple of centuries. But little by little, the cracks started emerging. They started losing territory. They had internal rebellion. Egypt, Babylon.  

[00:05:30.560]

It was a big deal when they lost Babylon. Smaller kingdoms started to form. These these loose alliances and standing together against Assyrian expansion and directly challenging the empire. And it was obvious that, you know, once Syria had been able to bend the world to its will and go around the region and say, you will do what I say. But now it had to ask, it had to plead, it had to negotiate with all these smaller powers.  

[00:05:53.080]

It didn't have the power and the authority that it once did to bend everybody, bring everybody to heal and bend the world to its will. And now, by the mid 600, 200 years or so after the party to end all parties, the Assyrian Empire was in full blown decline again. They had sort of ridden at the top, they'd had their ups and downs, but still were the dominant power. But at that point, by 200 years later, in the mid 600, they were in full blown decline. We could do a whole other podcast about that.  

[00:06:21.870]

But they had just the normal things, the weak leadership, the incompetence, the corruption, the bureaucracy, the inability to have a peaceful transition of power, the assassinations and the court intrigue and the suffering, humiliating defeat after humiliating defeat. And as well, there was a rising power, a rising power from the east. There was a people known of the as the Medeans, and the Medeaans were growing quickly and becoming their own empire. And eventually this Medean king, his name is Siaxares, who allied with the Babylonians and just literally wiped Assyria off the map in 609 BC. They just ceased to exist anymore.  

[00:06:59.850]

Poof. No more Assyrian. Syria is no longer the dominant superpower and is actually very quickly after that, that this guy, Cyrus, very famous historical figure, Cyrus the Great, who led the Achaemenid Empire, the Persian Empire, it's often referred to to completely dominate the region. Cyrus the Great of the Achaemenid Persians, came in and he defeated the Medeans, he defeated the Babylonians, the Achaemenids took Egypt, they took India, and the Persian Empire became the dominant superpower in the region in what they consider at least the known world. And they too refer to themselves as king of kings and gods among men and all these things.  

[00:07:36.240]

But the Persians themselves also, they rose and they peaked and they declined. We know the story. Xerxes, Darius actually in Xerxes, who famously fought and lost against the Greeks and ultimately got themselves wiped out by Alexander the Great. Poof. No more Achaemenid empire.  

[00:07:55.100]

This is the thing that happens over and over again throughout history. We see the same story, very familiar story. You've got a declining power and a rising power, and they sort of meet in the middle and they have a changing of the guard, and there's a reshuffling of the regional order, the world order, the power of of things. And this happens quite often as a consequence of war. And we've seen this again over and over again.  

[00:08:17.150]

There was a time where Carthage was the dominant power in the Western Mediterranean. We had did a podcast about that with the rise of Carthage, and Carthage was this dominant power in the Western Mediterranean, but they went to war against at the time, this sort of up and coming power named Rome. Rome was still a republic at the time, and Rome and Carthage went to war with each other. The Punic wars. Rome won, Carthage lost.  

[00:08:39.660]

Guess what? Rome's now the power. Carthage is no longer the power, and it was a consequence of war. Carthage out Rome in so many other examples of this, the 30 Years War, in the 16 hundreds in Europe, spain was the dominant power. France was the rising power.  

[00:08:52.730]

Spain was in decline. France was on the rise. The two went to war, spain was out, France was in. This ushered in a new era that made it possible for Louis XIV and all these things that was a result of the 30 Years War is one of the consequences. And what we also see throughout history is that war is a major factor in this.  

[00:09:10.580]

But sometimes the two powers don't even need to be at war with one another. World War II is actually a great example of this. Britain going into World War II was still the dominant power, clearly a power in decline, the US clearly a power on the rise. But US and the UK were on the same side in World War II. But after the war, it was just obvious the US.  

[00:09:30.380]

Was the dominant superpower. The UK was no longer the power. And this makes sense because wars are incredibly expensive. In money and manpower, in morale, public opinion, all these things. Wars are very, very expensive and declining powers have a really hard time footing that bill.  

[00:09:49.450]

Rising powers can handle it, it's expensive. And sometimes they struggle, sometimes they don't struggle at all. Sometimes they just, I mean, it's nothing. If you think to the Spanish American War, the United States waging war, a very aggressive war the United States waged against Spain in 1898. Spain was, spain wasn't the dominant superpower.  

[00:10:06.300]

Spain wasn't a superpower at all. But the US. Was clearly the rising power in 1898. I mean, Spain, spain did not want to go to war with the United States. They said, listen, we had nothing to do with sinking that bow.  

[00:10:17.050]

We don't know anything about it. They had to sell the royal jewels, practically. I mean, they were not in a position where they could afford to go to war. The US just wrote a check deck and beat the pants off of the Spanish in really just a couple of months. I mean, this was a clear showcase to the world that the US.  

[00:10:33.680]

Is an extremely powerful nation. And that leads us to today. Today is the 24 February. This is the one year anniversary of it's kind of bizarre to think about the anniversary of a war, but this has been a year now since the war in Ukraine started, and I think hopefully a lot of people probably agree that the start off is this completely idiotic, immoral, misguided, pointless invasion by Russia. But we're here to talk about the big picture, and this isn't about justice or righteousness or morality.  

[00:11:08.940]

I think it's again pretty clear that invading another country is not okay. But this isn't even about if you look at the really big picture, it's not about Russia or Ukraine or even Russian United States. It's really about the US. Versus China, because what has started off again is this pointless invasion sort of turned into this battle of who is the dominant superpower, because we're focusing on the big picture, and it's obvious in this scenario, we've got a rising power, a declining power, and a war. These are the ingredients that we've seen over and over again throughout history.  

[00:11:41.140]

So if we step back and look at that big picture, we can see well, in one corner, we have the United States, which has suffered humiliation after humiliation. You got a guy that shakes hands with thin air, who inspires confidence, and nobody you have the disgraceful embarrassment in Afghanistan from 2021 would say, oh, let's give $100 billion of military equipment to our sworn enemy, the Taliban, while we have people dangling from the landing gear of aircraft as we run away from this plan. It's just what a humiliating, horrible, horrible, shameful embarrassment all the way through today, which is the debt ceiling fiasco that they're desperately the Treasury Department has already said, hey, we're running out of options here. And, you know, they can't get their act together. They can't figure out how could we possibly live with them means, gee, we only we only collect $5 trillion in in tax revenue.  

[00:12:35.100]

How could we possibly manage to get by on a piddly $5 trillion? Never mind that that was an incomprehensible amount of money even just a couple of years ago, but now we can't possibly imagine how do we possibly get by with $5 trillion a year? It's just so completely ridiculous the way these people do business. And the other thing, I think we could also look at it let's call it the America Last Policy. You know, you got this guy who goes to Kiev.  

[00:13:01.730]

He says, we will not leave you, whatever it takes. Whatever it takes mentality. This whatever it takes. Sure, that applies to Ukraine, but it doesn't apply to people that are suffering through one of the worst environmental disasters in the history of the United States in Ohio. You got a guy that can travel to Kiev, but we can't do anything to those people in Ohio.  

[00:13:23.610]

But we can barely say a word about the people in Ohio that are suffering one of the worst community environmental disasters in history. And just to make sure they're very clear, the White House press secretary, the incredibly astute Kareem Jean Pierre, even announced yesterday that the President has absolutely no plans to visit Ohio, just to make sure there's no doubt that he doesn't give a shit about what's happening in his own country. They don't care about the border. They don't care about all this stuff, but hey, whatever it takes in Ukraine, because it seems pretty obvious to them that they know this is about superpower status. You got this guy who goes and shows up and gives this speech, all these speeches, speech in Kiev, speech in Poland, and it might as well have been him jumping him down, waving his hands, saying, we're still the dominant superpower.  

[00:14:13.130]

That's basically the message that he's trying to send. We're still the dominant superpower, according to me. According to the guy that shakes hands with thin air. We're still the dominant superpower. Meanwhile, in the other corner, you've got China.  

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China is, I think, pretty clearly a rising power. It has risen so much, they are supremely confident in themselves to be able to do whatever the hell they want. They don't care. Oh, the US has imposed sanctions. We don't give a shit.  

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We'll do whatever we want. We're not you're not the boss of us. We're not going to follow your your protocols, your rules, your policies. And just imagine your Chinese leadership and you kind of look back and you realize, you know, wow, we brought the world's dominant superpower to its knees over a virus. Widespread economic damage that happened in a lot of places.  

[00:15:02.040]

But when you think about some of the other consequences, it would say, like, wow, we caused you to completely vanquish an entire generation of young people who fell behind in their education, to cause people to be at each other's throats, screaming at each other over masks and vaccines and all these sorts of things because of a virus. The amount of chaos that was injected because this virus and they're sitting back like this going, oh my God, I can't believe that this is how these people react to this. You've also hacked your way across countless government and corporate networks with absolute impunity, no consequences whatsoever, showcasing some of those despicable incompetence. It was actually just a couple of days ago. The Defense Department acknowledged this week that they had an email server that wasn't even password protected that has been leaking terabytes of sensitive emails just out to the Internet.  

[00:15:50.420]

And you're the Chinese look at this, going, are you kidding me? How stupid are these people? Then you had all the other examples, the solar winds hack in 2020 and all there's so many different examples of this. And then you've got all these other things. You're spies who have slept their way to the top of the political elite in the United States.  

[00:16:08.410]

You got these female spies that are going around literally just having sex with high ranking politicians in California and whatever, and just stealing all sorts of secrets, and nothing happens. Nobody's held accountable nobody loses a job over this. Then you think about from the Chinese leadership perspective, you own a whole generation of young people who have become clinically addicted to TikTok, which might as well be published by the Chinese government. You had all these executives who can't even they hauled in front of US. Congress and can't even pledge, oh, no, we're not going to give any information to Chinese government.  

[00:16:47.570]

Of course they're going to give all this information to the Chinese government. The TikTok algorithms have figured everybody out. They know how you think. They know how you feel. They know what you want.  

[00:16:55.420]

They know what you want before you know what you want. And they're able to I mean, this is full blown psychological warfare, hardcore psychological warfare in terms of how they're able to get in the heads of young people and the things they're able to make people do and make people think and make people feel depressed and anxious and nervous and so forth. They have totally weaponized social media, and they're in complete control of it. They're also in the president's head, they've got this guy so paranoid that he scrambles fighter jets and launches $500,000 missiles every time there's a balloon in the air. And they go out and they say, look at these people.  

[00:17:28.910]

The US. Is hysterical and absurd and all these sorts of things, and they make this guy feel desperate to reassert his dominance, which is how we ended up with this Ukraine visit. The phony theatrics he puts on his aviator sunglasses and goes walking through Kiev, and all of a sudden, the fake air raid sirens go off. And the whole thing is so staged and so theatrical that even CNN called bullshit. Even CNN.  

[00:17:53.630]

The guy was like, I've been here for days. There hasn't been a rocket attack. There hasn't been so much as a gunshot. There's no air raid sirens. All of a sudden, Biden shows up and the air raid sirens go off, and it's kind of convenient.  

[00:18:04.000]

And of course, he's walking tall and isn't he's not afraid of the air raid sirens? I mean, it's just such bullshit. If it was actually real and the air raid sirens went off and they actually thought there was an imminent rocket attack, I mean, everybody knows the Secret Service would have been all over that guy in a second, and they would have taken him away to some undisclosed bunker somewhere. But instead, the air sirens going off, and nobody does anything about it because everybody knows that it's fake. It's just fake.  

[00:18:33.340]

It's this stage theatrical nonsense to make this guy look like he's still a strong leader. Nobody believes it. Everybody knows it's insulting that people like, they really think that we're that stupid, that we can't figure it out. It's really offensive that they think that we're that stupid. So where does all this go?  

[00:18:51.610]

You got the US. On one side, you got China on the other. You got a declining power and a rising power, and you've got a war. Where does this go? Who knows?  

[00:19:00.890]

It's impossible to make a prediction of that. These guys are when that guy win? I mean, who knows? That's not really the point. The point is that you got the Chinese saying they're working on a peace plan and all this sort of stuff.  

[00:19:12.350]

But the larger point is that this is very costly. Obviously, it's extremely costly for Ukraine. It's very costly for Russia. You can see a lot of the reports about morale of Russian troops and so forth. I mean, just really horrible for everybody.  

[00:19:28.630]

It's very expensive for Europe. It's extremely expensive for the United States. The United States, by the way, has given way more aid, military aid, financial aid, than anybody, including all these European nations. I mean, you look at the military aid the United States has given to Ukraine. I mean, it's multiples and multiples.  

[00:19:44.470]

It's like ten times more than what Germany and France have given. I mean, it's a joke. So it's very costly for the US. But this is not even a blip for the Chinese. It barely registers.  

[00:19:57.560]

They've barely had to lift a finger. They barely had to put a penny into this. And so based on that, if you just look at sort of cost benefit, there's a very good chance that the Chinese come out of this again. Rising power, declining power, very expensive war, very costly war in the Chinese. They might even come out and be the peacemakers.  

[00:20:16.390]

They actually have the ability to convince the Russians. I mean, Putin gave this speech the other day, and he said, we will never lose on the battlefield. He didn't say that. There's no end to this war. The Chinese could quite possibly say, hey, man, just stop.  

[00:20:31.630]

Let's figure it out. Have a peace, whatever. The Chinese come out of this looking like they're the peacemakers, or at least they put a peace plan on the table and dare the US. To say, okay, we've got the Russians willing to do a deal, willing to end this whole thing. Let's see what you're willing to do.  

[00:20:46.740]

And make the US. Look like the idiots, make the US. Look like the aggressors. I mean, there's a lot of permutations here and it's silly to sort of say this is what's going to happen, but at a minimum, you could probably imagine there's a good chance, there's no guarantee of anything, but there's a good chance that the Chinese come out of this possibly looking like the Peacemakers, clearly looking like a very dominant power. At a minimum, a power that can't be ignored, a power that has the power to create peace after a year of war.  

[00:21:13.720]

The US. Couldn't make a peace. All these other the Europeans couldn't make a peace. Who could make a peace? The Chinese.  

[00:21:19.350]

That's a real possibility. And that the Chinese come out of this looking like a major power, more so than they even are now, and really signals the end of an era where the US. Is just able to do whatever it wants, to whomever it wants, whenever it wants, however it wants. Those days are over, and it ushers in a new era where there's at least a multilateral influence. China has major influence, even veto power over the United States.  

[00:21:47.330]

Now, I've got to pause and say, every time I talk about China, there's always somebody friends of mine who give me the yeah, but, yeah, okay, yeah, but China's got this problem, and that problem. China isn't perfect. China has plenty of its own problems. Yeah, of course China has plenty of its own problems. People go, yeah, but China has lots of debt, and China has this, China has that.  

[00:22:06.170]

Yeah, I got it. The Roman Republic, when it was a rising power, had lots of problems. The Ottoman Empire, when it was rising, had a lot of problems. France, when it was rising, had a lot of problems. The British Empire had a lot of problems as they were rising.  

[00:22:19.700]

There's no place in history that's ever been, we're perfect. We have zero problems whatsoever. That's not a requirement. Being perfect is not a requirement for a nation or an empire to be on its way to being the dominant power, or at least being a major power or major superpower. That is not a requirement.  

[00:22:39.490]

I think with respect to China, if I'm honest, sure, they've got a big debt problem, their shadow financial system, all these things. I think a lot of those are are workable. The one that I used to think was just not workable was their demographic problem. I mean, there's just decades of the idiotic one child policy. Now they got too many old people, not enough young people.  

[00:23:02.240]

That is cancerous for a society. It turns everything upside down. You go, It's really hard to work your way out of that one, because you can't just create new people to fill that gap. But then you think about it, well, who are we dealing with here? We're dealing with the Chinese.  

[00:23:17.990]

There's actually nothing that says the Chinese can't create new people. Maybe they go out and just start cloning people. You have this whole sort of Star Wars clone army of Chinese people just to sort of fill in that demographic period. I mean, I'm just throwing it out there. Just think about who you're dealing with.  

[00:23:33.780]

All options are on the table here. But again, I'm not suggesting that even China becomes the superpower, the sole superpower, and everybody else shrinks to it. I think there's a lot of possibilities here. We did a whole podcast, actually, about something I call this Barbarian Kingdom Thesis. After the fall of Rome, there was a power vacuum.  

[00:23:51.310]

There was no dominant superpower. You had all these barbarian kingdoms, and you had Byzantium in the east, and so all these people that sort of shared power. There's nothing that says you have to have a single dominant superpower. What I am suggesting is that throughout history, there's always been instances where you have a declining power and a rising power, and quite often war is the signal that this rising power has to be taken very seriously and gets a seat at the table. Those are all the ingredients that we see right now.  

[00:24:20.150]

And the reason this matters, this is stuff that PhDs at the State Department write papers that get published in Foreign Affairs. That's not what we're talking about. I'm talking about this from the financial consequences, from the economic consequences. Because if the US. Loses its status as the superpower, which it has been for so long, really so long as the sole dominant superpower, the economic and financial implications are vast simply because if you lose your sole superpower status, the primacy of the US.  

[00:24:52.580]

Dollar cannot be far behind. This is a really big deal. The US. Dollar, and I've written about this before, I've talked about this before. The US dollar is known as the reserve currency.  

[00:25:03.570]

It's not the only, but the primary reserve currency in the world. What is the reserve currency? It's the currency of international trade. It's the lingua franca of economics that around the world. In the same way that if you got a company in Nicaragua and a company in Botswana and they do business with each other, they're going to settle that deal in US dollars.  

[00:25:24.200]

It's the reason why the price of gold traded in London is in US dollars. Oil in Saudi Arabia is priced and sold in US dollars. All these things, coffee contracts in Latin America, all these things. Rice contracts in Asia, all these things. There's so many of these contracts around the world, finance around the world.  

[00:25:43.390]

I mean, that gets traded, settled, closed in US dollars. Sovereign governments hold US dollars. Central banks hold US dollars. Commercial banks in Singapore and Australia and large corporations, they hold US dollars. Sometimes it's ridiculous, actually, the impact of this, a great example and one that's actually been pointed out by the French government, french Finance minister a couple of years back.  

[00:26:10.380]

You look at Airbus, right, which is a European aircraft manufacturer that sells planes to Air France. So you got a European manufacturer, European airline, and they price that deal in US dollars. Nothing about that deal takes place in the United States. Nothing has anything to do with the United States. But you got two European companies doing a deal in US dollars.  

[00:26:29.760]

So it gets actually, the concept of the reserve currency gets borderline ridiculous. There's this this concept has been around for a long time. Reserve currency has been around for a long time. You can go back to the ancient world. You know, the the Greek drachma, right?  

[00:26:43.380]

The currency in ancient Greece, coins that they had, I mean, they traded extensively around the region. And when you think about. It, it made sense. You've got some smaller kingdom somewhere. And they do business with the Greeks and another smaller, smaller kingdom, a does business with the Greek smaller kingdom.  

[00:26:59.260]

B does business with the Greeks, and A and B, then both they accept drachma because they do so much business with the Greeks. And the Greeks have this very large economy. And so they say, yeah, sure, we'll take your coin. We like your coin. And then you look at these A and B.  

[00:27:12.010]

They do business with each other. They do trade with each other. They say, well, you have drachma. I have drachma? So let's just trade our goods and settle in drachma.  

[00:27:20.000]

And this is the way things went for a very, very long time. The Byzantine Empire had this coin called the Solidus. And this Solidus became a major reserve currency around the world. Again, you had all these smaller kingdoms that were doing business with the Byzantine Empire. They were accepting and trading in gold solidus coins.  

[00:27:37.740]

And so they went. So all these other smaller kingdoms just started doing business with each other in solidus coins. But these things change in the same way that dominant superpowers change throughout history. They always have these reserve currencies change. And so why do they change?  

[00:27:54.380]

Well, when you think about it, throughout history with these reserve currencies in general, there's no formal rule. Nobody gotten together in a room and said, we're all going to decide to use the Byzantine Gold Solidus or the Greek Drachma or whatever as our coin. It just sort of happened organically. Again, people realize, well, hey, I'm sitting on a bunch of these solidi and you're sitting on a bunch of solidi. So let's get together and just trade our Solidi.  

[00:28:21.080]

Even though none of this has anything to do. Neither one of us is in the Byzantine Empire. We're not trading in the Byzantine Empire. Well, we'll just trade this coin because both of us have it right. It happens organically over time, and it follows logically that it would be the currency of the dominant superpower because they have the largest economy.  

[00:28:38.590]

Everybody has a lot of trust and confidence, and usually it means that the coin has good value. They're not playing funny games of the coins, but over time, the coin loses its stability. This happened with the Byzantine Empire. They started in the early 11th century. They started chipping away and debasing the coins and so forth.  

[00:29:00.670]

And so people get sick of that. It's a thing with the dominant power. The dominant powers always think that their position will last forever. There's always a level of arrogance. The dominant power say, you know what?  

[00:29:12.690]

We're the dominant superpower. We can do whatever the hell we want. We can debase our coins, we can inflate. And people will still accept our coins because we're the big boss in the region. Everybody's going to do what we say.  

[00:29:25.430]

And they think that that status is going to last forever, but eventually people get sick of it. And that's what happened in the case of Byzantium, is that all of a sudden their coins had been inflated and inflated and inflated, and people said, you know what? I'm tired of this. And wouldn't you know it, venice had come along and said, well, we have a coin. Florence had come along and said, we have a coin.  

[00:29:43.270]

And suddenly you start seeing trade in Venetian duckets and Florentine, Florence, and eventually Dutch gilders and Spanish pieces of eight, the real deoco, and eventually the British pound. The rise and fall of reserve currencies often coincides with the rise and fall of the dominant power. The reserve currency is often tied to the strength of the dominant power, and it changes when there's that reshuffling, that reordering of power, often not right away, right? I mean, the Byzantine Empire was by the 11th century, 12th century, 13th century was an obvious decline, but people were still using Byzantine coins until the Venetians and the Florentine said, okay, we're going to introduce our new coin. So it's not right away, right?  

[00:30:25.560]

History shows that there's sometimes a lag between when the reserve currency changes and the power changes. But both of these things happen. It's inevitable. It's there's never been a case where there's been some dominant superpower and some reserve currency that's lasted forever. Now, world War Two is an interesting example.  

[00:30:42.250]

World War Two people actually did get together in a room in 1944. They actually got together in a room at the Mount Washington Hotel in Bretton Woods, New Hampshire, and they signed an agreement that's known as the Bretton Woods Agreement in 1944 that basically made the US. Dollar the center of the financial universe. They said, everything is going to be pegged. There's going to be this fixed exchange rate between, you know, whatever the British pound in the US.  

[00:31:04.630]

Dollar. The Swiss franc in the US. Dollar, the French franc and the US. Dollar. Every currency is going to be is going to have a fixed rate to the US.  

[00:31:11.240]

Dollar, and the US. Dollar is going to be fixed to gold. So at any given time, the US. Dollar is going to be fully redeemable to gold. If you have dollars, you can exchange it for gold and vice versa.  

[00:31:20.790]

And because of that, there's a lot of trust and confidence in the dollar. There's a lot of trust and confidence in the United States because, like we said, after World War II, it was obvious the US. Was the dominant power. They're the only clear the dominant power, largest economy in the world, largest military in the world, the only country left standing, hadn't been completely decimated from World War II, the only nuclear power in the world. If they hadn't dropped the bomb yet in 1944.  

[00:31:42.770]

But they had. I mean, this was it was natural that the reserve currency went to the dominant sewer power. That was the US. And so it was the US. Dollar and it's been that way for decades.  

[00:31:53.750]

The thing about the reserve currency is that it provides and has provided, continues to provide the US. With an unparalleled financial advantage. The whole point is that, remember, the idea is that everybody's got to hold US. Dollars. Foreign governments, foreign institutions, foreign central banks, big corporations, commercial banks, they've all got to hold US.  

[00:32:12.940]

Dollars. And in order to hold US. Dollars they need some sort of liquid asset. Liquid US. Dollar asset.  

[00:32:19.790]

Right. We're talking about they need a way to hold dollars. Now as an individual, if you could say like, well, I've got €100,000 and I want to hold dollars, you just open a US. Dollar account at a bank and fine, they'll hold your dollars for you at a bank. But we're not talking about individuals with 100,000 or a million.  

[00:32:37.120]

We're talking about institutions with hundreds of billions of dollars. Central banks, governments, huge commercial banks, huge corporations. They're not going to put that money in a bank account. And even if they do, well, what is the bank going to do with that money? The bank's got to find some asset, us.  

[00:32:53.480]

Dollar asset to park that money. Right. So what do you do? Well, I guess, you know, you could buy apartment buildings in the US. You could buy whatever industrial warehouses and land, et cetera, beachfront property in Florida.  

[00:33:07.750]

But real estate is very illiquid. What do you do when you actually need that money for something? You got to go and sell the property. Real estate is very illiquid. It's expensive to sell.  

[00:33:16.670]

What else do you do? You put it in the stock market. Well stocks are extremely volatile. You need a way to hold that money. You hold those dollars that's really stable.  

[00:33:25.450]

Right. That you can get in and out of very quickly. That's stable. You can't put it in a collective. You're going to buy baseball cards.  

[00:33:33.900]

You're going to say, oh, we got all we're going to buy all these Mickey Mantle cards, right? Well that's a really small market. That's a really, really small market. You can't put hundreds of billions of dollars, trillions of dollars into the baseball card market. So you need an asset that's stable, that's risk free, that's not volatile, that's highly liquid and really big.  

[00:33:51.550]

So big that you can deploy trillions of dollars quickly and efficiently at very minimal cost. So what market is there? What asset is there? Government bonds. U.  

[00:34:01.180]

1. Government bonds. It's a huge market. How big? 31 and a half trillion dollars as of this morning, which is right at the debt ceiling.

 

[00:34:09.330]

Literally. The market for us. Government bonds is the size of the US. National debt. U.  

[00:34:14.450]

1. Government bonds are considered risk free. It's considered the ultimate risk free asset because it's backed by the dominant superpower in the world. They're generally stable. They're extremely liquid.

 

[00:34:25.580]

No one in the last several decades has ever been sitting on a bunch of ten year treasuries going, how am I going to get rid of these Treasuries, right? I mean, it's, it's one of the most liquid assets in the world. You can sell it in a heartbeat, pretty much in any major financial exchange anywhere in the world. So it's liquid, it's huge. It's risk free, it's stable.  

[00:34:44.080]

I'm doing risk free and error quotes, by the way. Risk free and stable. And so this is the asset that all these institutions around the world tend to hold. They hold us. Dollar, US government debt because it's a US dollar, liquid, safe, stable, non volatile asset.  

[00:35:01.000]

So again, think about it. You got all these foreign governments, all these foreigners, all these banks, all these central banks, all these big companies overseas. They literally have to own US. Dollars. If they want to participate in global trade, they have to own US.  

[00:35:15.270]

Dollars. And the only way for them to really own it is by having debt, buying US. Government debt. And that basically gives the US. Government this captive group of hostages.  

[00:35:28.160]

Really, the people that have to buy its debt, they have no option. They have to buy us. Government debt because it's the only solution they have if they want to participate in global trade and commerce. That's the advantage. The US.  

[00:35:41.780]

Is able to do the most ridiculous things. They can run multi trillion dollar deficits. They can go ten years with 0% interest rates. They can go forever with bond yields that are way below the rate of inflation. They can have complete and total government dysfunction.  

[00:35:57.560]

They can have a record high trade deficit. They can have this absurd debt ceiling, government shutdown, Mexican standoff. They can have inflation at multi decade highs, and foreigners will still buy US. Debt because they have to. They have to.  

[00:36:14.890]

They have no other choice. The US. Is still their major trading partner. I mean, everybody grumbles about it. People are like, this is ridiculous.  

[00:36:21.710]

Why would anybody do this? Well, because they have to. They said, well, we still trade with the US. Everybody else still trades with the US. And so they have a reasonable expectation that not only do they have to hold dollars, but everybody else has to hold dollars.  

[00:36:35.230]

And as long as everybody has to do it, then shit, I guess we'll just keep doing it. We still have to buy oil in US. Dollars, all these things. And so they have to do it. They just keep doing it because they have to, because they don't have another choice.  

[00:36:49.370]

But that is starting to change. The Chinese have been extremely active in campaigning for an alternative. They've been very, very active in setting up their internal currency, the renminbi, or the yuan, for internationalization. This is actually called the internationalization of the renminbi. Big institutions track this very closely, and you can see this.  

[00:37:13.130]

It's so obvious. In 2021, they did this huge deal with iran, where they said, we'll invest a bunch of money in Iran, which Iran has one of the largest oil reserves in the world after Venezuela. And this resulted in a lot of Iranian and Chinese trade directly trading with each other in renminbi, in China's currency. Not in US dollars, but in China's currency. Iran can't even get US dollars because they're under sanction from the US.  

[00:37:38.370]

Treasury Department, from the United States government. So they can't even get ahold of US dollars. So of course they have to trade with the Chinese in renminbi. China was recently in Saudi Arabia pushing for the Saudis to sell oil in renminbi. Saudi Arabia was like, yeah, that actually sounds like a good idea.  

[00:37:52.890]

That helps us diversify a little bit. I mean, you cannot overstate the impact of this, in particular, this oil issue, because oil is the most widely traded commodity in the world. Everybody in the world needs oil. Oil is energy. Everybody needs energy.  

[00:38:08.040]

So the fact that oil virtually everywhere has been priced and traded in US dollars is one of the single biggest things that pushes people to continue to hold US dollars. If you want oil and you don't have a choice, you need oil, which means you need US dollars. You're buying oil from Saudi. Guess what? Saudi requires us.  

[00:38:29.560]

Dollars. So if you want to buy oil from Saudi Arabia, you got to pay in US dollars. You want to buy oil from all these other countries, you got to pay in US dollars, which means you have to have US dollars, which means you have to buy this shitty US government debt in order to have US dollars. It's so weird when you really sort of sit back and understand it. It's so weird.  

[00:38:49.050]

And so the impact of this, if all of a sudden Saudi Arabia and Iran, all these people are able to start doing business and say, well actually I'll accept renminbi, sudden people go, wow, I can actually pay you in another currency. I don't have to hold as many dollars as it used to. It's not to say we'll go from owning a bunch of dollars to owning $0, but suddenly say, oh well, I guess I'll, you know, know, I do a lot of trade with China as well, so why wouldn't I have renminbi? And if I could take that renminbi and I can trade that, china can pay me in renminbi for the trade, and then I can take my renminbi and I can buy oil with it, and Saudi Arabia will accept that renminbi, then sure, I'll do that. I don't have to do everything in US dollars now.  

[00:39:28.600]

I can diversify a little bit, right? What a concept. And so we started to see this, and honestly, I mean, this is already happening. Global trade and renminbi has been rising. Swift, which is the Society for Worldwide Interbank Financial Telecommunications.  

[00:39:44.250]

This is basically the international banking boss that tracks all of the international bank transfers around the world. They report significant increases in renminbi, denominated A transactions. The Chinese financial system has been making obvious advances, technological advances, to make it easier to handle these foreign inflows and outflows of capital. And so this is where we are right now. If you step back and look at the big picture again, us.  

[00:40:09.720]

Power is waning. That is clearly on display worldwide. That is not a controversial statement. I don't take pleasure in saying that. But it's obvious.  

[00:40:16.900]

You've got China. That's clearly in ascendance, right? Those two things are pretty obvious. And you've got war. Those ingredients rising power.  

[00:40:24.630]

Declining power and war have often signaled a change in the guard, a reshuffling of world power. There's a lot of different permutations about how that might play out. But it's possible that this war may end up being that reshuffling, that China now has a clear and obvious seat at the table, and that generally, if you look to history, tends to coincide with a reshuffling of the reserve currency. This is the thing when we're starting to see a lot of these signs, it's already happening. Chipping away at the US.  

[00:40:54.290]

Dollars dominance, this selling oil and renminbi all these things. That's a really, really big deal. And so when you have that, it's not to say that the dollar, again just is no longer the reserve currency. Nobody deals with the US. Dollars.  

[00:41:08.700]

No. That's crazy. But what happens is you start chipping away at that market share. You have fewer and fewer foreigners. You don't have those captive hostages anymore that have to buy your bonds.  

[00:41:19.430]

Right? Now, instead of having the market share that you have, you have less demand overseas. And so because of that, you have less demand for dollars. The US. Starts to lose that really important financial advantage.  

[00:41:34.030]

One of the implications of this is inflation, right? In the past. The US. Could just print as much money as it wanted, and that money always able to find a home. UX had print money, and they basically ship that money overseas to all their foreign hostages, all their financial hostages who had to buy US.  

[00:41:52.120]

Dollars. Right? They had to hold us. Dollars, print all this money. So they get all the benefit of printing money, right?  

[00:41:58.150]

They get to jump start the economy, and they get to boost economic growth, and the stock market goes through the roof. But they didn't have any of the consequences. They didn't have any of the inflation that came from that other countries. If Costa Rica goes and prints a lot of money, costa Rica is going to have a ton of inflation. Costa Rica doesn't get to take all of its currency and shift all that stuff overseas.  

[00:42:20.640]

Right? But the US. Government, they get to print all this money. They get to have the benefit of, like, oh, look, the stock market is having a bonanza. The economy is having a bonanza.  

[00:42:27.940]

But they haven't had the inflation for years. 20, 15, 20, 16, 20, 17. I mean, everything was going so well. They're printing so much money, but they got to export all those dollars overseas. Well, suddenly they won't be able to do that.  

[00:42:40.210]

Suddenly those dollars will actually come home. You don't have the same number of foreigners buying the same amount of dollars anymore, and so you can't get away with printing all that money and expecting there will never be any consequences. Of course, now there's going to be consequences. It's not going to be any different than if New Zealand prints a ton of money, because New Zealand doesn't have the luxury of being able to ship all of its New Zealand dollars to a bunch of hostages overseas. Another major example, major implication, is a loss of sovereignty.  

[00:43:10.030]

And this is a real thing. And we saw this very recently in the United Kingdom. You might remember this. A couple of months ago, he had a brand new Prime Minister, the Prime Minister and Finance Minister, they come out, the Chancellor, and they say, here's what we're going to do, here's our economic plan, here's our financial plan. We want to do this, we want to do this, we want to cut these programs, we're going to cut these taxes, we're going to blah, blah blah.  

[00:43:30.510]

And the bond market just had a fit. The bond market went berserk and they said, no, we don't like this. You can't cut taxes when your debt is rising and blah, blah, blah. You can't do those things. The bond market, all these investors started dumping British government bonds called gilts.  

[00:43:48.180]

They started dumping gilts, they started dumping the British pound, started dumping the currency. The British pound went into freefall, right? And so the Chancellor, the Prime Minister had to resign. And they totally backed down from their plan and said, okay, just kidding. All that stuff we said literally a couple of weeks ago, we're not going to do that anymore.  

[00:44:05.460]

They had to capitulate to the bond market. They had to capitulate. Suddenly the UK found itself at the mercy of bond vigilantes, of investors who said, we're not going to go along with that plan. This wasn't some tiny country that we're not talking about Costa Rica or even New Zealand. The UK is one of the largest economies in the world, even to this day.  

[00:44:26.070]

And yet the bond market was able to squash the head of government of one of the largest economies in the world, force her resignation, force them to back off of this plant. So you talk about this is a loss of sovereignty. Suddenly you don't have the ability to do the things you want to do. Suddenly you've got to actually do what the market wants and not what you want. So the US government does not have the ability to say, okay, we're just going to print all this money and we can ship all the dollars overseas.  

[00:44:53.880]

And we won't have inflation, and we can run all these crazy, outrageous deficits, and we can do all these things, and there will never be any consequences. No, those days are over. Suddenly you're at the mercy of the bond market, you're at the mercy of the forces of inflation, all these things just like every other country has to deal with. If you've ever read the book The Sun Also Rises, there's a great quote. Hemingway writes one of the characters and says, how did you go bankrupt?  

[00:45:17.810]

And the answer is, gradually. Then suddenly that's kind of the way to look at this. This is not something that will happen overnight until it does. And a great example of that is Richard Nixon took the US dollar off the gold standard. He sort of just walked away from the Bretton Woods system in 1971, and in a televised address, he told the American people, he said, oh, this is all very technical.  

[00:45:38.980]

You're too stupid to understand. This is all very technical. And he promised everybody. He said, you're going to wake up tomorrow and everything's going to be the same. Nothing's going to change.  

[00:45:45.620]

And he was right. The next day, nothing changed. Actually, the stock market went through the roof, had the single biggest gain that had ever, I think, up to that point in financial history had ever seen. And in the short term, nothing really changed. Not like prices went through the roof the next day.  

[00:46:02.770]

But if you fast forward a couple of years, gradually they started getting more and more and more inflation until they started having these events like the oil embargo and so forth. And then things just got horrible, right? It was gradual then, very sudden. And that's the way that this could really go down. In terms of the Renminbi internationalization, it's something that's gradual.  

[00:46:25.780]

It's been gradual. We've been seeing a lot of these things, and we probably continue to see a lot of these things. Some of the canaries in the coal mine, large corporations that start trading with each other in Renminbi, foreign governments issuing bonds in Renminbi, foreign governments and central banks increasing Renminbi reserves, all those things have actually already been happening. I think one of the other things that we might see is people start talking about openly, you know what? We should create a new financial system.  

[00:46:53.750]

Let's get together. Let's have a summit. Let's have a new Bretton Woods conference. When you start seeing people talking very, very seriously about that, when you start hearing the Germans and the British and the Chinese and India and so forth, and people start talking about this, let's really get together and have a conference and hash this out and see what it looks like, that's the sudden part, right? Everything else is gradual.  

[00:47:15.680]

The gradual introduction of the Renminbi, the gradual internationalization of the Renminbi. That's the gradual part. The sudden part would be this game changing international conference that they get together and have a certain new Bretton Woods system. They say, well, we're going to hash this out, and here's what it looks like. Again, there's so many different permutations of how this could play out, and it's possible that there will be no conference ever.  

[00:47:37.700]

There's so many different ways. It's impossible to predict. The whole process could take a year, it could take a decade. It's impossible to predict. But what's obvious is that the Chinese are not stupid, and they understand very well the incredible advantage of having reserve status for their currency, even in a limited capacity.  

[00:47:56.290]

Even being one of the reserve currency of the world, they understand how important that is. And I'm not sure the United States, the people in charge in the United States, whether they be at the Central Bank or in the Treasury Department or in the White House, fully grasp that the US dollar's dominance is in doubt. It is not something that lasts forever. There is no guarantee. All these dominant superpowers throughout history have always assumed that their power will last, that the reserve status of their currency will last forever, because they're the dominant superpower.  

[00:48:28.830]

And they're blinded by that arrogance. They don't see that, you know, this is actually, this can come to an end. And in many respects, the things that we do, the inflation and the debts and the deficits, you're driving it to the end. You're causing people to lose confidence. You're begging people to go find an alternative.  

[00:48:46.480]

And I don't think they get that. I just don't think they get that, because if they got it, they would be doing things differently. If they understood how precious this privilege is, how important it is, you would think that they would do everything they could to safeguard it, but they're doing the opposite. They're doing everything they can to destroy it. It's completely nonsensical.  

[00:49:06.690]

It's borderline crazy, clinically insane, but it is what it is. And if you go back to we actually talked about this last week, the writings of Marcus Aurelius, the stoic philosopher and slash emperor of Rome, don't stress out about the things that you cannot control, and neither you nor I can control any of this. There's a handful of people in the world who have any say. Joe Biden, Z, Z, Zelensky, Putin, handful of central bankers, handful of chancellors and finance ministers. That's who is in control of this.  

[00:49:35.210]

Nobody else is in control of this. The other part about this is that even those guys aren't in control of these forces of decline, the natural cycle, the rise and fall of empire, the four I call it the forces of history, this natural cycle and rise and fall of empire, these are sort of things it this it's inevitable. This has always happened throughout history with 100% certainty. Superpowers rise and fall. Reserve currencies rise and fall.  

[00:50:00.030]

They are displaced. They come and go. This is 100% certain throughout history. So it's not worth stressing about. Instead, it's a lot more beneficial.  

[00:50:09.910]

As Marcus Aurelius wrote, focus on the things that you can control, and you can easily take steps to really reduce the impact that this has in your life. First, I think most importantly is to understand what's happening right. There's no way to predict how this is going to play out. The Internet is full of guys, including, honestly, some good friends of mine who shall remain nameless, talking about they say the dollar is going to collapse, and they jump up and down and wave their hands, say the dollar is going to collapse. And that's quite simplistic and honestly, a little bit silly because I always challenge these guys when we're together, and I'm like, come on, man.  

[00:50:43.060]

What does collapse even mean? What does that mean? The dollar just goes away. It vanishes. They just yank the dollar.  

[00:50:49.160]

It's no longer the currency of the United States. Does it mean hyperinflation? They default. They add a bunch of zeroes to I mean, what exactly does that even mean? To say it's going to collapse is overly simplistic.  

[00:51:02.430]

Again, there are so many permutations. Sure, every possibility is on the table. Will there be hyperinflation possible? Will they yank the dollar and discontinue it as the national currency and create something else possible? I guess.  

[00:51:16.940]

But there's also a pretty good chance the dollar doesn't disappear at all. And it becomes one of several reserve currencies, including the renminbi, including the Euro, including some supranational currencies like the Imfsdrs Special Drawing Rights. There's so many different permutations. And so I think for anybody to think that they've got it figured out, they know what's going to happen. Now, that's nuts because history is a guide, but it's by no stretch of the imagination, a guarantee of this is exactly what's going to happen.  

[00:51:48.370]

The key idea, and again, what history shows us in a lot of these trends is that it is very likely that the dollar loses its dominance, that the US. Can't get away with printing endless amounts of money. The US. Can't get away with multi trillion dollar deficit. They can't get away with just pawning off all these dollars onto a bunch of sucker, hostage, foreigners overseas.  

[00:52:08.530]

They can't do that anymore. And more than that, that a lot of the dollars they've already printed in the past start making their way back home, and that creates implications. You got this flood of dollars now in the US. That creates inflation, creates a loss of sovereignty. Now you're at the mercy of the bond market, et cetera.  

[00:52:22.970]

And again, history has never been wrong about this. The rising power, declining power dynamic is on display. The war is on display. It's not a guarantee, right? But we've seen these ingredients so many times before.  

[00:52:35.320]

It makes sense to really explore and understand this stuff. Marcus Aurelius focus on what you can control. So what can we control? We can control what we do. About it.  

[00:52:44.690]

And number one is don't panic. Don't buy into the end of the world. Is not the end of the world. This is not the end of the world. This is something that's happened over and over again throughout history.  

[00:52:54.730]

And what do we learn from history? A little bit of diversification goes a long way, right? Remember, I'm saying a little bit of diversification. I'm not saying you got to change upend your entire life and do all these things. We're talking about thinking about it in the right way and realizing that over time things are going to change.  

[00:53:12.750]

And so I can't continue to do exactly what I'm doing now and expect the same outcome. That's common sense, right? So one way to view this is not to ask the question and go, okay, fine. If the dollar is going to decline and lose its door staff, what's the right currency to hold? Do we hold renminbi?  

[00:53:30.290]

I'm not actually suggesting that at all. What I would say is it's not even about what's the right currency. Whoever said you had to hold a currency that diversification from the dollar meant holding any currency at all? I think currency is actually a horrible asset. It's a terrible asset.  

[00:53:48.080]

And if you think about it, it's all about incentives. Think about stocks, right? If we own shares of some stock, right? We own shares of Apple. Let's just say we own shares of Apple.  

[00:54:00.590]

Well, who else owns shares of Apple? The CEO. So the CEO has the same incentives as we do. The CEO of Apple wants to see the stock price go up. We want to see the stock price go up.  

[00:54:11.470]

The CEO wants the company to be successful. We want the company to be successful. So we have the same incentives. That makes sense as an investment where you have the shared incentives, shared incentives between the stakeholders and the people that are managing the asset. In a currency, it's completely different.  

[00:54:27.500]

The incentives are not aligned. If you hold a currency, if you're a saver, right? Your incentive is for the currency to maintain value, or at least maintain value, even increase in value. But the people that manage the currency, that's not their incentive at all. The people that manage the currency want, want to devalue the currency, right?  

[00:54:45.310]

They want the currency to lose value. Central bankers, politicians, they want the currency to lose value. Politicians want to lose value because they have so much debt, and it's beneficial for them if the currency loses value. Central bankers explicitly say, we want 2% inflation. Now imagine if Tim Cook, CEO of Apple, or Elon Musk showed up and said, I want my stock to lose 2% every single year, right?  

[00:55:07.330]

Who who wants to own that, right? But that's, that's the deal with currency. When you own currency, when you're holding currency, you are holding an asset where the people who manage that asset are jumping up and down waving their hand saying we want this asset to lose value every single year. It's just the wrong incentive structure. Right?  

[00:55:26.730]

Our incentives and their incentives are not aligned. And so the idea is to think about well, what are assets that oh jeez, might actually hold their value? Where if there's people managing it we have the same incentives or maybe there's not even anybody managing it at all, right? And so that's the point. That's the way to think about it.  

[00:55:44.590]

Don't ask the question what's the right currency? The question is what's the asset? I can hold where the incentives are aligned to where there's actually we don't have to worry about incentive structure. And this is where I think it's worth looking at. Real assets, real assets tend to rank very highly here in contrast to paper assets, financial assets like bonds, a real asset, a lot of people have different definitions of real assets.  

[00:56:09.440]

For me a real asset is something that really conveys scarcity, universally recognized value. It's not something that's controlled or manipulated by a single government. And there are a lot of things that qualify gold and precious metals. This is something again, where there's not even really much of an incentive structure. There's no single person that manages gold, right?  

[00:56:29.530]

In the same way that there's a group of central bankers that manages the US dollar. Nobody's managing gold. Sure there's gold miners and there's refiners and there's people in the industry but nobody's managing gold as an asset class, right? And so that's something that makes it interesting. This is an asset with 5000 years of universally recognized value.  

[00:56:48.480]

There's built in scarcity, et cetera. But it's like that with a lot of things, energy as well. Agriculture, technology I would say actually very specifically productive technology. Not consumer technology, not things that make people scroll and swipe and turn 14 year olds into automatons and zombies, but productive technology. Things that make people better, faster, better at their jobs.  

[00:57:10.500]

All these things, real productive technology. And to me these are all real assets. Productive real estate, et cetera. These are all real assets. Scarce, universally recognized value, quality businesses as well.  

[00:57:24.380]

A lot of people think stocks are paper assets, financial assets. I actually don't agree with that. I think that great businesses managed by talented and honest people, especially those that are in industries and sectors that have to do with real assets, those make a lot of sense. Could be stocks, could be public companies trade on a stock exchange, could be private businesses. I love private businesses.  

[00:57:46.460]

I think private businesses are great as an asset class because you don't have that noise of the stock market. You don't have this constant ticker going up and down. It was basically just noise of other people telling you what they think an asset is worth. I don't care what other people think an asset is worth. I care what I think it's worth.  

[00:58:01.630]

And when you have a private business, all that goes away, right? You don't have that noise. You can just focus on the production of the growth and profitability. I think all these make sense as a way to look at this where you have aligned incentives, or sometimes even no incentives at all. These make a lot of sense.  

[00:58:20.160]

I would also consider this concept of diversification. Clearly, international diversification makes a lot of sense. Most people in the world have to think about international diversification. If you're from a small country, you have to think about international diversification. You can't do everything in your single economy.  

[00:58:36.600]

It just doesn't make sense. It's too small. You've got to look outside of your country. You've got to look outside of your economy. Most people have to think about this.  

[00:58:43.980]

People from the dominant superpower don't. They don't because they haven't had to. But they should start now. I want to close by saying again, this is a way of thinking about the future. I'm not here trying to say in fact, I'm explicitly saying this is not going to happen tomorrow.  

[00:59:03.060]

This is a gradual, then sudden approach. Could take a year, it could take years, could take ten years, who knows? But it certainly seems like we have all the ingredients. We look to history, we see rising powers, declining powers, war. We see all these things.  

[00:59:16.850]

It's happening now. And we see that when that order, that order of power is reshuffled, we see changes in the reserve currency. And that has major implications for the United States because they can't get away with multi trillion dollar deficits and all these just ridiculous things they've been able to get away with financially for so long. And that creates implications like inflation, like a loss of sovereignty. And yet there are ways to plan for it.  

[00:59:41.930]

There's no reason to panic, there's no reason to buy into the dollar is going to collapse or anything like that. But it is important to think about these things rationally and look to real solutions. There is time to plan for this, right? It's a way of thinking about the future and there is time to plan for this. Things are still fine, but it's in a way, it's like 864 BC, you know, everybody's partying celebrating the peak of the Assyrian Empire.  

[01:00:06.730]

Have a great time. Enjoy the party while it lasts, but keep an eye on the exit. Thanks so much for joining me and we'll speak to you again next week.   Close Podcast Transcription

There’s hardly anything that POTUS loves to brag about more than his ‘economic success’. He is, after all, a self-proclaimed “capitalist”.

Even in last week’s State of the Union address, he boldly claimed that he “cut the deficit by more than $1.7 trillion– the largest deficit reduction in American history.” And he’s made that same assertion over and over and over again.

Unfortunately it’s a complete lie. And just yesterday the Treasury Department released financial documents proving it.

Every year the federal government publishes an annual financial report; it’s sort of like what big public company like Apple does. The annual report contains financial statements, plus hundreds of pages of discussion, details, and footnotes.

And yesterday afternoon they released the annual financial report for Fiscal Year 2022, which just ended a few months ago.

It goes without saying that the government’s financial condition is completely atrocious.

Their “net financial position”, which is sort of like the net worth of the federal government, fell to MINUS $34.0 trillion… which is worse than the MINUS $29.9 trillion in FY21.

The projected social security funding deficit also got worse… from $71 trillion to $75.9 trillion.

The real headline to me, though, is the budget deficit lie. The President claims that deficit last fiscal year was $1.4 trillion, and that he (and he alone?) brought it down by $1.7 trillion. But that’s not true at all.

It turns out that the “budget deficit” is actually an inaccurate figure that can easily be manipulated. If you’re a finance or accounting type, you might be surprised to learn that the budget deficit is determined on a ‘cash basis’ and not ‘accrual basis’.

This means that officials can easily accelerate certain revenues and push off certain expenses to massage the data and make the budget deficit appear better than it really is.

Businesses aren’t allowed to do this. Nearly every other organization in the country of any reasonable size has to follow strict accounting rules, booking revenue when it’s earned, and accruing expenses when they’re incurred.

This provides a more honest, transparent, and standardized way of reporting financial results.

So whenever they talk about the ‘budget deficit’, this is really just a manipulated number that doesn’t conform to proper accounting standards.

Naturally this raises an important question: how much would the federal government’s annual budget deficit be if they conformed to those proper accounting standards? i.e. the same ones that every major corporation has to follow?

Well, lucky for us, we don’t have have to guess. Because the government actually publishes that number too.

They call it their “Net Operating Cost”. And it essentially represents the REAL budget deficit.

It turns out that the FY22 Net Operating Cost of the federal government was MINUS $4.1 trillion. And that figure was MUCH worse than FY21’s Net Operating Cost of $3.1 trillion.

So this guy did not, in fact, “cut the deficit”. The real deficit, as determined by Net Operating Cost, INCREASED by a trillion dollars.

There’s so much more in this report, though.

One of the other interesting points, in fact, is that the government actually failed its audit. Again. The Comptroller-General states very plainly that there are numerous “material misstatements” in the government’s financial reporting and internal controls.

There are actually laws that are supposed to prevent this from happening. Twenty years ago Congress passed something called the Sarbannes-Oxley Act, which imposed CRIMINAL penalties for company executives who fail their audits.

If the federal government were held to the same standard as the private sector, dozens of officials should be facing jail time right now. Instead they’ll retire to their generous, fully-funded pensions and receive lavish board seats and prestigious awards. They will never be held accountable.

You, on the other hand, will have to bear the costs of their incompetence, in the form of higher taxes, inflation, reduced Social Security, and other broken promises.

Personally I find it extremely unethical and unjust that the irresponsible, criminally incompetent decisions of politicians and bureaucrats should be paid exclusively by the citizens.

It’s just like all the destructive decisions they made during the pandemic. They will never be held accountable for the mental health crisis, the suicides, the substance abuse, the entire generation of children who fell behind.

Nope. There will never be so much as an inquiry. Instead they’ll make millions from their memoirs where they cast themselves as heroic saints who saved the world.

This is the topic of our podcast today.

We start off with another historical example showing that, even though our problems are gargantuan, they are fixable. Good leadership works wonders, and it is possible to put the government’s finances back on the right track.

Unfortunately there is a dearth of real leadership. Instead we have people who are incapable of telling the truth or even recognizing real problems, let alone solving them.

So don’t hold your breath that they’re suddenly going to turn things around.

The Roman Emperor Marcus Aurelius used to write in his works on stoic philosophy that we shouldn’t stress about the things we cannot control… but instead to put our energy into the things that we can.

That’s great advice, and it’s an excellent way to think about these national and global problems.

And in today’s episode, I walk you through a few specific strategies to really move the needle in the right direction for yourself, in ways that you absolutely control.

You can listen in here.

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[00:00:00.570]

Today we're going to go back in time to the year 165 Ad. To ancient mesopotamia, essentially, where modern day baghdad is located in Iraq. At the time there was a city there named Salucia, and salusia, though originally part of mesopotamia, was a very old city, but it had been conquered by a group known as the parthian Empire. A lot of people haven't heard of the parthian Empire, but at the time they were pretty big deal if you look at it on a map, the Part Empire, they were essentially iranians, early iranians. And the parthian Empire would have taken over all of Iran, all of Iraq, most of Turkey, parts of Afghanistan, Pakistan.  

[00:00:34.630]

It was a pretty big deal. And it would have been, should have been probably one of the most feared and most powerful in the world, except for one thing, of course. Their next door neighbor happened to be the Roman Empire. And not just the Roman Empire, the Roman Empire in its golden age, in its sort of peak tax romana. This, of course, is the time from the age of augustus in the late first century BC.  

[00:00:57.180]

Through the next nearly two centuries, through the first century Ad. Through the second century Ad. This is the time period in history where if you ever sort of play the thought game, if I could go back in time, this is sort of the error that might be really high on your list. rome's golden age. I mean, life was really good by comparison in other places in the ancient world, throughout history, the romans lived such a great life, it would be virtually unparalleled for, I mean, more than a thousand years afterwards.  

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I mean, it was really, really good. They had a boundlessly, prosperous economy, global trade all over the world. I mean, they, they brought in goods and services from all over the world. There was a greco Roman writer, a guy named aristidis, who wrote, quote, whoever wishes to see all the goods of the world must either journey throughout the world or visit Rome. Basically saying everything in the world is right here in Rome.  

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It was incomprehensible to most people. I mean, whatever animals and exotic fruits and nuts and silks and robes and spices and everything, it was all in Rome. They brought in everything. And they had, of course, all the famous engineering works the aqueduct and the plumbing and the roads and the bath, which, when you think about it's, actually another good reason why if you got to go back in time, this might be a good era to go because they have really good hygiene, they have toilets and all these sorts of things that were conveniences, that were unheard of in most of the places in the world. They had honestly really great nightlife and theatrical performances and literature, travel, and people were able to travel across the empire and, and it was relatively low crime relative.  

[00:02:33.750]

There was no crime but there's relatively low crime, relative peace and stability. And the thing about this era, 165, this is also the era that later on in history became known as the era of the Five Good Emperors. These are guys like hadrian and trajan and Marcus aurelius, Marcus raelis, who actually was emperor or co emperor here at the time in 165. Now, I said it was an era of relative peace. And of course, it wasn't to say that there was never any war.  

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In fact, in 165, there was a war because Rome was at war with this parthian Empire. And that was not unusual. It was sort of like the relationship between Rome and the parthian Empire was like Rome and carthage, which is sort of like, in a way, the Us. And Russia. There was like a traditional adversarial relationship there.  

[00:03:18.270]

They never trust each other. They never got along. And in the case with the parthian Empire, with good reason, the parthian Empire had made incursions into Rome. There was a really nasty tradition going back to you might have heard of this guy, myth or deedes, back in the second century BC. There was a lot of war between the two back then, and the parthian Empire sat right on these Silk Road trade routes to the east, blocking some of rome's path to the east.  

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And so they had different reasons to go to war. And they had been at war a couple of times already in the past. And so now it's 165 Ad. They're at war again. And there's this Roman general's name is Evidence cassius, and he takes the city of Salutia, where we started this podcast.  

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Salutia, even though it was really mesopotamian in origin, it at that point had been conquered by the parthian Empire, had become a major city in the parthian Empire. And a video cast, he takes the city and says, you know what? I'm tired of this. I'm just going to burn this thing to the ground. I'm not playing around anymore.  

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I'm just going to burn it to the ground. So they destroy the city. Now, according to A very famous legend that's handed down to us by the romans during the destruction of the city, there were some Roman soldiers. And according to one version of this legend, even a general named lucius Virus, who go into the in the city of Solution, they go into the Temple of apollo and they disturb the Golden Casket. The golden casket in the temple of apollo, which is they're offending the gods.  

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And the next thing you know, soldiers start getting sick. Now, that wasn't terribly uncommon if you understand the nature of warfare and the history of warfare all throughout history. So many soldiers died in some wars, it's even more common. People, more commonly people die of disease on the front lines than in actual combat. And that's because conditions are harsh and soldiers are packed together tightly like sardines.  

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It's easy for disease to spread. This is the case even in World War I, world War II, we saw just rampant disease ravaging the front lines, and it was not that unusual. He said, oh, soldiers are getting sick. People are dying. It happens, right?  

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But you think about obviously, we know a lot more about how diseases spread. These guys are marching back all the way to Rome. Remember, solution was basically where modern day baghdad is. Think about how long that journey is, how many places they stop, all the local provinces and peoples they meet along the way. They're spreading that disease everywhere.  

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And by the following year, this was basically a full blown pandemic. They called this the antonine Plague, and we have substantial sources about this people that describe conditions, and it was nasty. The modern historical consensus is that it was smallpox, and people think might have been something else, but smallpox is sort of the consensus. And again, the death toll varies. You have some of these ancient there's a lot of hyperbole in the ancient world.  

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People go 90%, 100% of the population was wiped out. Come on, that's ridiculous. But a good estimate, probably at least 10% of the population wiped out from this disease at quite a high, dangerously high mortality rate. In fact, this guy mentioned earlier, aristides, that greco Roman writer, who said, you know, all the goods in the world, you know, being here in Rome, this guy got it. But he didn't die.  

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He actually survived. He was one of the lucky ones who survived. Now, there was a there was a doctor. I want to just pause for a minute and talk about the leadership at the time. There was a doctor, this guy who his name was Galen, and he was a famous guy.  

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He's probably one of the most famous physicians in ancient history. And he had been physician to the gladiators at a certain point, sort of like the team doctor for the Dallas Cowboys or something. So he was sort of a big deal. And he was summoned by Marcus aurelius, who was co emperor at the time, and he said, Listen, Marcus aurelius, he's with his troops camped in northern Italy and is this mysterious plague. And he goes to gayle and said, you figure it out.  

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And Galen to his credit, even though there's a bunch of voodoo belief and medicine at the time, galen kind of realized, well, this seems to be an airborne virus. He got sort of on the path to realizing that. He wrote in his works about how these people are sort of spraying pestilence in the air, and you got to stay away from that. So he was really sort of on track to realizing that it was an airborne virus. But the way that they dealt with this, they didn't tell everybody to cower in fear, hide in your basements.  

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They didn't say, we got to shut down the empire.  

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They didn't suppress origin stories. This is actually kind of funny that Christians at the time were the social outcast. accords are people that blamed Christians. There are people that blamed you offended the gods by opening the casket in the temple of apollo. Other people thought that it came from China.  

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Nobody got canceled for saying that. They didn't suppress these opinions. They didn't suppress information that people had. There are a lot of people that were experimenting, trying different treatments, things like that, and people wrote about it. The word spread.  

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They didn't try and suppress information. People had differing opinions. People they didn't try and force treatments. They didn't try and prevent certain treatments. You're not allowed to use this particular route in treating this plague.  

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Nobody ever did that. Everybody was sort of free to figure it out for themselves and share information and figure out their own cures. And of course, there are plenty of cuckoos running around. There was one guy, he called himself a prophet. His name was Alexander, this prophet Alexander, he went around, told everybody, you need to put this icon of a snake above your door, and that's going to save you from the plague.  

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The guy probably made a fortune going around selling these snake icons to people, and some people believed it. But even that, they didn't suppress that. They didn't censor, they didn't cancel anybody. Galen himself, this guy who was essentially who became the official court physician, he was basically fauchy, right? Except he was actually really big on galen was big on mental health.  

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Galen did not think that you should sacrifice the mind or the soul in order to save the body. In fact, Galen was also really big on fundamentals. He said, you know what? Everybody get outside, get fresh air, get exercise, eat a healthy diet, don't cower in fear. And for his own part, Marcus aurelius was also pretty relaxed about it.  

[00:09:12.530]

He understood, as romans understood, that, you know what? This stuff happens. This wasn't like it was the first time there was a plague in Rome, that these things happened quite frequently. This was the first time, at least in their memory, that it was this big. This was a really, really big deal.  

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It was dangerous, it was virulent, it spread rapidly, a really high mortality rate. But they had seen plagues before, lesser plagues before, so this was just a worse version of what they'd already seen. And Marcus Raylis was pretty stoic about it. In fact, he was quite famously a stoic philosopher who wrote extensively about stoic philosophy and life and all these things. And one of the things that he wrote in his book, and I actually really encourage you to read some of the works of Marcus aurelius.  

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And he wrote, I think this is great advice, really. He said, you got to focus on the things that you can control. Don't stress about the things that you can't. And in this particular case, you can't control the Pandemic, you can't control. It's like they all sort of realize this thing has just got to run its course.  

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The pandemic's got to run its course. It's going to rip through our empire. A lot of people are going to die. That sucks. There's nothing we can do about it.  

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Try not to stress about it. Focus on you. Focus on the things that you can control. And really that makes a lot of sense. Now, Rome did get through it again, it became known as the antonine Plague, sometimes in honor of this guy Galen, the physician who wrote really extensively about it.  

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Sometimes it's known as the Plague of Galen. But it lasted for a long time. It lasted for years. A lot of people did die, but life went on. This was important, though, to understand, because up until this point, life was pretty good in Rome.  

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Of course, they'd had their share of idiotic emperors in the past. They had nero and all of this. That was in the past. But they were still in their golden age. And Marcus aurelius.  

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Things were good. Peace, prosperity, all these things. But this plague kind of starts to mark the beginning of the downward spiral for Rome. Because after Marcus aurelius, quite famously, he succeeded by commodus. Now, if you ever seen the movie gladiator, I think it was from the year 2000, I think it was at least nominated for an Academy Award, but not even one best picture.  

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I don't remember this a long time ago, but comedy was actually this is actually one of the rare instances where Hollywood doesn't overdo it. commodus is played by the actor joaquin Phoenix, and he comes off in this movie as this pompous, arrogant, dangerous psychopath. And they were probably being actually kind to communist was combust, was insane and he was so cruel. He was terrible. This is guy he really used to go he was so enamored with himself.  

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He thought it was so handsome and so buff and muscular. He would go into the gladiator arena, go into the coliseum, and rip his shirt off and flex his muscles and slay beasts. And then he would go and slay his opponents and steal from people and plunder and the taxes. It was just a terrible, terrible, terrible, terrible person. But even worse leader and ruler.  

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But obviously things got worse and they had comedy. This guy lasts for more than a decade. They get two emperors after that who lasted combined only a few months. I mean, we start getting the murder and intrigue. Everybody emperor is getting assassinated.  

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They end up with a guy named septimus severus, who was a hardcore, hardcore warmonger spendaholic. Another guy who used to go around and execute his political opponents. He debased the currency, he raised taxes, he vastly increased the size of the state. He created this. He made the Roman government so big primarily because of the military, because he essentially turned Rome into a proto fascist military dictatorship.  

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Rome had basically, under septimus severus, sort of become almost like a little bit like Nazi Germany under the Third reich. And that created this really unsustainable fiscal burden. It was so expensive to maintain this huge military and the bureaucracy. And of course, his son Carrakala was even worse. carica is the guy who famously they say, oh, the treasure is empty.  

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We don't have any money. And he's having this conversation supposedly, I believe, with his mother, and he sort of jingles his sword and he says, as long as we have this, we shall never run out of money, which really tells you everything you need to know. I think you kind of get the idea here. It's a terrible situation. They get to the point where taxes become outrageously high, inflation is rampant, trade plummets, both internal trade and external trade.  

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We start getting into this period that historians call the crisis of the third century, and it's so bad that the empire almost vanished. I mean, really just broke up, started to disintegrate. caracalla's success was a guy named macronus. macronus macris had the Parthians knocking on his door on the Eastern Front. He had barbarian tribes making incursions into Roman territory.  

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The treasury is totally depleted. And this poor guy, he probably knew that taking the emperor position, he was going to be executed. Sure enough, he was. There were rebels that basically came in and executed this guy in like a year. He was followed by ella Gabolis.  

[00:14:06.820]

And elle Gabalus was to be honest, it was a transgender ruler who was supposedly said to have offered half of the empire to a physician who could turn him into a woman, which again, I don't care. I have zero issues with anybody's personal choices. But you don't get to pony up state assets for your own personal choice. That's just not okay. It's just not okay.  

[00:14:27.320]

You don't get to do that. And again, this sort of sets the tone for the next several decades, the empire would basically collapse. It really, actually did break apart. They ended up in this thing called the Ted sharky. They had competing things that used to be part of Rome, broke up into their own sort of spin off breakaway republics and breakaway empires.  

[00:14:47.600]

They had another plague as well. They had something the plague of cyprian, it was called, which a lot of historians some historians believe might actually been ebola, originating from Africa. And if you guys remember ebola, this is something that popped up in the was terrifying. You just sort of just implode from within. Like all your organs just melt and practically you just burst into flames.  

[00:15:09.480]

All it just really nasty, nasty thing. And some stearns believe that this plague of cypriot might have actually been ebola. We're also talking about in addition to this plague, the breaking apart of Rome collapse of trade. No no price stability, no confidence in the currency, no confidence in government, anybody with any wealth hit it away. They hit it from they hit it from each other.  

[00:15:28.890]

They hit it from from corrupt tax officials. They hit it from corrupt politicians. They hit it from corrupt soldiers. And people would just go around. I mean, the Roman just become just this criminal organization.  

[00:15:39.550]

At that point, there was intense social conflict, rebellion, and of course, you had these completely incompetent bureaucrats and continued just tidal waves of migrants coming across the border. You can just imagine again, you have to imagine just being back in history. Just imagine living in that time. And if the TV news was available back then, you could read the stuff on if the Internet was there, you could read this and you could see politicians putting up, we've been to the border. We've been to the border.  

[00:16:09.890]

The border is secure. No, it's not. You could just imagine just the lunacy, their idiotic ancient Roman word salads of trying to convince people that everything's okay. But people knew. They knew.  

[00:16:21.520]

The Empire is broken apart, everything is terrible. And again, things are going pretty okay. Things are going pretty okay. In 165 Ad, then they had a plague, then terrible leadership, and then the empire literally broke apart and was about to collapse forever. But then there was one guy, it almost sounds like one of these movie trips, but one man, but this is actually the case.  

[00:16:45.960]

This is what happened. There was one man. His name was lucius Dumitius Aurelianis. He's known to history as aralian and arrayan, was no saint. There's plenty of reasons to criticize everybody, plenty of reason to criticize a rally, but this is a guy who became emperor and reformed everything, the coinage, the military, government finances.  

[00:17:06.270]

There were welfare programs. There was one called the alimente, I believe it's called, and he just said, no, we're going to get rid of that stuff. I mean, all these things, people are on the dole. We're creating incentives for people to be unproductive. That doesn't make any sense.  

[00:17:19.180]

Too many corrupt politicians, too many corrupt officials. I'm going to get rid of these people. I'll even execute them if I have to. I'm going to put down these foreign incursions. I'm going to do the things that need to be done.  

[00:17:28.540]

And again, he's no saint. Plenty of reasons to criticize this guy, but he almost single handedly turned things around. He put Rome back on the right path. He actually reconstituted the empire. He went to all these breakaway empires, said, no, you're part of Rome.  

[00:17:45.350]

And for this reason, they actually called him the restorer of the world. Because Rome was considered really, especially by romans, consider themselves like, this is basically the known world, and this is the guy that pieced it back together and put us back on the right path. Restore of the world, that's actually pretty high praise. The city of Orleone in France, and by extension, New Orleans in the United States actually named after Oralian orLeon Oralian, that became sort of the French aurelian orLeon is actually named New Orleans, named after this guy Oralian, who was again, almost single handedly put Rome back on the right track. Now, we did a podcast about this a couple of weeks ago.  

[00:18:21.710]

I told you about Britain, I told you about the failures of all these British kings. We sort of ended with George III. This is a guy who notably lost his mind. I mean, he was bona fide crazy dementia. People sort of talk about like, what exactly did he have?  

[00:18:36.390]

But I mean, this guy had really lost his mind. He was all these stories. He was supposedly to have shaken hands with a tree thinking it was the King of prussia. You know, stop me when this sounds familiar, but, you know, but, but yet, even though they had and you think about Britain in the early 18 hundreds, you got this guy shaking hands with a tree thinking it's the King of prussia, totally lost his mind. The king has completely lost his mind.  

[00:19:00.930]

You got napoleon knocking on your door about to invade. You've got inflation, you've got a currency crisis, your treasury is depleted. Things look really bad for Britain in the 18 hundreds, and yet they too got on the right path and they grew their way out of trouble. Now, you obviously get the parallel. We've talked about this before.  

[00:19:19.280]

Like Rome in the third century, today's dominant superpower. In the 18 hundreds, the dominant superpower was the UK. Today's dominant superpower, the United States also beset by similar circumstances. We see the inflation and the economic decline, all the issues related to the pandemic social conflict, the border incursions, external conflict with major powers, the internal conflict that we have with ourselves that nobody can compromise, nobody can have a discussion, everybody's canceling everybody. And there's a lot of things on this list you could add to this list all day long.  

[00:19:52.910]

You could add climate issues to this list if you wanted to. You could add all sorts of social issues to this list. Some of these are really existential issues. And I have to say among these existential issues really, is this enormous fiscal hole. It is an enormous fiscal hole because not fixing this will create catastrophic problems in the future.  

[00:20:13.220]

And I'm not talking decades and decades from now, we're talking the relatively near future. And to explain this a little bit more, I want to tell you, hot off the presses, just came out yesterday, February 16. Today is February, Friday, February 17. So yesterday, February 16, they just came out with the annual financial report. It's called the financial Report of the Us government.  

[00:20:32.800]

And you can actually pause for a minute and go, and I'm not going to say Google this because I don't use Google, I use Brave. I think anybody that cares about privacy shouldn't use Google. But whatever your favorite search engine is go and just find financial Report of the Us. Government and the fy 22 fiscal year. 22.  

[00:20:51.010]

Remember the Us? Government runs in a fiscal year that starts on October 1 and ends on September 30. So fy 22 went from October 1, 2021 to September 30, 2022. And they put out this essentially annual report like it's a publicly traded corporation, like it's Apple or jpmorgan or something like this. They have this annual financial report just like any other big company or big organization that has financial statements and management discussion and analysis and so forth about what's going on and why.  

[00:21:21.130]

And the financial statements, as you can imagine, are absolutely atrocious. Now, the President of the United States loves, loves, loves to brag about he said he brags about how he's a capitalist, and he loves to brag about the fact that he brought down the deficit, you know, by more than any other president in history. And he brags about how the deficit, you know, the fy 22 deficit was, quote, only $1.4 trillion. Even in the State of the Union address just recently, he was bragged about this, I brought down the deficit, and blah, blah, blah. So first of all, I don't know how somebody could brag about how the deficit is only $1.4 trillion.  

[00:22:00.540]

But second of all, everything that he's saying is a lie. It's a lie. It's a lie. He lies. And the financial statements prove it.  

[00:22:09.360]

The government's own financial statements prove that this guy lies. And it's very easy to understand. It's very easy to see because it's right there literally in their own financial statement. Page 17 of the report, if you're following along with me, page 17 of the report actually explains this. They actually have two metrics for how they measure this.  

[00:22:27.200]

One is they talk about the budget deficit on a cash basis. Now, cash basis means that you can actually massage the numbers. You can massage the budget deficits because it's based on literally like, cash in and cash out at the time. And so you can accelerate certain revenues. You can push off certain obligations in order to massage the numbers and sort of make up a little bit of number, which is amazing.  

[00:22:50.200]

It's like, really? $1.4 trillion? That was the best number you could make up. But the same way, you can imagine, let's say you incur, like, some big spending bonanza at the very end of the fiscal year, but you go, we're going to push that into next year, right? So we don't actually incur any of those expenses this year.  

[00:23:08.880]

Well, that's not actually how accounting works, right? The real accounting system that every company in the world, any sizeable business of any real size, uses something called accrual accounting. Accrual accounting basically says, will you incur an expense really at the time that the obligation is undergone all these different rules? But it's basically, if you get an invoice, right, that's an expense the expense isn't recognized when you actually write the check. The expense is recognized when you get the invoice or when the invoice is due.  

[00:23:40.030]

So There are very specific rules about this, and you don't have the option of doing what they do on this cash basis budget deficit, pushing out Expenses and accelerating revenues. And So We don't actually have to Wonder if You Go, well, if the federal government followed its own accounting Rules, right, these generally Agreed Accounting principles gap, Us. Gap rules, the same rules that they require, by law, all These Big corporations follow. If they follow the same accounting rules that everybody else has to follow, what would their Actual deficit be? Well, we don't have to Guess because they calculate it for us, right?  

[00:24:13.170]

And So the actual true budget deficit, which they call in their versions, they call the Net operating Cost was actually not 1.31.4 Trillion. It was $4.1 trillion, negative $4.1 trillion. And in case you're wondering, this is also the part where this is a complete lie. Because they said, he brought the deficit down. No, you didn't, bro.  

[00:24:36.890]

No, you didn't. Because, as A matter of fact, the previous Fiscal year was terrible, but it was, quote, unquote only -3.1 trillion. So it got a trillion dollars worse the net operating cost went from -3.1 trillion to -4.1 trillion. It got a trillion dollars worse. So this guy is going around town telling everybody going on camera, go, I Brought down the budget.  

[00:24:57.560]

I said. No, you didn't. It's a lie. It is a lie. And your own financial statements prove it.  

[00:25:03.760]

Your own financial statements say right there in black and white. You can read it for yourself. The net operating costs of the federal government went from -3.1 trillion to -4.1 trillion but wait, there's more. Because in addition to that, and In calculating their Net Operating costs and actually putting the real numbers, they also put out a balance Sheet, right? The balance sheet, just like Any human being, any business, we all have assets and liabilities.  

[00:25:29.470]

We have Cash in the bank and we have whatever cryptocurrency and Real estate and stocks and Bonds, all Whatever it is we have. And we have liabilities, maybe a home Mortgage or a car loan or whatever. The government has that as well. Their assets are things like tanks and Bullets and Acres of national parks, the Strategic Petroleum Reserve, monuments and buildings and all this sort of stuff, minus Liabilities. Things like the national debt, et cetera.  

[00:25:54.280]

And the difference between those two is the government's net Worth, right? Obviously, we'd like to see a net worth. It's Positive. Most people want a positive net worth. When they say elon Musk is worth whatever.  

[00:26:05.490]

$100 billion. $200 billion. They're talking about his net worth, the value of his assets, minus his liabilities. Well, the government's net worth is really bad. It's -30 $4 trillion.  

[00:26:18.650]

This is not my calculation. This is right there in the. Government's own financial report -30 $4 trillion by the way the year before it was -29.8 trillion so they went from -29.8 trillion to -30 $4 trillion It's absolutely Insane and yet there's still more because on Top of that on Top Of this -30 $4 Trillion sort of Negative Net Worth they also have the Social Security funding gap we talk about this a lot, so I don't need to hash this too much. But this is the idea that they made promises to taxpayers. They made promises to their citizens.  

[00:27:01.850]

You can retire at this age. You get this much money? blah, blah, blah. Well, guess what? That requires that they have a certain amount of cash.  

[00:27:07.960]

And that cash means that they have to have this cash set aside and these trust funds in order to meet those needs. And they don't have that cash. They don't have the cash. So the difference between those two is they call that the Social Security funding gap. And the funding gap again, these are their own calculations is $75.9 trillion.  

[00:27:27.570]

$75.9 Trillion. That is an enormous funding gap. That's basically the difference between how much they owe over the long run to Social security beneficiaries current and future and the amount of money that they project they'll have set aside for that program. It's a $75.9 trillion gap. And by the way, the number last year was $71 trillion.  

[00:27:47.810]

So they went from 71 trillion to $75.9 trillion. And you put the two of these together? They're negative net worth. The Social Security funding gap, we're talking about $110,000,000,000,000 in negative net worth. That's more than four times the size of the entire Us.  

[00:28:02.400]

Economy, even by their own projections. This gets worse. You can look at this on page 28. They have a little section headline that says an unsustainable fiscal path. Yeah.  

[00:28:14.380]

You think so? You think so? Maybe. That's probably an unsustainable fiscal path. That's an extremely polite way to put it.  

[00:28:21.230]

And in there again, their own analysis. They got a neat little chart. You scroll down to page 31. Page 31. It shows their projection of the United States public debt, which this is a little economic nuance, but there's actually a difference between the public debt and the national debt.  

[00:28:37.590]

The public debt is sort of a portion of the national debt. It's not even the entire national debt. It's just a portion of the national debt. Right? So the actual number is much worse.  

[00:28:46.550]

Over the next, they think about this stuff over decades. They always project. They use 75 years in their projections. So they project the national debt or, sorry, the public debt, which is just a portion of the national debt over the next 75 years. And they show it reaching nearly 600% of GDP over the next 75 years.  

[00:29:02.750]

It's basically just this sort of straight line going up and to the right. This is completely insane. And you got to look at it and say, does anybody actually think they have they can keep doing this for 75 years. Does anybody think that anybody, any reasonable investor in the world can be like, oh sure, you're 600% GDP in debt. Let me keep loaning you money.  

[00:29:24.600]

That makes sense. That sounds like a reasonable investment to make. No, of course not. This is totally this is completely insane. They don't have 75 years.  

[00:29:32.390]

They don't have seven decades. It's hard to say how long they have, but it sure as hell isn't seven decades. It's not five decades. Not four decades, not three decades. Is it two decades?  

[00:29:42.070]

Who know? We don't really know for sure what the timeline is, but it's not that long. It's really not that long. Now, there's a little bit of a little bit of humor in this. One of the things you might also find in the report, if you scroll down to page 43.  

[00:29:55.360]

Page 43. Remember, the government these are, these are audited financial statements. The government has an auditor. It's actually, this it's, it's a government office. It's called the Government Accounting Office.  

[00:30:03.880]

The Government Accountability Office and the gao audits the federal government. And the federal government, if you're familiar, if you've ever read audit reports before, the whole point of an audit is they don't prepare necessarily the financial statements. The auditor goes in and looks at the financial statements, and they perform certain their responsibility is to say, these financial statements that have been provided to us by management, we believe that these are, in fact, an accurate representation of the financial condition of the business or of the organization. That's what the auditors are supposed to do. And the auditors the government failed its audit.  

[00:30:38.270]

That's the bottom line. The government failed its audit. Again, this happens almost every year. The government fails its own audit. It's totally ridiculous.  

[00:30:44.690]

And you could see this on page 43 that the gao cites, quote, certain material weaknesses in internal controls, which is a very polite way of saying that the level of financial mismanagement is absolutely insane here. And they go on to say that they said, look, we looked at the federal government's assets, and again, we're talking about that balance sheet. These are the tanks and the bullets and the parkland and the monuments. They said 49% of the assets were reported to us by agencies, federal agencies, whose financial management could not be relied on. Right.  

[00:31:21.740]

This is hilarious. And the reason why is because all those people should be in jail. And that's not even hyperbole. Back in I think it was 2003, maybe 2004, 2003, I think the Congress passed a law. This is in the wake of their bunch of financial scandals, most notably enron.  

[00:31:39.000]

We had all these corporate executives that were cooking the books and misleading investors by just literally just making up numbers. I mean, putting out publishing numbers every quarter. Oh, our earnings are, you know, we're making resilience of dollars. And it was all it was all a lie. They just completely made up everything.  

[00:31:53.060]

It was just, it was a fraud. It was a scam. And Congress, of course, what they do, they passed laws. I mean, there were already laws on the books saying you're not allowed to do that. But what, they just went and passed another law and this time this law was called the sarbanes oxley Act.  

[00:32:05.030]

And they passed this law and, and they actually created criminal penalties for executives that essentially fail their audits. And that if you don't, this is, you know, section 404 and 302 compliance. You know, if you go in and, and as an executive, if you preside over an organization that fails its audit, you can be held criminally liable, personally thrown in jail because you fail your audit. Right? And so here you have the government not just failing its audit, I mean, just completely blowing it to a level that is literally a level of financial mismanagement that rises to the level of criminality.  

[00:32:39.740]

And any, any corporate executive, any publicly traded company that had an audit that bad, where the auditors came out and said 49% of the assets can't be relied upon, those people would be in jail. But the government does it pretty much every year, right? So it's just a way to show that the situation is so bad. But it's even worse because even though you can't even rely on the data, it's so bad because the financial management is so piss poor, you can't even actually have any reliance on the data that they provide. That's how ridiculous it is.  

[00:33:12.810]

And it doesn't take a rocket scientist to see where this goes on current trajectory. realistically. This is why I was saying, like, who knows how long they have? It's not 75 years, is it? 20 years, 15 years, ten years?  

[00:33:26.640]

We don't really know for sure. Right? We don't know for sure. And it's quite a gamble to just sort of roll die. Well, I'm going to assume it's going to last for another 50 years.  

[00:33:36.310]

That's a very dangerous and risky position to take on current trajectory where they are right now. The only realistic solution is to default. And what does that really mean? Well, they can default on the debt. They could default on the, on their external debt to all the, you know, to, to the, the Chinese and the Japanese and the europeans, et cetera.  

[00:33:52.750]

Well, that's going to cause a massive currency crisis. That's a bad news ending. They could default on their internal debt to, for example, Social Security, the Social Security trust funds on a lot of Us. Debt. So what are you going to do?  

[00:34:06.060]

You're going to default on Social Security trust funds and now you completely screw over all Social security beneficiaries. You're going to default on the Federal Reserve, cause another massive currency crisis. You're going to default on the banks, Us. Banks, cause all deposits to get wiped out. I mean, there's no good solution there by defaulting on the debt.  

[00:34:22.220]

And that kind of leads to defaulting on promises that they've made to their citizens and their taxpayers, like, you know, paying social security or maintaining a stable currency with, you know, supposedly 2% inflation, or the promise to maintain a strong national defense, or the promise to not completely plunder their citizens'wealth through confiscatory taxation and all these sorts of things. Well, guess what? All those promises are probably going out the window now. Again, we talked about this a few weeks ago that Britain was in a terrible position. It's the early 18 hundreds got George the Third shaking hands with trees, napoleon's at the gate, the treasury's depleted, inflation is getting out of control, and yet they grew out of it.  

[00:35:01.410]

They had a little bit of luck on their side. They had the Industrial Revolution, technology and a lot of economic growth and they did what was necessary to sort of liberate the economy and free things up and they grew their way out of it. This is similar, right? But we talked about Rome. We talked about a rally.  

[00:35:19.570]

This is a case where you had literally one guy turning everything around. A Raleighan had the authority to go and impose his will and make all the reforms that were necessary. And in the case of Rome, obviously the emperors that came after Iralin weren't so sound. But Iranians'reforms meant that the empire, the Western Empire, lasted another 200 years, basically because of what this guy did. So it's a really, really big deal.  

[00:35:43.840]

He was able to extend the life of the Western Roman Empire, reconstitute it, put it back together and put it back on a path where it lasted another 200 years. So that was quite an accomplishment. The Us. Is more complicated than Rome. Again.  

[00:35:56.530]

In Rome, it only took one emperor. In the United States, you need a whole lot of stuff. You need a president who's actually sentient who knows who he is, where he is, who he's shaking hands with, et cetera. You need a filibuster proof majority in the Senate. You need a super majority in the House.  

[00:36:12.460]

You need all three of these bodies that have total alignment in philosophy and priorities, et cetera. And this is, of course, a huge problem because there is no alignment. There is no alignment in priorities and this is reflected in voters. Voters have no alignment in their priorities. And you can see this based on the people that they put in office.  

[00:36:32.140]

They elect complete and total buffoons over and over and over again. They elect people. It's amazing. You got to look at some of these districts and you go, how do you keep electing this person who's clearly corrupt and competent, narcissistic like, why do you keep putting these same people for decades and decades in the same position? Is there really such a dearth of leadership?  

[00:36:54.220]

There's nobody who can step up in that jurisdiction who can be possibly better than this complete idiot? But this is what you end up with, is because I can't explain it. I wish I knew why people keep taking these same essentially criminals and putting them in office over and over again. I wish I could understand it. It just seems so counterintuitive.  

[00:37:14.180]

It seems so illogical. But they just keep doing it, right? And because there is no alignment, we can see this reflected again in voters choices. We can see this as well in the leadership that has no capacity to solve problems whatsoever. In most cases, no capacity to even not only they can't solve the problems, they can't even acknowledge the problem.  

[00:37:34.990]

They can't even address the problems. You guys are probably aware of this. I mean you might not be aware, I mean, that the media has been strangely silent on potentially one of the biggest environmental disasters of our time, where you had this train derailment in Ohio and they spewed all these chemicals and they just went, oh let's go light them on fire. And all these chemicals ended up in the air. The EPA was looking on, all these state officials were looking on and said, okay yeah, sure, let's light them on fire.  

[00:37:59.020]

And they killed off all this life, plant life and animal life in the community. And the EPA, of course, is totally downplaying. It. The Secretary of Transportation, Pete buttigieg the other day, though this was just a couple of days ago. I mean this has been going on for what, week, week and a half.  

[00:38:16.340]

Pete buttigieg is out making public remarks, did not once even bother to mention the Ohio train derailment. Bear in mind, train derailment kind of falls under the Secretary of Transportation, right? This is sort of his thing. And yet no word about train derailment, no word about toxic chemicals killing off life in the community. But he did have time to complain that there's too many white people working construction jobs in federal infrastructure projects because that's the priority, right?  

[00:38:42.710]

We can't acknowledge the obvious problem, the clear priority. You have plenty of conversation about racial disparity in the infrastructure and construction industry. Fine. Is that really the priority or is the priority toxic fumes in Ohio killing off plant and animal life and probably extremely harmful to human beings? But again, that's just apparently not the priority.  

[00:39:07.780]

And when you see situations like that where there's a clear difference in what the obvious priority should be and they're not even close. They're not even close. And so with all that, I think you could hope that maybe there's going to be some major crisis, that they get really close to the edge. They go, oh well, Social Security is out of money and now we're in this major financial crisis. Maybe some major crisis knocks some sense into people, right?  

[00:39:39.370]

Make them realize, I got to stop electing these criminals. I got to stop putting the same criminals over and over again the same people, and I don't want to keep using the word criminal. I'm sure there's some very nice, very well meaning people and there's a lot of people that are just completely incompetent. We know the names. I don't need to get into this.  

[00:39:55.550]

But I mean, they realize maybe, jeez, we need different leadership. It hasn't happened yet, right? I mean, there have been crises in the past and it hasn't happened yet, so I'm not holding my breath. We can hope, but I don't think it makes sense to hold your breath for this. And that's why, again, I think it makes sense to think about the future, think about some of these risks, think about I mean, these are really existential issues.  

[00:40:17.400]

You've got to really consider what happens at the point where the Us really does get to the point where the debt is so high, their financial obligations are so high, there's no room to cut anything, right? They have to do away with the military. They've got to completely eliminate Social Security. I mean, we're talking about major radical issues. These are clearly existential issues to the way that the United States is and exists right now.  

[00:40:44.910]

And it's important to think about these things because they're not that far off. They're really not that far off. I've been writing about these sorts of things for a really long time, and now if I go back and I look at things that I wrote ten years ago and I look at where we are now and go, oh my God, this stuff is really happening. It's really happening, all these things. We look at the social conflict and the decline in power and all the fiscal issues and the inflation, all these things.  

[00:41:08.840]

I've been right about this for a really long time, and it's important to think about the future because it's happening. All these things are actually happening. I don't have this end of the world is nigh mentality. I do not believe that at all. I'm incredibly optimistic about the future of the world, the future of humanity.  

[00:41:24.080]

I think everybody has control and power over their lives and can take back control and can take that power and do a lot of things with it. But it's important to think about risks. You've got to think about risks in life, and there's some pretty obvious risks here. If you look at some of this fiscal hole and you think these guys become these fiscal challenges become so great, they become more and more desperate and they're starting to get it. You can see these guys talking about the debt ceiling and so forth, and it's starting to actually cause a lot of concern among politicians going, jeez, we really got to get this under control.  

[00:41:55.410]

Unfortunately, that's a pretty small number of politicians that think we need to get this under control. Other people saying, no, you've got to keep raising the debt ceiling. But this is going to be a situation where they're going to get desperate, taxes are going to rise. That's pretty much a given. I've got to say, at face value, I don't have this issue with taxes per se.  

[00:42:18.250]

I don't think anybody really loves paying taxes, but it's not tax in and of itself. It's it's how they waste the money. If you look at all the money that they collect, trillions and trillions of dollars, and then you look at the stuff they do with $2 billion on a website, paying people to stay home, all this all this all this crazy stuff that they just waste, constantly waste money. That's not their money. That's our money.  

[00:42:43.360]

That's our money that they waste on the most made, the most offensive, insulting waste of money. And you're sitting there arguing about the debt selling, and there's no that there's, like, no discussion about, jeez, maybe we shouldn't pay people to stay home. Maybe we shouldn't waste all this money and all this silly stuff and just feel like we can just spend whatever we want on whatever we want, and there will never be any consequences forever and ever until the end of time. That's a terrible attitude to have. But of course these people go and waste all this money.  

[00:43:11.840]

They will never be held accountable. They will never be held accountable. They of course they go. They'll be awarded the Presidential Medal of Freedom, and they'll have elementary schools named after them and get honorary doctorates from universities and get very lucrative gigs on CNN and Netflix and all this sort of stuff. You'll be forced to pay for it.  

[00:43:32.560]

They will never be held accountable, but you'll be forced to pay for it. And this is the problem that I have with taxes, especially higher taxes, is because this is essentially a remedy to fix their own stupidity, their own corruption, their own idiocy, their own bad decisions. And you think about the pandemic is an obvious example, right? You think about all the decisions that people made and the lockdowns and et cetera, and the consequences, the mental health consequences, the consequences on children's development, children's education and learning, the massive increase to the debt, the supply chain issues, the inflation, all these things. These are all decisions that they made.  

[00:44:07.230]

You pay the price, they don't pay the price. They retire, and they get all their fancy awards and speaking gigs and their book tours and all this sort of stuff. You pay the price. It's your responsibility to pay for their mistakes. And I think that this is extremely unethical.  

[00:44:23.690]

I think it is extremely unjust to force citizens to pay for the literally criminal level of incompetence of their political leaders. And I do not use that word lightly. I don't use that word as hyperbole, literally criminal level of incompetence. Again, go back to the financial statements. 49% of the assets can't be relied upon because of the complete and total financial mismanagement of the government, of the leaders, of the bureaucrats and the politicians, that's a level of criminal incompetence as defined by the Sarmains oxley Act of 2003.  

[00:44:53.690]

This is not I'm not being excessive here in my vocabulary. This is criminal level incompetence. And I think it is extremely unethical to force people, to force citizens, hardworking people, to pay for criminal incompetence of their political leaders. And so, you know, my view on this, I think it makes all I never advocate violating the law, but fortunately, a tax code that's so vast that it takes an entire football stadium to fill it up, there's plenty of room. There's plenty of ways you can take absolutely legitimate steps to reduce what you owe.  

[00:45:26.790]

And again, just simply following the law, simply taking legitimately, legally allowable deductions and setting up perfectly legal structures and so forth to reduce what you owe following the law makes total sense, right? It makes total sense because, again, if you can see, if you look forward and you see this trajectory towards they're going to they're going to have to default. They're going to have to default on their promises. They're going to have to default on their promise to maintain a stable currency. That means inflation, which we're already experiencing.  

[00:45:55.380]

I mean, they said, oh, inflation fell to whatever, six something percent. I mean, get used to it. Hey, it's better than nine, right? And I think that's going to be sort of thing going forward. They're going to get it down to five and go, job well done.  

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It's only 5% now. It's hard to imagine that they're able to, again, over this long period of time going over, if we think about 10, 15, 20 years, to think you're going to be able to maintain an average 2% inflation over that time when this is their financial condition, that just seems ludicrous to me. And so if you think about this and you think about this trajectory towards inflation, for example, you think about this trajectory towards default. So higher taxes, take steps to reduce your taxes, take steps to reduce the impact of inflation. And there are ways to do that as well.  

[00:46:39.980]

It's not rocket science. I mean, there's plenty of historical precedent for that. We're not reinventing the wheel. We say, oh, what works well during inflation? Well, maybe diversification into real assets, businesses that are exposed to real assets.  

[00:46:50.760]

These are things like energy, metals, agriculture, productive technology, not swipe and scroll, but actual productive technology that makes people better, faster, swifter, more productive real technology. All these things are out there, and especially right now, to be honest, there are really great, well managed real asset businesses out there, both public and private, that are trading for absurd discounts. There's companies in the energy space that are trading. Natural gas companies trading two to three times earnings while gas is at $2.30 right now. Even though they want to do all this LNG to europe, which is probably going to make the gas price go up, and they're trading at two to three times earnings at $2 and 30 cent natural gas.  

[00:47:31.270]

I mean, there there's a lot of really good deals out there. There's technology, productive technology, companies that are traded really on the cheap, agriculture, businesses, fertilizer business. There's so many of these opportunities that are available. And so if you think about inflation hedges, go, jeez, I hate paying, you know, $12 for, you know, $15 for a dozen eggs. Well, guess what?  

[00:47:49.830]

There are plenty of these inflation hedges out there. And what I'm ultimately sort of outlining is that these politicians are making your cost of living go up, and so why not use their own laws to give them less money, right? Use their own laws to say, here's the taxi go. Great. I'm going to follow the tax code.  

[00:48:07.610]

And by following the tax code, I'm going to give you less money because I shouldn't have to pay for your criminality I should not have to pay for your criminal level of incompetence. That's one way to help ease the burden of inflation. And then you can take that savings and put it in things that do very well and can make a lot of money in an inflationary environment, and especially in different investments right now that have very attractive entry points, right? So this is just sort of one way. I'm not here giving anybody investment advice.  

[00:48:36.040]

I'm just giving you a way to think about all this because there are things that you do have under your control. Remember, it closes as I'm going on. It's 48 minutes now. I want to stop here, but I want to go back to ancient Rome. And again, think about that.  

[00:48:51.630]

Things are pretty great in 165. They were in their golden age. Sure, they'd had troubles in the past. They had idiots like nero in the past, but things were pretty great in 165. They had a nasty pandemic, and that was sort of, again, the start of this downward spiral that led to an inflation crisis and a migration crisis and financial crisis until the empire actually did break apart.  

[00:49:11.670]

One guy put it together, one guy put it together, and we can hope that that happens. But again, I wouldn't hold my breath. I'm certainly not holding my breath, because it turns out there are plenty of things that you can do. While we maintained hope and optimism, there are plenty of things that you can do. You cannot control how tens of millions of people vote.  

[00:49:29.640]

You can't control the stupidity of leadership, the gigantic fiscal problems, the inflation, the tax increases, all the things to talk about. Just the crazy woke mobs and all this silly stuff. But remember the words of Marcus aurelius. Remember Marcus aurelius saying, you know what? Don't stress about the things that you cannot control.  

[00:49:45.840]

Focus on the things that you can. And it turns out there are really a lot of things that you can control to really move the needle in your own life. Thanks so much for listening, and we'll speak to you again next week.   Close Podcast Transcription

Most people have a peasant mentality.

Throughout human history, in fact, the vast majority of people never thought much beyond their tiny village, let alone traveled.

But there have always been some people who have had the intellectual courage and curiosity to think far beyond their own borders. And they’ve often been richly rewarded for it.

Adopting a global mindset essentially means thinking about the entire world when considering your options. And more options is almost always more beneficial.

If you’re thinking about retirement, more options will greatly increase the chances of finding the right place that has the right weather, cost of living, medical care, and lifestyle that you desire.

If you’re thinking about business, considering your overseas options will greatly increase your chances of finding high quality, cost effective labor… or lucrative new markets to sell your products and services.

If you’re thinking about investments, looking abroad increases the likelihood of finding wonderful, well-managed businesses trading at a steep discount to intrinsic value. Or a trophy property selling for less than the cost of construction.

This is the topic of our podcast today– we discuss WHY it makes so much sense to look abroad, and cite some very specific examples.

We talk about asset protection, for example, and I explain why foreign asset protection structures are so much more effective.

(I also explain why asset protection structures exist to protect against professional criminals who abuse the legal system to steal from law-abiding, hard-working people.)

I cite specific legislation from some of the best jurisdictions to show precisely why they are so much more effective at helping to protect honest people from thieves.

We also discuss taxes… and specific ways that thinking globally can dramatically reduce your taxes. These are all completely legal. We’re not talking about any ‘loophole’ that requires a creative interpretation of the tax code.

I tell you about one international strategy, for example, to slash your tax bill by 50%. It’s no loophole. In fact there’s an entire section of the tax code dedicated to it.

Bottom line, diversifying internationally doesn’t mean you need to go anywhere or do anything exotic. It just means expanding your thinking to consider a wider variety of options… and that can have an enormous benefit in your life.

You can listen in to today’s episode here.

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[00:00:00.890]

Today we're going to go back in time to the 8 January in the year 1198 Ad. To the ruins of the ancient Septicoleum Temple, located in the city of Rome. Now the Septic Soleum temple doesn't exist anymore. It was demolished hundreds of years ago. But if you know Rome at all, it was used to be located nearby, the Circus Maximus.  

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And on that day, the 8 January 1198, the Pope Celestein III, he had just died at the tender young age of 92 years old. And the College of Cardinals met very quickly at that Roman temple, the Septicoleum Temple, to elect his successor. By Vatican standards, the deliberation was very quick. The vote only took two ballots. You probably know, the black smoke and the white smoke and all of that.  

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It was very, very fast. They had two ballots. And so very quickly they chose their new Pope. It was a young guy's, 37 year old Italian nobleman. His name was Latario Descendy.  

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Latario descende chose as his new papal name. He chose innocent III. And right from the beginning, this young guy, he's young, he's full of energy, he's actually quite fixated on power. Innocent III felt that his predecessor had really weakened papal authority. You got to remember that for a long time the Church was the dominant influence in everything in Europe.  

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Politics, economics, daily life. They controlled everything. And over time, at this point, by the late eleven hundreds, that power was really starting to wane. There were individual kings and kingdoms and empires that were saying, no, I'm going to be in charge. And Innocent III thought, no, I've got to go back and I got to reassert the Church's dominance and everything, and politics and economics and all these things.  

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And Innocent Third, quite famously, meddled with elections. For example, in the Holy Roman Empire, they had an electoral system where there were these people that were called literally electors. And to be an elector in the Holy Roman Empire was a big deal. It meant that you had the power to choose the next Holy Roman Emperor. But Innocent III went in and he meddled with these imperial elections and the Holy Roman Empire.  

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He says, no, I'm going to be the head of the Holy Roman Empire. The Emperor is just some stooge who reports to me. And so this guy went and basically rigged the vote. He threatened to excommunicate people who didn't acknowledge his pick for emperor, all sorts of things like that. I mean, he went into England, he declared the Magna Carta to be void, which basically sparked full blown rebellion in England, the barons war against King John.  

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He interfered in politics all over the continent spain, Norway, and probably most famously, Innocent the Third was the guy that started the Fourth Crusade. Everybody knows about the crusades. Everybody's heard about the crusades. They had been around at that point for more than a century. 1095.  

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1. Really? The first Crusade. It was this back and forth over who controlled Jerusalem, the Muslims, the Christians and various territorial changes. The Crusades were really disruptive.

 

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Really, really disruptive. They were expensive. A lot of people died, very costly, depleted people's, treasuries, and kind of most importantly, the Crusades always seemed to come at this time where there were European powers at war with each other, and the Pope would come and say, oh no, we got to go invade Jerusalem. We got to go and take back the Holy Land. And people say, oh, jeez, so we've got to put down our we got to sort of press pause on our war so that we can go and fight this other war.  

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Now we're going to be on the same side. We're on opposing sides yesterday, and now we're going to be on the same side. It's like the All Star Game in the NBA or the NHL or something like that, where you go halfway through the season. All these guys that played against each other yesterday, now they're on the same team. Or like Olympic basketball or something like that.  

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That's sort of what it was. And it was really at this point, by the time they got to the Fourth Crusade and there would be many more to come after this, people were kind of over it. They didn't have the money, they didn't have the manpower to spare.  

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They'd been back and forth so many times, people were just sort of over it. And the Fourth Crusade in particular was just so bizarre, so bizarre. This was one of the most bizarre episodes in history. Jerusalem had just been taken, had been taken back by the Muslims. And again, Innocent the Third, he's determined, he's all about the power and the authority of the Pope, which basically is his power and authority.  

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So he's determined he's going to use his authority, he's going to exercise his authority to sort of assert his dominance over all the Christian rulers and say, I want you to go back to Jerusalem and take it back. But again, most people are over the kings and various emperors across Europe. They were over it. And after a lot of negotiation and cajoling, they finally said, okay, fine, we'll go ahead and do this. And the ultimate target they decided on was Egypt.  

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Egypt at that particular time, in the late one one thousands, early two hundreds, egypt was the biggest sort of Muslim power at the time. Said, all right, we're going to go to Egypt and we're going to go and take out those Egyptians. And that clearly meant going by sea, right? They had to leave from somewhere in the southern Europe, along the Mediterranean, go across the sea into Egypt and vade Egypt. They're going to have this wages Fourth Crusade.  

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But at the time, that wasn't really a really powerful navy among most of these European nations. The guys who had the most powerful fleets were the Italians, were the venetians. The Venetians were really, really interesting, quite actually anomalous along with a couple of other very prominent Italian city states like Genoa, very, very different than the rest of Europe. You think about France, you think about the Holy Roman Empire, the Germans, the Spanish, everybody was very futile. They're very traditional, to be honest.  

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I mean, it's censorship and kind of closed mindedness, very focused on agriculture. By comparison, venice was free, venice was commercial, it was focused on trade. They had this early form of capitalism. They created really, they didn't create it, they actually borrowed it from the Muslims. An early sort of proto limited partnership, a type of business structure that they called a commenda.  

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And a commenda was essentially it wasn't a limited partnership, it was a way that an investor could come in, finance a business, which would usually be a trade voyage or something like that. It'd be some young merchant saying, I want to go across the Silk Road somewhere and I want to trade these goods. And obviously he would need capital to do that. And so it would create a way for an investor to say, all right, I'm going to put up the capital, you're going to go and do the work. We're going to come back and we're going to split everything 50 50.  

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And there was this ironclad contract and they developed courts and so forth in Venice to be able to judge and adjudicate commercial disputes and all these things. This was just alien level stuff for the rest of Europe. And at the same time, also, they didn't have this same feudalism that was so common across the rest of Europe. Venice was this place where anybody could come to Venice and anybody. If you were willing to work hard and take some risks, you could actually become wealthy.  

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You could become a landowner. You could become this really rich merchant and powerful and all these things which would just be unheard of in the rest of Europe but you could do it in Venice. And so it was totally different. And again, everything, the value system was different. Everybody in Europe, it was all fealty to the king and all these sorts of things.  

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In Venice, the loyalty, the duty was to commerce, was to industry. In a way, the rest of the Europeans, they just didn't understand. They didn't understand the value system. They felt like they couldn't quite trust the Venetians, because the Venetians are very commercial people. If you're a fan of Star Trek, the Venetians were sort of like the forengi, the ferengi, it's all about profit and all these things, and then nobody really ever quite trusts the forengi, because you can't trust people that have a profit motive.  

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And that's been a sort of ridiculous trope throughout all of human history and also sort of felt that Venetians might do some things that are immoral, unethical, do what they have to do to turn a profit. But at the end of the day, they've got the best fleets, they've got the best maritime technology, and so they were sort of the obvious choice. And they go to Venice. Now it's March 12 one, it's March 12 one. The Innocent the Third said, we're going to have a crusade.  

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And people go, okay, fine. And so they actually had to, a lot of it came from France and Flanders and sort of that part of Western Europe as all these guys came, and the leaders of the fourth crusade, now they march of twelve one ad, they go to Venice, they start negotiating. The Venetian authorities, they say, look, we need ships. We need lots and lots of ships because we got 30,000 guys we got to transport because we're going to take the Egyptians. And the Venetian said, all right, but it's going to cost you.  

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It's going to cost you. And look at it from the Venetians perspective. To go and build all of these ships basically meant monopolizing the entire Venetian economy. So Venice would have to all these people that are in all these other industries, they got to stop what they're doing, they got to stop their trade, they got to stop their other industries, and everybody's got to focus on building these ships for the Crusaders. And so the opportunity cost for them is quite high, the opportunity cost for Venice is very high because they're going to miss out on all these other things just to do the ships and make this mission happen for the Crusaders.  

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So they said, all right, we'll do it, but it's going to cost you. And the amount of money they'd agreed on was 85,000 marks. 85,000 marks, that was an enormous amount of money back then. A mark was an old, it was about 250 grams or so, which is kind of more or less, I guess maybe about one troy ounce. I'm a little bit off on my metric to Imperial conversion, but this was a lot of money, lots and lots of money.  

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And the Venetians did actually hold up their end of the bargain. They built the ships and everything was fine, good quality ships, everything. But the Crusaders did not hold up their end of the bargain. So now it's about a year later, a little more than a year later, it's May of twelve two. Everything was ready, the ships were ready, everything was great.  

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But the Crusaders didn't pay up. The Crusaders didn't have the money. And so at this point, the ruler of Venice, he said, no, you know what? You guys aren't going anywhere. You guys aren't going anywhere.  

[00:10:10.300]

We're not letting you leave on our freaking ships until you pay up, just like you agreed. And what's interesting is, when you think about it, the Crusaders had like 30,000 guys. So they could have taken these ships, they could have taken the city of Venice in theory, but they didn't because everybody was so terrified of the Venetians. This shows how powerful the Venetians were, is that even though they didn't quite understand them, they didn't quite get along with them, but they were still the Venetians were held in incredibly high regard. And it wasn't even on the table to say, well, let's go forget these guys.  

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Let's just go take the ships. That wasn't even on the table. Instead, the Crusaders like, jeez, I guess we got to figure out how to come up with the rest of the 85,000 marks and pay these guys. So this is where things really go totally off the rails. Completely off the rails.  

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Why? They said the Fourth Crusade was just super weird, because the Venetian said, well, I think we can come to a deal. And the deal was that the Venetians basically said, go down the Adriatic coast and rough up my competition. That's what I want you to do. I want you to go all these little towns on the coast here across from me.  

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I don't like any of those guys. They're kind of cutting in on my business. So go and rough those guys up and just send us a message. And the Crusaders basically became thugs at that point. They're supposed to be the Christian Crusaders were going to take back the holy Land from the evil Muslims and all this that just same nonsense back and forth throughout history.  

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They didn't even pretend to that point. He said, all right, we'll go down the coastline and we'll rough these guys up. And one place in particular was the city of Zara, the kingdom of Zara, this modern day city, if you've been to Croatia, the town of Zadar, and Zadar was sacked by the Crusaders. Zara is one of these places. The Venetians did not like Zadar.  

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They then called Zara. They did not like Zara. They did not like having a rival. And the Crusaders, basically a bunch of thugs, just showed up and sacked the town of Zara. And it was a huge deal, right?  

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Because again, these were Christian crusaders. Catholic crusaders taking a Catholic town. Zara was Catholic. So you got a Catholic army taking a Catholic city, because the Venetians, because they got to pay off their debts to the Venetians. Then when you think about it, maybe that's what the Venetians wanted all along, right?  

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Maybe the Venetians sat together in these negotiations and knew there's no way these guys are going to come up with this sum of money. So they said this outrageous price for the ships, knowing fully well that the Crusaders did not have the money. And we're basically too unsophisticated to realize this whole, you know, this whole ploy, and said, you know, we'll we'll do the ships because our cost of building the ships is way less than 85,000 marks. And then we'll basically pressure these guys to go and take out our competition. And in the long run, that's going to be a huge return on investment force.  

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Maybe that's what they wanted all along, right? And so now you've got the Crusaders. They've sacked this Catholic town, Innocent III. The Pope hears about this, he freaks out. Remember, this is a guy he's all about, you know, he is the authority, he's in charge.  

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He's got everything under his control. And now there's clearly no control. Everything's lost all control. He got his Catholic army totally broke, indebted to the forengi, running around in Croatia, sacking Catholic towns. I mean, he's completely lost the plot here.  

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In order to try to reassert control, he bounces back and he says, I'm going to excommunicate all you Crusaders, right? He's going to excommunicate them as punishment for second as Catholic town. But the leaders of the Crusade, they don't bother actually passing it on to their troops, right? Because I say, well, now we're going to have outright tyranny. We're going to have just a total anarchy if we tell people, they don't even tell people like, hey, guys, you've been excommunicated by the Pope for doing what we told you.  

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So they just sort of keep it a secret. And now you've got the Crusade. So the pope's furious. The Venetians have just ridden themselves of their competition, and you've got basically this, like, gang. That's what the Crusaders are at this point.  

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They're just a gang. It's just like an armed, you know, a mercenary militia hanging out in Solder. They just sacked the town, demolished a lot of stuff, stolen pillaged, and they're camped out there in the winter, and they get a new opportunity comes to them because now it's like people sort of see, like, oh, this is an armed gang. We could probably use that to our advantage. And so at the same time now, right around the same time, you've got the Byzantine Empire.  

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Remember, the Byzantine Empire is based in Constantinople, and technically they are Christian, but they're not Roman Catholic. The Byzantine Empire is Eastern Orthodox at this point. And the emperor of the Byzantine Empire is a guy. He was deposed, he was chased out of town, just par for the course. In the Byzantine Empire, there's always murder and intrigue and assassination and all this sort of thing.  

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The Byzantine Empire, again, this is supposed to be the continuation of the original Roman Empire. This is back. We talked about this in a previous podcast. Constantine, the Roman Emperor Constantine ends up building a new capital in this area in Byzantium, which became known as Constantinople and became later on the capital of the Roman Empire. 100 years, 150 years after that, basically, the Western Roman Empire just sort of fell into the abyss and was taken over by all the barbarians.  

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But the Roman Empire itself continued. In fact, in Constantinople, they viewed themselves as Romans. They viewed themselves as the Roman Empire. And so now you've got essentially the Roman Emperor in Constantinople who's been deposed, and his son, this guy named Alexios, the fourth. Alexa the Fourth is his close relative, and he says he reached out to the Crusaders that are wintering in Zada.  

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And he said, Fellas, I want to make you an offer. I want you to retake the city. I want you to retake the city of Constantinople and kick out these pretenders and get rid of these guys, and I'm going to be Emperor, but I'll pay you a whole bunch of money as soon as you retake the city for me. The Crusaders, again, at this point, they're just a gang, they're just a bunch of mercenaries that go, yeah, sounds good, you know, I mean, we took ZAR, we might as well take Constantinople. And it seemed like a less, less controversial, because again, Byzantium wasn't even Catholic.  

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They were Christian, but they weren't actually Roman Catholic, so it wouldn't be that big of a deal. So that's what they do. So they go in twelve three, they go to Constantinople, all the Crusaders, they pick themselves up, they leave Zatter, they go to Constantinople, and they take the city after a siege, and take the city on August 4, August 1, Twelve Three, and then they went to Alexios the Fourth. They said, all right, man, we held a bar into the bargain. We took the city for you and up, pay up.  

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Wouldn't you know it, Alexios doesn't have the money. That's because his predecessor had fled with all the gold and they didn't have any money. The treasury was practically empty. And so Alexis does something really, really unpopular. He takes all of these Eastern Orthodox relics, these icons, these scepters, and all these different things, and they're all made of gold and silver, and he melts them down to pay the Crusaders.  

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Now imagine you're a local, Eastern Orthodox, local citizen, living in Constantinople at the time, and you see your Emperor supposed to be this Eastern Orthodox guy, melting down all of your precious religious icons to go and pay these foreign people that aren't even of your religion. You're furious about this, and people were rightfully furious about this, and say you're melting down all of our stuff to go and pay these foreign guys just so that you can be emperor. People got furious, riots broke out, all sorts of things, and eventually Alexios the Fourth was assassinated. So now the Crusaders are going, oh my God, the guy that was supposed to pay us, and he was trying to pay us, now he's been assassinated, somebody's got to pay us. Now.  

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The crusaders are furious. So they actually took the city again, there was actually a second siege, which actually became known as the Sack of Constantinople, and this time they were really mad and they totally looted the place. They just gutted the city. So we have now this supposedly Catholic army who was sent by the supposedly all powerful Pope, supposedly to take back the Holy Lands, supposedly to fend off the Muslim invaders. Now they took this Catholic city in Croatia.  

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Now they're looting and raping and murdering their way across Constantinople. It was so bad, it was written by one historian who called it, quote, a scale which even the ancient Vandals and Goths would have found unbelievable. So it was quite a vicious and violent assault on the city of Constantinople at this point. They said, you know what? You know what?  

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Forget it. There's no more Byzantine Empire. We're tired of these people. They lie. Everybody lies.  

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And now you think about these Crusaders, like they were supposed to go to Egypt, and now they end up in Constantinople. They've been in debt. They've been promised the world that everybody keeps lying to them, and they're under the thumb of the Venetians. They're so tired of it. So they said, we're just going to reconstitute this place.  

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We're going to take this Byzantine Empire, and now it's ours, and we're going to rename it the Latin Empire. The Latin empire. And Concentrate became the new capital of the new Latin Empire. And again, remember before that, it was the Byzantine Empire. Byzantine Empire was Eastern Orthodox, not Roman Catholics.  

[00:19:09.160]

Or didn't fall under the Pope. And so if you think about it from the leadership of the Crusaders and their perspective, this is kind of a face saving consolation prize, because they didn't take Jerusalem, they didn't take Egypt, but hey, at least we got this Eastern Orthodox place, and we're going to put this under the Pope's control. So the Pope Innocent the 30, can claim, oh, at least we got Constantinople. This was great for the Venetians. If you're Venice, you're just rubbing your hands together and saying, oh, yeah, because you gotten rid of your competition on the Adriatic, you've gotten rid of Constantinople, and basically these guys are all under your thumb, right?  

[00:19:44.760]

Venice holds all the political and economic influence. Now, actually, at this point, they control roughly 40% of all the territory. That was supposedly the Latin Empire is actually under the control of Venice. Venice basically now controls the Dardanelles, which is strategically one of the most important sea passages in the history of the world. Right?  

[00:20:05.730]

So now this is all under Venice's control. Great for trade. They've got no competition. I mean, it just can't possibly get any better for Venice. And naturally, Venetians began pouring into Constantinople.  

[00:20:16.910]

Business was brisk, and it remained that way for for several decades. And there was even there were so many Venetians in Constantinople this point. There was even a Venetian quarter in the city. And by around the middle of the century or so, you know, 1240s, 1250s, there were a couple of young guys from Venice and two of these Venetian guys that were there, these traders were a couple of young traders named Nicolo and Mafao. They were brothers.  

[00:20:42.110]

And the brothers Nicolo and Mafeo were excellent businessmen. They had accumulated quite a strong fortune, especially for young guys of their age. But they saw the writing on the wall, it was clear to them that this Latin empire wouldn't last. And that was pretty obvious to them as soon as they showed up and, and it didn't last. I mean, this, this Latin empire, it was like 50, 60 years and it was done that's because these, these European guys that had taken over, they were all weak.  

[00:21:11.120]

The emperors were weak. The city's defenses were nonexistent, the treasury was depleted. Social chaos is on the rise. You've got again, intense ideological conflict between the Eastern Orthodox and the Roman Catholics. Again, to us we view that as all of our why do people get so fussy about these subtle little religious differences?  

[00:21:30.830]

It was a really big deal for them. In the same way that people, if you bring somebody from the past, from the 1002 hundreds and bring them to our times and go why are you guys so fussy about social justice and all these sorts of things that might seem silly to them. Again, everybody's got their ideology and people get very entrenched in their ideology. Nobody likes being forced to do anything. And when they have forced conversions and you have to be this ideology, you have to be that ideology, nobody really likes that.  

[00:21:57.420]

And it creates a lot of conflict. And so there's all this going on. Again, the treasure is getting depleted. Emperors are weak, politicians are weak. They've got enemies at the gate.  

[00:22:07.020]

And Nicola and Mafiao say, you know what? The getting has been good here. We made a ton of money, but it's time to go. Their time in the city had been very, very prosperous. But again, they saw the writing on the wall.  

[00:22:16.490]

So they got out of town around 1250, 912, 59. They've been there for a while, but they got out. It's 1259. They travel east. Now, that turned out to be a really good choice because Constantinople would actually fall a couple of years later.  

[00:22:29.860]

A new emperor would assert himself and burn the entire Venetian quarter to the ground. They were so sick and tired of the Venetians at that point and Nicolo and Mafiao would have most certainly been exterminated in that carnage and that revenge. And so it's basically 1260, 1261. The Byzantine Empire was reformed, re established. We're Byzantine again, we're Eastern Orthodox again.  

[00:22:50.780]

Forget about everything that happened over the last 60 years, but Nicolo and Mafiao, they're out of there. They're on the road. And instead of sticking around and waiting for disaster to strike, they got out early and they started making their way across the Silk Road. They didn't go back to Italy. They went east.  

[00:23:05.120]

They went across the Arabian Peninsula. They went across the Silk Road. They made it to Uzbekistan, modern day Uzbekistan. They had a blast there. They stayed in some of these areas for even a couple of years and they kept going east and finally made their way to what is today modern day Beijing, and they met the guy.  

[00:23:22.830]

They were presented to the court, to the ruler, the guy who ruled over all the lands they had just crossed, from Beijing, all the way back across the Arabian peninsula, across the Silk Road, uzbekistan, India, all these places. They met the guy that ruled over all of that. And his name, of course, was Kubla Khan. Kubla Khan was a very inquisitive guy. He was perhaps this is all very relative, but certainly much more inquisitive than his grandfather.  

[00:23:49.120]

Genghis Khan, also known as Genghis Khan, also known as chengas Khan. A lot of different ways to pronounce his name. Kublai Khan was was a lot more sophisticated, a lot more inquisitive. He was a curious guy. He really appreciated and valued foreigners and foreign culture.  

[00:24:03.940]

To him, the more the merrier, even if it was a point where people were sort of disputing. And he had disputes with one another over cultural differences, he thought, well, it's better they have disputes with one another over cultural differences than they have disputes with me as their ruler. And so Kublai Khan was quite enamored with these two brothers, these Venetian traders, and he said, here's what I want you guys to do. I want you to go all the way back to your leader. I want you to go back to this guy.  

[00:24:29.670]

I've heard about this pope. I want you to go back to this pope, and I want you to set up an exchange of ideas and information. Information. And he sent in this sort of emissary. He sent to the pope a request.  

[00:24:40.320]

He said, I'd like for the pope to send 100 scholars to our lands here in Mongolia so that we could all learn from you western customs and religion and education, all these different things. And so he gave these guys, Diecolo and Mafeo this golden tablet, something called a Pisa. And the Pisa was literally it was a tablet made of gold. It's about a foot long, a couple of inches thick. I mean, it was quite a hefty thing, and it was sort of like a passport.  

[00:25:03.800]

This was normal in Mongolia that different emissaries and court officials and government officials would have this thing because it was this thing that was stamped by the khan himself, and it would threaten everybody. The pope threatened people with excommunication. The Khan just threatened everybody with a vicious and horrible death. And the Pisa would basically say, give these guys whatever they need, whatever they want, and ordered by the con, and if you don't, I'm coming for you. And so everybody generally would abide by the Pisa.  

[00:25:33.140]

Somebody showed up with his golden pisa. You were practically throwing rose petals at their feet, and it ensured the protection and comfort and safety and food and money, whatever they needed all along the journey, all the way back to Italy. And so they finally returned home. Nicolo and Mafia, I remember these guys. What.  

[00:25:49.410]

An incredible journey. They were in Constantinople, they went to Crimea, they went to Iran and Persia, they went to India, they went to Uzbekistan. Now they're in China. They go all the way back, all the way back and they finally get back home to Italy. They land in Venice in 1269, ten years after they left Constantinople.  

[00:26:09.450]

So that was a long voyage and what do you know, it nicolo found that he had a son who was now 15 years old. 15 years old. And he decided after this whole back and forth with the Pope and all of this, he decided, you know what? You're 15. I'm going to bring you back with me on the voyage back to Mongolia.  

[00:26:26.750]

And his son, of course, is very famously known to history as Marco, marco Polo. And Marco Polo would spend most of the rest of his life traveling. He went to some of the most exotic places that very, very few Europeans had ever set foot. And he wrote about it. He wrote about it in his book.  

[00:26:42.930]

It's called The Travels of Marco Polo. And like a lot of works from history, some of it's factual, some of it's completely fantastic, some of it is very chest thumping, self aggrandizement. This is a similar common theme throughout history where you see Julius Caesar. Julius Caesar wrote an account of his wars against the Gauls. And this is actually the same.  

[00:27:02.710]

I mean, Caesar is pumping himself up. Caesar refers to himself in the third person in his book. It's totally ridiculous. But he's praising caesar is praising his own genius on the battlefield and making outrageous claims of victory. We vanquished millions of Gauls without a single law.  

[00:27:18.590]

I mean, all these just silly things that are total fantasy, total fiction, but there are certain factual things about it. And Caesar and his writings and his travels about himself, I mean, there are certain things that are factual. We can see this in the works of Herodotus. We can see this in the Old Testament. I mean, there are so many things throughout history that are, again, part fact, part fiction, part whatever.  

[00:27:39.650]

In Marco Polo's book, he makes himself out to be this great guy, probably gives himself a lot more credit than he deserves. Some of things are clearly completely made up. And even back then, to be honest, there are so many things that people just didn't believe. They read this book and they go, yeah, okay, dude, no way. But it was still things that people just never heard about, things that people never even imagined.  

[00:28:02.100]

And there are a lot of things that are actually quite factual from his books. You also got to remember that a lot of the books, it was basically pooled together from the notes and things that he took. And a lot of this was written by a teenager. A guy was 15, 1719 years old. So of course there's an obsession with the sexual customs of all these different peoples that he encountered.  

[00:28:20.920]

He writes, for example, he travels to Tibet, and this is a place where, at the time, chastity and virginity were frowned upon and women were encouraged to sleep with travelers. And Marco Polo actually says explicitly in his book, like, I highly recommend going to this place, especially if you're a young man between the ages of 18 and 30, whatever. I mean, he loves this place, and he basically rates women in every country that he goes to who are the most beautiful, who are the least beautiful, who are the most this and that. And in fairness, again, these are also the musings of a horny teenager, but in fairness, is also a source of intelligence for Kublai Khan. Kubla Khan, in many respects, is an overgrown manchild who was always on the lookout for more concubines.  

[00:29:04.410]

The guy had thousands of people whatever he wanted to in his palace. But they had actually, in the Mongol Empire, they had a highly formalized system of concubinage where they had literally officials on staff who would assess beauty. Objectively by taking measurements of women's the distance of their eyes and the thickness of their brows and the pumpness of their cheeks and all these different things and assess women's beauty. So Marco Polo was essentially gathering intelligence for Kublai Khan and all these things. The book, if you've never read it, a lot of people have heard about it, in some respects, very frustrating, because there's very little chronology.  

[00:29:44.670]

It's hard to separate, in some respects, fact from fiction. Sometimes Polo talks about places that he's never been to, as if he's been there, just hearing different accounts from what other people say and all these different things. But it is quite a fascinating book, especially if you keep in the back of your mind that was written by a very, very, you know, basically a teenager, a guy in his early 20s, but as well, like, having been to places that nobody in Europe, most people would never have dreamed about. And this is the way the guy lived his life. He ended up going back to Europe for a time.  

[00:30:13.010]

Actually, he was put in captivity when he was in Europe, but he was treated very, very well. He's treated as a very distinguished, dignified nobleman. So he's treated incredibly well, given all sorts of luxuries while he was in captivity. That was the point where it actually dictated his book and had it published. And even after he was released, he continued to travel and explore and go all over the world and really just maintain that global mindset.  

[00:30:38.550]

Marco Polo, for his faults and eccentricities and the silly things that he wrote, was clearly a guy, regardless of all that, who recognized that the world was a really big place and it was full of unimaginable opportunities. This is a guy that has gone down in history as one of the world's more famous travelers. Have been other people. There was a Viking, a guy who's named ingvar the far traveled, ingvar the far travel. This is another guy who was a famous traveler throughout history.  

[00:31:09.750]

You've got Strabo who is an ancient sort of Greco Roman lived during the time of Augustus. In fact, travel in certain places, in certain areas was actually somewhat common. The ancient Romans did travel extensively. They had roads and they had sea routes and they had all these things, the Romans along their roads they had a very formalized system where every several miles there would be new post, where there would be stables and fresh horses that you could hire, there would be inns after that. I mean all this stuff was actually very highly regimented and organized to make it a lot easier for travel to take place and these are things that ancient people always understood during the time of Augustus in the first century BC.  

[00:31:53.150]

First century Ad. Travel was very, very commonplace, especially around the Mediterranean. People would travel to expand their horizons and learn, especially for scholarship and trade and these sorts of things. And it even predates, far predates the Romans, I think. Last week, the week before, we talked about trade and travel from the ancient phoenicians and establishing various colonies and trade posts, one of which became Carthage and the Carthaginian empire.  

[00:32:15.590]

All these things establishing wealth and prosperity and this has been a very, very common theme throughout human history. There have always been people. Some people, some people always had a peasant mindset and that there was no world beyond their tiny village. Others had a level of sophistication understand that there's more out there in the world, and they had a more international, global mindset, and they realized that that mindset was the gateway to far greater opportunity. And there was a lot of opportunity.  

[00:32:44.480]

There was the opportunity for profit potential, as the case of marco polo shows. The guy became very wealthy. His father and his uncle nicole and mafiao became very, very wealthy. But there were lifestyle opportunities. As marco polo wrote about you going to tibet.  

[00:32:57.870]

And he thought, this would never happen where I came from. And now all of a sudden he goes to Tibet and this is a teenage kid getting laid everywhere he goes and different things like that. I mean you've got health opportunities in the case Marco Polo in his book he writes about he actually got very, very ill at one point along the voyage to go, going into Mongolia for the first time. People think that it might have been tuberculosis as a matter of fact. And he was told you got to go up into the mountains.  

[00:33:24.280]

They had a place here in the mountains where he could go up and basically to help reduce the altitude, reduce the pressure, help him breathe a little bit more easily and he did recover and it's possible that the guy would have died if he hadn't had that opportunity. And that mindset of okay, what can I do? Where can I go? Let me expand my horizons beyond what's in front of me right now. And he ended up recovering from that.  

[00:33:45.670]

A lot of people realize travel and having that global mindset was just a great way to have more freedom. We talked about how the rest of Europe was under this era of this system of feudalism. But in Venice they didn't have that. And so people moved from a few you know, from Germany or France or some feudal society and they came to Venice where they could be more free or people were fleeing persecution and all sorts of things like that to increase their level of freedom. Or we've seen throughout history people going somewhere for more opportunity, lower cost of living, safety and security because people moving to the United States at a certain point in the 18 hundreds because they're just giving away land for free and they know they can have a better life and take care of themselves and their family.  

[00:34:30.650]

This has been a very common theme throughout history. Today it's obviously so much easier to have this global mindset because we have practically infinite information at our fingertips. We have the opportunity to network with people around the world without leaving the house, without leaving our living room. We have the ability to be on the other side of the planet tomorrow morning. And we also at this point have very relatively limited bureaucratic requirements.  

[00:34:56.630]

And what I mean by that in terms of travel, in terms of restrictions, things like that. You think about travel from the context of travel bureaucracy like visas. Visas are kind of interesting. Just as an aside, a little bit of a historical aberration. Most places never had visas.  

[00:35:10.680]

Of course, we didn't have passports or anything like that either. Long ago, if you were a traveler showing up to place you were probably a curiosity. Many respects welcome mostly because if you had the money to travel then probably good enough to hang out in our town. And that's the way most people most people really looked at it. Or you were bringing things, you're bringing trade, you're bringing goods, you're bringing something that was sort of welcome.  

[00:35:35.760]

It wasn't until there were some isolated episodes of widespread emigration usually because of some sort of crisis like, you know, the Israelites fleeing slavery in Egypt or Protestants fleeing Catholic and Polish oppression and being welcomed by Frederick the Great and Prussia. All these different instances of people fleeing persecution. But the idea of widespread migration, people coming, showing up and immigrating somewhere in Mass that was a relatively recent thing that started in the late 18 hundreds when we see just boatloads of people showing up every day to Ellis Island looking for capitalism and opportunity and all these sort of things. And it became so common, it's really at that point that governments finally said no you can't just show up. You've got to go through a system.  

[00:36:19.290]

And they started setting up, you know, visa regimes and health inspections and all those sorts of things. And and there's actually, you know, the Canadians, believe it or not, had at a very regimented system, they had they had an act, the Chinese Immigration Act in 85, which required a $50 duty for every Chinese person seeking entry into Canada. Obviously, this seems like quite a racist thing to say, well, we've got too many Chinese people, so we're going to charge $50, lot of money back then, $50 for every Chinese person wanting to come into Canada ended up actually increasing all the way up to $500. And, you know, it's you can say, well, that's that's very racist, and so forth. And it is.  

[00:36:56.420]

But it also formed the foundation of excluding people based on nationality. That's what visas are today. In a way, when you think about it, it's just a way to exclude we don't like people from this country, we do like people from that country. So whatever Chinese people, Venezuelans and Nigerians, you need a visa and you got to go through jump through all these bureaucratic hoops. But if you're from Switzerland, you can come in without a visa.  

[00:37:20.010]

That's basically where the foundation of this thing came from, was Canada's 1885 Chinese Immigration Act.  

[00:37:29.470]

In 19 six, they passed an immigration act. Section 28 of the 19 six Immigration Act in Canada prohibited the entry of, quote, poor people. Poor people. They didn't like poor people. Also prostitutes, panhandlers, all sorts of things.  

[00:37:41.940]

They specifically prohibited in this 19 six Immigration Act. But this is also somewhat of an anomaly because this idea of very heavily, heavy, heavy, heavy visas, this lasted for a long time, but really since the 1970s, the world started opening up and started getting rid of all these visa free, these visa regimes, little by little, specialty in Western countries, north America, Western Europe, et cetera. And over the last 30 years, in particular, from 1993 and 2013, if you're a European passport holder, for example, visa free travel, visa travel among European passport holders, meaning you require a visa, fell from about 35% of countries in the world to just over 10%. Right? So this has been a trend where it's become easier and easier and easier to travel, fewer visas required, et cetera.  

[00:38:30.440]

And we see this it's not just with travel, we see this with capital controls and exchange controls, where you can change money and transfer money and transfer funds and all these sorts of things freely, openly around the world, no problem. You can establish a bank account, you can wire money, settle transactions and invoice and so forth. It used to be a really difficult thing to do. It used to be really hard to travel to a place and do business and settle international payments. Now it's very, very easy.  

[00:38:54.560]

Right? And the larger point here again, isn't to suggest like, oh, you should get on a plane tomorrow or go set up a company in Timbuktu or anything like that. The idea is really just to highlight that point, that sophisticated people throughout history have always understood that there is great opportunity beyond their own borders. And this is still absolutely true today. And the basic logic behind this is that when you start thinking globally, you give yourself a lot more options.  

[00:39:22.100]

You give yourself a lot more opportunity, more options. More opportunity is always better. It's always better. And if you think about it, let's just a few examples. I mean, some of these are silly, but if you think about retirement, for example, you say, oh, I'm going to retire.  

[00:39:37.180]

I'm going to move to the suburbs, or whatever. Okay, that's fine, that's fine. I'm going to stay in my home country, I'm going to stay in my state, whatever it is. But if you look abroad all of a sudden, you might find that looking abroad, retiring abroad might mean a much, much lower cost of living and a very high quality of life. You might find that, wow, I could live in a place that's got exactly the weather I want, that's got exactly the lifestyle I want.  

[00:39:57.890]

And even on a modest fixed income, I can afford a beautiful home. I can have a maid, a cook, a driver. I can have top quality medical care. I can go out to nice restaurants and nice dinners regularly. All these things that I can do because I've expanded my thinking internationally.  

[00:40:15.350]

Medical care is actually another great example that I got to pay. It's going to cost me a kidney to go and get this MRI, but instead I can go overseas. I can get this whole workup done just south of the border or whatever. I mean, there's so many places I can go and get dental work done or cosmetic surgery, whatever else it is that you want. By expanding your thinking internationally, you might find a whole lot more options that it might be better, faster, quicker, cheaper, whatever.  

[00:40:44.020]

And you just end up in a better position by giving yourself more options. It's the same with investing. It's the same with business. You expand your universe of options, increase the chances of finding high quality, well managed businesses with excellent growth prospects and an attractive entry price as an investor. That's what we want, right?  

[00:41:00.450]

Wide. Limit yourself to this very narrow pool of options where you have a much greater pool of options. It's going to increase your chances of finding a really great investment. It's going to increase your chances with business. You increase your chances of finding lower cost, maybe remote workers, new markets, growing markets, all sorts of things that are just going to be more beneficial.  

[00:41:18.320]

It doesn't mean you actually have to do it, but at least puts you in a better position. Even personal stuff, let's be honest. Are you looking for the man or woman of your dreams. If you think internationally you'll end up with a lot more options. You greatly increase your chances of a better match.  

[00:41:35.790]

Asset protection. Let's think about I actually want to talk about asset protection for a minute. Asset protection is very interesting, especially if you live in the most litigious country in the history of the world. A lot of people engage in, they hear about these things like, okay, I should probably do something and they set up like an LLC. And I think they're protected because they have some domestic LLC or maybe even set up a domestic trust or something like that.  

[00:41:57.830]

I'm telling you there's just no contest looking abroad to foreign asset protection structures. It's just no contest. I got to say a lot of people think when we talk about asset protection setting up whatever trust and foundations, whatever. And people think there's this common trope, especially in mainstream media, and you see this in these papers or that paper, the paradise papers, the whatever papers the media loves to beat up on anybody that has you know, they say, oh, they got to trust and such and so place, and they think they just automatically it's so ignorant and so stupid. They just associate having some kind of asset protection plan as something that's for criminals.  

[00:42:37.660]

It is not for criminals. It's not. All these people, tax cheats and fraudsters, et cetera, they always get caught. They always do. It's nothing else.  

[00:42:46.920]

If you go around cheating people, it's just a question of karma. You're going to get caught. These people always get caught. This sort of stuff is not for criminals. Asset protection is for honest people to protect themselves from criminals.  

[00:42:57.990]

It's to protect yourself from blood sucking lawyers. And people, honestly, these criminally minded people whose whole purpose in life is to abuse the legal system and steal from hardworking professionals, hardworking business owners, hardworking talented people that have saved their money and been responsible. And there's people, this is what they do. They float around out there and they make a big stink. They make a bunch of noise and they abuse the legal system.  

[00:43:21.800]

They abuse the law to go and steal from people. Asset protection is to protect honest people from those dishonest people, to protect honest people from those criminals. And this is why it makes so much sense, especially if you live in the most litigious country to have ever existed in the history of the world and for people to set up some kind of structure. Now most people again, they don't expand their thinking to the whole world. They say, oh I'm in this country so I'm going to do whatever I'm going to do exactly in this country.  

[00:43:48.540]

Well guess what? Domestic asset protection structures, you set up a trust, you set up an LLC, it's not going to do anything. It's not going to do anything for you because a court in your home country. A judge can basically set aside all of that because they have jurisdiction over the trust. They have jurisdiction over the LLC.  

[00:44:05.300]

So it doesn't really do any good. I've had lots of conversations with lots of asset protection lawyers, all these people that basically say, look, all these things that you read about asset protection in certain states that say, oh, we've got rocks, all of this, the bulletproof, that it's all clever marketing gimmicks. It actually doesn't do very much for you at all. However, if you look overseas, there are entire countries that have passed clear legislation specifically for the purpose of for honest people to protect themselves from these dishonest, abusive criminals, right? So Belize.  

[00:44:42.370]

Great example. Belize actually under its Limited Liability Companies Act, part Six, Section 53, says, quote, any action, any action made under duress shall not be honored. The idea basically being that if somebody is being threatened, if somebody is being sort of forced to do something against their will, that any action, the LLC doesn't need to listen to that the banks don't need to listen to, that the LLC is actually legally required to disregard the instructions from anybody giving instructions under duress. So this is something is specifically wrote with asset protection in mind. A lot of jurisdictions, including Belize, other places that are famous for asset protection, like Nevis, et cetera, they have something called a charging order which basically says, first of all, somebody wants to come after your LLC.  

[00:45:27.890]

They got to do it in this country, which in a case like Belize, for example, it's something like $100,000 bond just to bring a lawsuit, right? So that's a really pretty high barrier to entry for a lawsuit. It helps. It helps just get rid of these frivolous lawsuits from these ambulance chasing, bloodsucking lawyers and professional plaintiffs and people whose entire job is to go around suing people and abusing the legal system, even though there's not actually any real grievance. They just basically steal from others, right?  

[00:45:55.250]

And so they said, we're going to make a very high barrier to entry to discourage anybody from doing that. And then even if you win, you bring a case here, even if you win, the thing that you end up getting is something called a charging order. And a charging order is basically you don't actually get control of the property. You don't get control of the property. You basically assign certain economic rights associated with the property.  

[00:46:13.640]

And not to turn the listen to a legal lesson, but the reason that matters is because it can actually be. Even if somebody comes and brings some frivolous lawsuit and they go and they want to pay $100,000 to do it and all these different things, even if they win, they actually lose because a charging order doesn't actually give you anything. And that can actually be a net negative from a tax perspective. You end up with this giant tax liability, but no assets. So it really discourages, again, these dishonest people that abuse the legal system.  

[00:46:38.420]

It really discourages them from going around and trying to steal from honest, hardworking people. And that's why these things are actually important. But most domestic structures won't hold a candle to this. People that are thinking that, well, at least I've got some domestic asset protection structure so I'm safe from these dishonest, abusive criminals. Well, no, you're actually not.  

[00:46:59.750]

Domestic structures are okay, but they just can't hold a candle to some of these places. If you expand your thinking internationally, there's just one example. Tax is another example. We talk about taxes all the time, and there's a reason for that. It's because reducing your tax burden is an incredible return on investment.  

[00:47:17.840]

It's one of the best ways to actually, in my opinion, actually move the needle, make a real statement. People would say, like, oh, if you don't like the politicians, you should go vote. I think if you don't like what politicians are doing with your money, stop giving them money. Not illegally, but use all the legal ways at your disposal to stop giving them money. It's a much stronger statement to make.  

[00:47:37.120]

It puts more money in your pocket, puts you in a position of strength that if you want to, you can actually still give that money to the government if you want to. If you think, well, the national debt is too high, well, you can actually pay less tax and then make a donation to the treasury to pay down the national debt. I mean, you can still give it to the government if you want to. It's entirely up to you. You can go fund charities, do all sorts of things.  

[00:47:57.050]

This has been sort of an annual ritual for me where I take a lot of money that I don't pay in tax and I do things with it that actually move the needle for individual people or causes that I think are worthy. You have the ability to do this if you take completely legal and legitimate steps to reduce the amount that you owe. Most people do have the ability to do this. The tax code is enormous, and there are plenty of ways to reduce the amounts you owe completely and totally legitimately. But this is becoming a thing that will continue to be more and more necessary if we think about I'm just going to review this briefly.  

[00:48:31.580]

We'll probably talk about this in more detail in the next couple of weeks because there's more numbers coming out. But I talk about Social Security a lot. The program is completely underwater. The annual report, Social Security's Annual Trustees Report says the trust funds are going to be fully depleted in ten years. Probably going to happen sooner because of inflation.  

[00:48:46.240]

But they basically have very few options. They can just let the trust fund run out, slash everybody's benefits, which is essentially a default on the promises they made to taxpayers, or they could cut benefits now, or they could change the retirement, and you say, oh, we told you you could retire at 65. Now it's going to be 72. Well, that's also a default on the promises they made. Forget about everything we told you for the last 40 years.  

[00:49:07.260]

Now it's going to be something else. We're going to move the goalpost. They can also bail out the program, but that's with money they don't have, so that creates inflation. Or they could drastically raise taxes, which is also very inflationary because it squeezes your standard of living. So basically, essentially, their options are either default or inflate, and it's probably going to be a combination of both of those.  

[00:49:25.670]

If you look at it, really, if you think about it, Social Security, if you do the math, Social Security is basically 12.4% from a federal level in the US. 12.4%. So you're taking 12.4% of somebody's salary, investing it at these, you know, treasury rates, they're getting 2.3%. It's nothing. 2.3% annual return barely keeps up with inflation, even over long term averages.  

[00:49:46.710]

So basically, taking 12.4% of somebody's salary and paying out a benefit of one $800 a month, do the math. It just doesn't compute. You just can't do that, right? You just can't do that. You look at the average somebody's average salary in the US.  

[00:50:00.510]

The Department of labor says it's less than $60,000. You take 12.4% of that, you just don't get to one $800. Even if you accumulate all that for decades, it still leaves a giant hole. You just don't end up with enough money to pay one $800 a month for the rest of somebody's life. It just doesn't compute.  

[00:50:17.470]

Social Security knows this. They acknowledge this. This is why they estimate their funding gap at negative $47.6 trillion. It's so obvious, right? And the solutions are either need to Social Security that needs to be able to generate a much, much higher return, but they can't, because by law, they're only allowed to invest in US.  

[00:50:38.330]

Government treasuries. They can't invest in the stock market, they can't invest in real estate, they can't invest in private equity. They can't invest in anything where they can generate more than a 2.3% return. So unless they're allowed to do that, it's not going to work. Or they got to raise the tax, right?  

[00:50:52.000]

So instead of paying 12.4% tax, they got to pay 20, 30% tax, which is actually more normal. If you look at the rest of the world and most social insurance programs like this, most countries have 25, 30, 35% taxes on payroll to fund their Social Security programs. In the US. It's 12.4%. You can't offer the benefit and not have enough money to pay for it.  

[00:51:13.750]

You either got to raise the tax to pay for it, or you got to raise the investment return to pay for it, or you got a default on the promise, whatever it is. But it. Just doesn't compute. And that's just for Social Security, right? Then there's the rest of the budget.  

[00:51:27.770]

The fiscal year 22 numbers will be out in the next couple of weeks. And so this is just going to be completely gruesome. But if you look back to the previous fiscal year, FY 21, the net operating loss of the federal government was negative $3.1 trillion. Right? $3.1 trillion loss.  

[00:51:46.200]

It's absolutely incredible. So again, they just don't and it's going to be horrendous for FY 22. It's already horrendous for FY 23. They're already on record for this crazy high budget deficit. The budget deficit has grown in FY 23 in the first four months of the year than it did over FY 22.  

[00:52:01.110]

I mean, these guys have no hope of actually running a balanced budget, and they consider running a balanced budget now irresponsible, and they're not going to make any changes. Just the other night, there was this at the State of the Disunion address, and the President aviator sunglasses in chief was up there talking about, oh, we're not going to touch Social Security. I mean, they're not even interested in discussing it. They won't even discuss it. It's off the table or it's off the books, as he called it.  

[00:52:27.700]

They're not even going to discuss it. So they're clearly in no interest in solving this problem whatsoever. And that leaves them very, very few options either. Again, they either inflate, they print a bunch of money so they can pay off their debts, or they default on their creditors. They default on those citizens.  

[00:52:43.210]

Most likely, it's going to be a combination of all these things, including dramatically increasing taxes. You are going to be punished, because even though you had nothing to do with this, you just happen to be living in the country, therefore you will be punished. You had nothing to do with this. You didn't make any of these decisions. The people who are responsible for these decisions, the people who are responsible for this financial mess, will never be punished.  

[00:53:05.070]

They will receive the Presidential Medal of Freedom. They will have schools named after them. They will be Harold in textbooks as the greatest speaker of the House of all time. All these things. They will be given accolades.  

[00:53:16.520]

They will never be held responsible. You will be held responsible. You will be punished. And that's why I think it makes sense to look at at least look at the legal steps you have at your disposal to reduce your taxes. You could do things that are completely and totally legal to reduce the amount that you owe.  

[00:53:32.950]

This makes sense. From a moral perspective, it makes sense. From just a pure, just rational perspective, it makes sense. And there are so many options available. There are domestic options available.  

[00:53:42.380]

We talk about some of these things a lot like maximizing retirement contributions, setting up the right kind of structure that gives you the ability to reduce your taxable income by tens of thousands of dollars and allowing that money to grow tax free in a retirement account. I mean, there's a lot of things you can do to reduce your income, and they're coming up with all sorts of conniving ways. They want wealth taxes and national sales taxes, all these things. And so there's always going to be new threats and new challenges, but there's always going to be completely legal ways to reduce what you owe. If you look overseas, there are always, honestly, even more ways.  

[00:54:15.990]

And a lot of times those overseas methods of tax mitigation are even more effective. If you think about it from a personal perspective, you can move abroad, which I understand is not, you know, it's a lot of people that just don't have the ability to do that. And that's fine, but it is an option. It gives you access to the foreign earned income exclusion, which can basically slash your tax bill to almost nothing, and you can earn $250,000 or more per household. You could move to a place like Puerto Rico where you could earn virtually unlimited income and pay 0% capital gains, 4% combined business and personal tax.  

[00:54:51.370]

I mean, there are ways to do that if you look abroad, but you don't have to move. You don't have to move if you have a business, for example, you can actually take advantage of this thing they call the global intangible low tax income provisions, right? If you spell it out, it's G-I-L-T-I. They came up with this, like, this name. They call it Guilty because they want you to think, oh, if you look overseas, it makes you a bad person.  

[00:55:14.020]

No, it makes you actually a very rational and sensible person. And this is a way where you can cut your corporate tax rate in half down to just ten and a half percent, right? So you can effectively reduce your global worldwide tax rate, setting up a company in the right kind of place, and you'll still pay tax in the US. But you'll basically pay ten and a half percent, right? So this is an example of literally cutting your corporate tax rate in half if you expand your thinking internationally.  

[00:55:40.020]

This is what a lot of companies do. Apple does this. Google does this, and Facebook does this. This is not just for big, giant multinationals. Anybody can do this.  

[00:55:47.550]

You should obviously, it's not for everybody. The reporting is a little bit more complex and you should be of a certain size. But I mean, honestly, plenty of small businesses, medium sized businesses, can absolutely benefit. And these are just barely scratches the surface of the different options and things that are available to cut your taxes, especially if you have that global mindset and you look abroad. So, again, the bottom line here, these are just examples.  

[00:56:13.190]

The bottom line here isn't you don't have to be Marco Polo. You don't have to spend your life roaming for one place the next. You don't have to travel to 122 countries. You don't have to leave your hometown. You don't have to leave your living room.  

[00:56:23.610]

But it just makes so much sense to expand your thinking to the whole world. There's so much benefit. It creates so much more opportunity. It creates so many more options. More options is better.  

[00:56:33.900]

More options means more freedom. And you'll be so much better off for it just by expanding your thinking to the world. That's it for this week. I want to thank you so much for joining me and giving me some of your time. And we'll speak to you again soon.   Close Podcast Transcription

Gold is really an amazing metal when you think about it.

It doesn’t corrode. Coins buried underground or sunk at the bottom of the ocean for hundreds of years are routinely pulled up and brushed off, and they’re good as new.

This strength and durability is precisely what makes gold so interesting as an inflation hedge.

It undoubtedly takes a lot of work to produce a gold coin or bar– so much labor, energy, technology, etc.

A gold coin essentially represents all of the work… all of the effort and labor… that went into producing it.

This is not unique. In the same way, a bushel of wheat represents all the labor that went into producing the grain. An iPhone represents all the labor and effort that went into producing it. Except that wheat doesn’t last. iPhones don’t last. Gold does.

So gold essentially encapsulates all of the resources, including TIME, that went into producing it… in a way that lasts forever.

Right now, for example, it costs major mining companies about $1,270 to mine a single ounce of gold. So if you buy gold today, you’re essentially locking in a $1,270 production cost.

This is the reason that gold does such a great job of maintaining its value against inflation, because, over time, production costs tend to increase. And higher production costs eventually result in higher prices.

This is true with just about any product or industry. We’ve seen companies like Procter&Gamble, Unilever, CocaCola, McDonalds, etc. all increase prices because their production costs are rising.

Again, though, you cannot use a Big Mac as a store of value. It won’t last forever. It won’t even last a day.

But gold lasts. You can buy a Canadian Maple Leaf coin today, and, ten years from now, your 2023 coin will be worth exactly the same as a brand new coin minted in 2033.

And if you anticipate that inflation will push up production costs over the next decade (which tends to happen), you can easily make a case that gold prices will be higher by then.

This is the topic of our podcast episode today; we take a deeper look at why gold has long-term value– a variation of ‘proof of work’ that I call Proof of Time.

We start out in Yap Island, in Micronesia, and discuss how the natives there developed one of the most advanced financial systems in the history of the world based on the concept of ‘Proof of Work’.

Anthropologist William Furness wrote that, despite the Yapese having no understanding of economics, they realized that “labor is the true medium of exchange and the true standard of value.”

I believe this is true. But more than labor, I believe that TIME is real standard of value.

Time is the ultimate scarce resource. No one, no matter how rich or powerful, can create any more of it. And once it is used, it is gone forever.

Labor is one of the ways that we use time. And gold is a rare asset that transmits both time and labor… forever.

We also talk about different BUY signals for gold. We talk about miners’ gross profits– and why it makes sense to think about buying when profits are low… or even when the price of gold falls below the price of production.

In a way that’s like buying a house for less than the cost of construction; it’s a SCREAMING deal and definitely worth considering.

Gold isn’t at that level right now. But it could be soon… and that’s why it’s worth understanding how to think about gold, and many other assets, through this lens of ‘time’.

You can listen to this week’s episode here.

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[00:00:00.970]

Today we're going to go back in time to the 26 January in the year 1543. Our location is absolutely nowhere, just the middle of nowhere in the middle of the Pacific Ocean. A tiny speck that you'd have to zoom and zoom and zoom in just to find a little tiny island that's a couple of dozen square miles, an area at most. Now, this is a time in history where you've got super powers that are vying for economic dominance over one another. You've got Spain on one hand and Portugal on the other, both of them empires.  

[00:00:33.190]

And they were really at each other's throats trying to figure out who was going to be number one. They were feverishly establishing colonies all over the world trade routes, exploiting natural resources, trying to be number one. The Americas had already been picked apart. Spain was dominant, and the Americas really had the lock. They had colonies and outposts all over the Caribbean and Hispaniola, where modern day Haiti and Dominican Republic are, puerto Rico, cuba.  

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By the 1543, they had vanquished the Aztecs already. We did a podcast about that some weeks ago. They taken Mexico, they'd taken Peru, where they were pulling literal shiploads of gold out of the out of the ground and shipping it off to Spain, flooding Spain with so much gold that they pulled out of Peru. They had Chile, they had Colombia, and not to be entirely left behind, the Portuguese, they had a foothold. They had really a giant landmass in South America that became Brazil.  

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And the Portuguese were also more international. They had taken some outposts and colonies in Africa. They put Zanzibar, India, they'd even taken a spot in Asia where modern day Singapore is located. And again, the competition between the two was fierce. They weren't at war.  

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They didn't have armies marching on the battlefields, shooting at each other, but it was about as vicious as you can imagine today's standards, we think about trade disputes between China and the United States, or if you're old enough to remember, the 1980s, everybody was terrified that the Japanese were going to take over the world. And the Japanese government had all these unfair practices in its business. That's nothing. It's nothing compared to what these guys would do. There is one story, this is actually with the French.  

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The French went and established a small outpost in Florida, in what is today Jacksonville, Florida. And the Spanish didn't care for that so much that they actually just sent a group of guys and slaughtered all the French people that were there, because they said, well, you're not going to go to Jacksonville. So they just slaughtered all the people, all the French people there. It should have been an act of war, but everybody just sort of shrugged their shoulders as well. That's what it is today.  

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That was the sort of stuff that was kind of normal and commonplace. So they used every dirty trick in the book to trip each other up, even including straight up violence. Now, at the time, the big prize for all these guys was Asia. Again, spain had had the Americas locked down. Portugal was getting into India and getting into Africa.  

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Asia was still relatively virgin territory. There wasn't a major European power that had its hooks into Asia yet. And at the same time, it was also a different level of resource. In the Americas, it was all about gold, it was all about silver, and that's what Spain was doing. They had all these mines everywhere and they were just pulling metal out of the ground and shipping it off to Spain.  

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Well, in Asia, it was different. It wasn't about gold and silver, it was about it's about the spice trade. And the spice trade was a really big deal back then. Spices were so important, as they have been for so much of human history. We have a lot of archaeological evidence that even ancient Neolithic humans, people that predated the ancient Greeks, classical Greeks and Mesopotamians, were engaged in the spice trade.  

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This has been with us in humanity for a really long time. And for us, it seems maybe even a little bit silly. Like, why do people make such a big deal about spice? Well, they might come if they could get in a time machine, come into our air, they would say, Why do you make such a big deal about coffee? It's kind of the same thing.  

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All of these people that killed can't function if they don't have their coffee. It was the same thing back then, right? People say, I can't function without my spice. The other thing about spice is and by the way, coffee today is the number two, top two, top three most widely traded commodity in the world. So coffee is a huge deal in global trade.  

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Spice were a big deal back then, but even more importantly, spices were also almost kind of a form of wealth, a bit of a store of value. No trader in the history of the world has ever said, man, how am I going to get rid of all these spices? Right? Nobody had a shipload of spice and couldn't figure out, who am I going to sell this to? Everybody.  

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If you had a lot of spices, you always knew there was a vast market for it and you could probably fetch top dollar for it because they were always in such high demand. And so controlling spices was not only something that you wanted just in terms of just raw consumption, but also something you wanted just for the economic value. And so Asia was where the spices were at. Spain was playing ketchup. Portugal had already had a little bit of a toe hold in in what is today Singapore.  

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And so, in 1541, the guy who's the Viceroy of New Spain, this is the basically the they're headquartered in Mexico City. This is how far away they were from the Pacific. And they went to the Spanish explorer guy named very Spanish name, ri Lopez de Villa Lobos. And they went to this guy, Villa Lobos, and they said, we want you to go to this island chain in the Pacific. And the island chain is what we know today as the Philippines.  

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The reason it's called the Philippines is because Villa Lobos did find it. They knew it existed because the Portuguese were there. There were maps and sightings and things like that, so it wasn't like they had never heard of this before. But the reason it's actually called the Philippines is because Villalobos got there and named it after King Philip II of Spain. So they called the Philippines, but on the way, they set sail.  

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They had this expedition at 1541. They said, you got to go to the Pacific. Said, all right. Took about a year to get the men and the ships and the money and everything, the supplies. Together they set sail from Mexico, from the Pacific shores of Mexico.  

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On November 1, 1542, months went by. They passed through what is today the Marshall Islands and all those different atolls and so forth. And they finally got to, on January 26, 1543, not the Philippines, but a place they'd never seen before. It's an island chain, small island chain, a couple of islands. They said, oh, my God, this isn't on our maps.  

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We've discovered something new. And they called it the Caroline Islands, after their former king, Charles I, or Carlos the first. They called it Caroline Islands, after Carlos I, king Charles, and of course, naturally said, oh, it's not on our map, therefore we've discovered it. Therefore it belongs to us. And so this little island chains Caroline Islands became Spanish territory, and it remained that way for hundreds of years.  

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They realized very quickly, oh, my God, there's nothing here. There's nothing but coconut trees, and that's it. There's no economic resources. There's no spices, there's no gold, there's no silver. There's nothing here.  

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Just some natives that don't really care for us very much, so we're just going to leave it alone. And essentially nothing happened there for a really long time. A couple of hundred years later, over time, it was very, very quiet. Eventually it transferred from the Spanish into German hens. The Germans didn't do anything with it, and it doesn't really come up on the international radar until an American guy in 1903 oh three, he shows up.  

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And this is a guy named William Furness. Furnace was actually trained as a physician. Interesting guy. He was a medical doctor. And at a certain point, he said, I don't really like medicine anymore.  

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I want to be an anthropologist. He was always sort of intrigued by cultures and civilizations and travel and all these things. A little bit of Indiana Jones, kind of, because he would travel to all these places and do really exotic things he was known as being, like, one of the most highly tattooed people in the world. You take pictures of his tattoos, and this guy had today people's sleeves and all sorts of things. Dragons and eagles.  

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That was a big deal back then. Nobody had that stuff. But Furnace was all tatted out. And he would travel to places and go to these exotic places and take photos, which nobody did that at the time. This guy had a camera, and he would take photographs of his adventures in the jungles and Borneo, whatever.  

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Remember, this is 19. Three people are like, man, far out. This is crazy stuff. This tattooed medical doctor going to Borneo taking these wild photos of topless women in grass skirts. People have never seen anything like that before, right?  

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So this guy, 1903, William Furness. He's in Sydney, Australia and he meets up with his German steamship. And again, at the time, the Caroline Islands. They were technically under German control. Not that the Germans were in control of anything there.  

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Didn't even matter. So he says, all right, I want to go to this place. I want to go to the Caroline. So he hops on this German steamship and they drop him off. And the captain says, well, we'll be back, like, in a couple of months.  

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We stop by once every couple of months. We'll be back in a couple of months. If you survive, then we'll pick you up, we'll take you back home. He said, okay, great. So this guy goes, gets off the gets off the boat, goes into the wilderness to meet the natives and takes his life into his hands and has an incredible experience, an incredible adventure.  

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And he wrote about it extensively. He spent the next several months living there integrating with the local culture, writing about it, learning all their customs, even learning some of the language. And while technically it's called the Caroline Islands the place that he went to was known then as is still known today as Yap some people call it Yap Island. It's technically, again, four islands, not just one, but it's really small. We're talking about, I think, 30 or 40, like, 100 km².  

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It's really small now. This was a really fascinating culture to furness. He wrote about this extensively. All these things, what they did that were so different than what people were accustomed to in the United States and in the west. They engaged in polyamory.  

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They engaged in polyandry. You have to look that one up. They engaged in kind of a very formalized, quasiforest quasi voluntary concubinage where they would steal women from other villages keep them in their village for a while as captives. But then at a certain point, they were free to go but the women would actually stay voluntarily. Just all these things that just made people's heads explode.  

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When he wrote about this stuff, they viewed children as property of the community and not as wards of actual parents and couples. But it's like, oh, the whole village is that all our children, every children, every child belongs to everybody. Everybody's, everybody's child. And just things that Furnace thought were so interesting. But one of the things that he thought was really interesting was there he wrote about this.  

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He said, the Yappies have such little hardship. This is an island where you think about Furnace, he was born, I think, in the 18th. I think he was born like the, at the, at the depths of the Civil War, right? So this is a guy, you know, born in the 18 hundreds who, who has sort of grown up imbued with the great American frontier mythology of the frontiersmen going on their covered wagons, braving all the dangers and risks and taking their lives in their hands. And if you build their log cabin, if you screw up, then you're going to freeze to death in the winter, you're going to starve to death.  

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I mean, they didn't have any of that. And yet he said these people have no natural predators. There's no enemies, there's no snakes, there's no disasters, there's no natural forces, anything that's going to wipe him out. There's no major disease. Food grows everywhere.  

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He writes this kind of joke, really, how motivated can a man be when all he's got to do is roll out of bed in the morning and shake his breakfast off the tree in the backyard, right? How about, I mean, there's nothing that you really have to do, there's nothing you really have to worry about. And because of this, he said that kind of it's, it's, it's like Garden of Eden stuff, really. It's just this sort of paradise that's so easy. And if you take that level of comfort, that ease of life, and you pair that with the fact that there's no natural resources at all, there's nothing to exploit, essentially, there's no economy here.  

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And he said, this is the reason why there is no economy. There's no production, there's no industry, there's no technology, there's nothing going on here at all. And people are very happy. They're extremely happy people. They live their lives and everybody's great.  

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But the thing that really he found, William Furnish found so remarkable is that in spite of having no economy whatsoever, the Yappies had potentially the most highly developed financial system in the world. And he devoted an entire chapter to his book about this. In fact, he was so taken by their system of money, he actually called his work, he called it the island of Stone money. And it got published in an economic journal, not an anthropology journal, an economic journal. Because people were so taken by this idea, because that is what they use, this money.  

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They use stones, but not just any stones. They're not talking about rocks that you pick up off the ground. You've probably heard of these, these famous Yap island rises or Phi stones, depending on where you are, that these are giant, enormous stones, that it might be several meters in diameter, weigh up to several tons, literally thousands and thousands of pounds. They've got a hole in the middle that's big enough that you're supposed to be able to shove this wooden plank so that if you're strong enough and so inclined, you can actually tilt it on its side and roll it using this wooden plank. And not that most people really did that, but this is the way that they were built.  

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And again, they were huge. And you're talking about Yap being in a place that is so devoid of natural resources, they didn't even have the material, the aggregate stone to make these giant rice stones. They had to go to another island. So they got in their canoes and they paddled quite a long way over to Palau, which I've been to Palau. Palau's got all sorts of very interesting natural resources and quarries and so forth.  

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They have this very special limestone there. You can see it actually to this day. There's part of palau. I flew over this in a helicopter, and there's all these Japanese people that come down and bathe in the waters because of this limestone there, and they think it sort of purifies their skin or whatever. And the people from Yap that would go in their canoes, they would go to Palau quite a long distance to paddle.  

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They would take all the rock they could find, the limestone from the quarry, and they would actually build these stones. They would craft them. And these giant stones, they put them back in their canoes and they paddle back, and they would bring them back and they say, AHA, we have money. And so they would create money that way. That was essentially their monetary system.  

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And the thing that was, you could imagine any of these stones, all of them are different, right? So you've got some stones that are bigger, some are a little bit smaller, some are made of higher quality limestone, some are more polished. And so the value is sort of based primarily on size, but also on quality. You could think about it like gold, for example. You've got some giant gold bar that's 99.99% pure that's going to be worth more than some little tiny gold bar that's maybe only 90% pure, right?  

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So it's the same thing. And they have a measuring system that they call span. It's three span, five span, ten span. So if you think about a span, if you make like an L shape with your thumb and your index finger, and you look at the distance between the tip of your thumb to the tip of your index finger, that distance between your thumb and your index finger is one span. And so they would think about their Rhystones in terms of span.  

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So Furness writes in his book, he said, Well, I went around and said, well, how much are these things worth? And they said, well, a three span Rhystone is worth about 1000 coconuts or a small, roughly 100 pound pig. He said, okay, so these are the ways that they actually these are actual pricing that existed in Yap in 1903. Things that make these stones or the sort of monetary system so interesting because we could laugh and go, it's stones. It's silly, but it's actually not.  

[00:15:17.380]

There's so many things about this that make it extremely effective. Number one is it's a very secure monetary system. Nobody's going to steal these things. Nobody can steal these things. If you can steal these things, it's going to take a crew of guys, so many people that there's no way you're actually going to be able to get away with stealing somebody's rhythm because you got to have a crew of like twelve guys come and pick up these three tonne stones and try and take it somewhere.  

[00:15:40.210]

You're never going to be able to get away with that. So there's built in intrinsic security and furnace. Wright's mother said there's basically no theft on this island as a result of that. There are no intermediaries whatsoever. There's no banker, there's no banker of the rhy stones who's got to go and you got to go deposit your rhy stones with this guy.  

[00:15:58.210]

Everything is completely decentralized, totally disintermediated. There are no intermediaries whatsoever. There's also a very free market in that there's no central authority saying these are the stones and this is all the stones they're going to be. In theory, anybody that's willing to put in the work can go and create more rice tones. If you want to get in your canoe and go to Palau and mine the limestone and fasten it together and make the stone and then haul it back and row all the way back to Yap, then sure, you can do that.  

[00:16:28.750]

And there's actually this great story of another guy. His name was David O'Keefe. He was an Irish American guy and he's one of these old school from the 18 hundreds swashbuckling entrepreneurs. And he shows up to Yap. The story, it's almost unbelievable.  

[00:16:45.250]

It literally is hard to believe. This guy shipwrecked onto Yap Island and was kind of ingratiated himself into the locals, learned the culture, and he said, you know what? He grabbed a couple of guys. He said, let's go to Palau, let's get in your canoes. Let's go to Palau, let's make some stones.  

[00:17:01.120]

And people said, all right. So they go with this guy, David O'Keefe. They go to Palau, they mine some stones, they lay them out. They actually fashion these rhe stones. They bring them back.  

[00:17:10.480]

This is a foreigner. He's not Yappies, he's a foreigner. And he shows up with these rhythms and says, hey, I have money. And the people go, yeah, okay. So they accepted that.  

[00:17:19.150]

The community accepted it. It wasn't that. There was this fixed sum that said that some guy decided, this is all the money that's ever going to be until the end of time. It was a free market in money. As somebody showed up with some similar rhy stones, people actually accepted that.  

[00:17:32.430]

Ironically, they actually made a movie about this. You might want to check it out. The guy who plays David O'Keefe this is from the 1950s. So this is like old school Hollywood stuff. Burt Lancaster plays David O'Keefe.  

[00:17:41.720]

They get one of these Hollywood starlets back in the 1940s, 1950s to play his obviously, there's a love interest. He's got this beautiful woman who falls in love with him, and they go and they have these adventures trying to make rhystones I think it's called what's it called? His majesty O'Keefe for something like that, starring Burt Lancaster from, like, 1953, something like that. So if you feel like checking out an old movie this weekend, might check that one out. But so we have extremely secure, totally decentralized, free market.  

[00:18:10.040]

And it's a credit system, right? So a credit system, unlike a sort of cash and carry system where you've got to go around and back in the old days, when people had gold coins, they had to pay gold coins to one another for every transaction. This is a system where physical possession was not required. You could do a transaction with somebody and say, okay, I'll sell you 1000 coconuts for that three span Rhystone, or, I'll sell you 10,000 coconuts for a 30 span Rhystone. But you know what?  

[00:18:36.180]

That rhy stone sitting in front of your house. Just keep it there. I don't need to pick it up and move it. I'm too lazy to do that. I'm not interested.  

[00:18:41.800]

That sounds like a lot of work, and my back hurts, right? So just keep it there in front front of your house. But we'll all agree that even though it's in front of your house, it's my stone. People go, okay, yeah, that's fine. And so what they essentially had was this decentralized community balance sheet where people could go around, they knew, like, okay, that stone that belongs to this guy.  

[00:18:59.440]

That stone belongs to that family. These three stones that are in the middle of the jungle right here, they're not even in front of anybody's house. They belong to this other person. And everybody just sort of knew. And there was this essentially distributed decentralized ledger of who owns what and who has what money.  

[00:19:15.440]

And it was all a credit based system because they could do that. They could engage in transactions, and no actual money, no stones would change hands, only the concept of who owned it. And people would essentially update their mental balance sheets of who owned which stone. It was actually quite a very interesting system. The real interesting part and furnace was dumbfounded.  

[00:19:35.740]

He tells this story in his book. It's really, actually wonderful. It's a relatively short read, but he's got a whole chapter devoted to the rhystones. And in the chapter, he talks about how there was one family. And he says that everybody their wealth was undisputed by everybody in the community because everybody knew that they had these giant rhystones, but nobody had ever seen them because supposedly generations before it could have been 100 years prior, there were some guys coming back from palau with these giant rhystones that belonged to this family.  

[00:20:05.910]

And the canoe sunk and the rhinestones fell into the ocean, and they were at the bottom of the sea. And what happened was the people that were on that particular voyage, they came back to the island. They went to the village. They said, we had these rhystones. They were like 30 span and really, really great quality.  

[00:20:22.500]

But they fell into the bottom of the ocean, and everybody said, okay, good enough for us. That's fine. You had all these people sort of testify to the size and quality, and they said they belonged to this family. And so even though nobody ever set eyes on those particular rise stones, people just credited that family. And again, their community mental balance sheet, they credited that family with ownership of these giant, beautiful, high quality, huge rhythms.  

[00:20:47.800]

And furnace said, basically, at first, it seems almost crazy. Like, how could they do that? But he said, well, when you think about it, remember, he lived at a time. This is the early 19 hundreds. The US.  

[00:20:59.480]

Is still on a precious metal standard. The dollar is actually defined by gold and silver. And furnace says it seems crazy at first when you think about it. But honestly, we do us. Dollar transactions every day.  

[00:21:12.870]

But I've never seen the gold. I've never seen the silver. I assume that it's there, but I've personally never laid eyes on the silver that's supposedly in the mint. I just believe that it's there. And I go on about my life buying and selling things in US.  

[00:21:25.290]

Dollars as if I knew that the money, that the silver was there. That's basically how they do it with the rhystones. And so there are a lot of things, even though they didn't have the technology, they didn't have the know how, they'd never read Adam smith or any of these famous economists. They figured all this stuff out for themselves. And the thing that's actually quite interesting that I really want to point out here furnace says this, and I think this is a really profound statement, and this is a direct quote from his writing that, again, ended up in the journal of economics.  

[00:21:52.460]

And he said, quote, labor is the true medium of exchange, the true medium of exchange and the true standard of value. He writes this saying again, the yapees, they haven't read any of these. They haven't read Adam Smith. They don't know anything about economics, but they figured this out. They figured out that labor is the true medium of exchange and the true standard of value.  

[00:22:14.350]

What does that actually mean? Well, when you think about it, that's what rise stones actually are. Labor being the true medium of exchange, the true standard of value. Rise stones are essentially proof that there was labor. Labor took place.  

[00:22:27.600]

You don't get that. That stone isn't natural. It doesn't fall from the sky. It doesn't just fall off the mountain. Somebody had to do a lot of work.  

[00:22:35.440]

Somebody had to go and get in their canoe and paddle all the way to Palau and dig that stuff, dig the limestone up and shape it and form it and make these giant disks and poke the hole in the middle, haul it back onto the boat, rode all the way back to to to to Yap. That's a lot of work. And that's essentially what the rhe stone represents. It's proof that there is all this work. There was all this labor, the labor, and not only the labor, the know how, all those things to actually create something.  

[00:22:59.980]

And that something the product of that labor became the medium of exchange. And this is what he's saying. Labor is the true medium of exchange. And that's really what they're using as a medium exchange, is these rhystones is the product of their labor. The thing that is the result of this labor becomes the medium of exchange.  

[00:23:17.670]

Now, if you're into crypto at all, you might be thinking, well, that sounds a lot like proof of work. And it does, because it's really what it is. That's one of the underpinning philosophies behind Bitcoin, the original algorithm, this idea of proof of work, this is one of the they call this a consensus algorithm proof of work. This is why Bitcoin miners essentially perform all these complex calculations, do all these things, and people go, well, there's no point to doing that. There's no intrinsic value, et cetera.  

[00:23:42.080]

Well, there's no intrinsic value to most money. There's no intrinsic value to most currencies most medium of exchange, but it is, by definition, proof of work, because it is doing work regardless of there's actually any intrinsic value associated with it or not. People can debate whether or not the intrinsic value is important. But I just want to point out that this is really the hundreds of years, if not thousands of years. People believe that.  

[00:24:07.260]

Researchers think that Yap Island was originally inhabited as early as 1500 BC. So whenever they started with these ridestones, I could go back a really long way. They realized that proof of work was actually a really powerful way to translate value, to be a measure of value in a medium of exchange. Now, I have a slightly more nuanced view on this idea. Instead of instead of saying proof of work, I see it as proof of time.  

[00:24:33.000]

And the reason I think that's important is because time is the ultimate scarce resource. Time is the most valuable commodity in our existence. No one can make any more. Of it. There is no central banker that can say, let there be time.  

[00:24:44.480]

They can say, let there be money, let there be fiat, let there be interest rates, let there be all these things. They cannot make any more time. No politician, no king, no emperor, no president, no central banker can create any more time. And once it is used, it is gone forever. Once it is consumed, it is gone forever.  

[00:24:59.060]

In whatever way we choose to do that, whether it's through work or recreation or whatever, once it is used, it is gone forever. How it is used definitely has a major impact on our lives. And people use time for destructive purposes, wars and things like that. It has a pretty bad impact on humanity. But in aggregate, if you think about, let's say right now there's 8 billion people in the world.  

[00:25:23.290]

That's roughly true, according to what the demographics tells us, 8 billion people. So literally, over the next 60 seconds, the next 60 seconds, you could say there's 8 billion people minutes, right, or man minutes available. 8 billion people minutes, literally, as I say this right now, for the next 60 seconds, 8 billion people minutes available. And so those 8 billion people minutes will come and go. They will be used and consumed or not used or wasted or whatever it is, and they'll be gone forever until the end of time, whether people are at work or they're at sleep or they're at recreation or whatever it is.  

[00:25:54.160]

And sure, we have technology that's available to us that makes us more efficient with our time, makes us more productive. So we do have the ability to do more. We can do more work in an hour than we used to be able to do, but that 1 hour is still the only hour that we have. And once it's gone, it's gone forever. And this is one of the reasons why I think this concept of time time is really the valuable, scarce, universal, equal currency and everything else.  

[00:26:21.690]

And why it makes actually a lot of sense to view that through that lens. And why I personally find assets that essentially convey time proof of time in ways that are really durable. I think those do tend to make a lot of sense. And gold is really a great example. Gold is a great example because if you think about gold, let's think about a popular coin like Canadian maple leaf, right?  

[00:26:46.790]

So you have different coins of American eagles and buffalo coins and all these different things. Chinese panda coins. Well, in Canada they have these things called maple leaf coins. And so a maple leaf coin that's made from one troy ounce of gold, and that was a troy ounce of gold that was mined and refined and minted. This year, that coin is going to be worth exactly the same as a coin that is made from the same one troy ounce of gold.  

[00:27:12.950]

That was mined will be mined and refined and minted ten years from now, right? So you have a coin today, it's going to be worth exactly the same as a coin ten years from now. That's not really that common, right? You can take whatever, a microchip in your laptop not going to be worth the same as a microchip that's made ten years from now. There's so many things that are not going to be worth the same as something else that's made ten years from now.  

[00:27:37.110]

There's a lot of assets that even when they appreciate, like real estate, like homes, for example, homes do appreciate, but they also depreciate, right? Because you've got all the materials and so forth, that the roof needs to be replaced over time, and the siding needs to be, the deck needs to be redo, all these things that need to need to happen, it requires a lot of maintenance. And if that maintenance isn't being done, then the property itself loses value and it's not going to be as valuable as something that's made brands banking new. But gold is going to be where a gold coin today is going to be worth exactly the same as that similar gold coin ten years from now. That's very interesting.  

[00:28:13.280]

That's very, very interesting. Because when you think about through this lens of proof of time, gold does have natural scarcity through the lens of proof of time it took, and this again goes back to even ancient civilizations. You think about the Romans and the Greeks, it took a lot of labor, a lot of labor, a lot of man hours to explore and develop and mine and refine and mint a single coin took a lot of time. And so holding that gold coin was the equivalent of holding all of that labor in your hand. It's the same way that if you had bushels and bushels of grain, wheat and corn and so forth, well, that wheat and that corn was also the product of labor.  

[00:28:54.430]

It's a lot of labor. It's a lot of manhours that people have to plant and maintain and harvest and thresh and all these things. And you have all this grain as a result. The difference is, is that gold will last forever, right? The wheat doesn't, the wheat is eventually going to rot, it's going to be consumed, but the gold lasts forever.  

[00:29:09.160]

So it's like taking all the labor. Gold basically means you're taking all that labor, of all the labor that it took to again explore the mind, develop the mind, actually pull the gold out of the ground and mine it, refine it, turn it into something, mint it into a coin. All the labor, all the effort, the know how, the technical expertise, the investment in technology, all of that, all that time and effort goes into that gold coin and you've got it in the palm of your hand and it lasts forever. You're freezing in time essentially all of the time that it took to make that gold. And that's a very interesting concept.  

[00:29:42.000]

It's freezing all of that time and holding it in your hand, and that lasting forever. And I'm going to come back to why that matters and why that actually makes such a good inflation hedge. The other part about that and and the the lens through which I would encourage you to look at this is also it's freezing in time, a minor's gross profit, which is really interesting. And if you're not sure what that means, it's a fairly simple concept, gross profit. This is the case with anything.  

[00:30:09.810]

But I'm going to talk about with minors in particular, miners, obviously, like any business, gold miners, oil producer or legal business, you're a law firm, it doesn't matter. Everybody has cost. You've got labor, you've got energy costs. If you're some a lot of businesses that produce things have equipment cost. They have to get tractors and giant machines or whatever it is.  

[00:30:31.710]

They've got all these things that those are all costs. And all that, together with miners, they have a cost of production. How much does it actually cost them to produce an ounce of gold? Right? Well, every company generally kind of reports on that differently.  

[00:30:47.300]

The industry has tried to standardize that. They have something they called AISC. That's the all in sustained cost. It's basically how much does it cost you to produce an ounce of gold? Well, that cost has been going up some of the biggest ones in the world.  

[00:31:00.050]

So you've got Newmont, for example, huge mining company. They're all in. Sustained cost is now $1,271 per ounce, one $271 per ounce. That's up from $1,120 an ounce in the prior year. So that's about a 13% increase just in the prior year.  

[00:31:17.660]

That's their production cost. How much does it cost them to pull 1oz of gold out of the ground? One $271, up from one $120 last year. That's a 13% increase. Then you've got Barrick gold.  

[00:31:29.910]

Barrack Gold is at one $269 per ounce. So more or less the same as Newmont. That's up from $1,034 same time last year. That's a 22% increase. So that shows you these costs can and do increase.  

[00:31:43.960]

These guys are just as susceptible to inflation as any other business as any other person in the world, and these costs are going up. So I mentioned earlier profit margin. What does that actually mean, if you're not familiar? Profit margin. Gross profit margin specifically is essentially the difference between their revenue and their actual cost for that particular ounce.  

[00:32:05.520]

So, for example, Barrett Gold. I use Barrett Gold as an example. A year ago, remember, I said their cost was $1,034 an ounce? Well, the price of gold they were getting on average was $1,771 per ounce. So they're getting $1,771 per ounce in revenue.  

[00:32:21.910]

They were spending $1,034 per ounce to pull that individual ounce of gold out of the ground. So the difference between the two. Their gross profit was $737 an ounce. That's pretty good. Well, this year, the price of gold is actually for barrick what they've been getting.  

[00:32:37.730]

This goes back to, by the way, Q three of 2022. They haven't released their latest numbers yet, but then Q three of 2022. The gold price per ounce they were getting was pretty much the same as the year before. But remember, their cost went up by 22%. So their gross profit fell from $737 an ounce to just $453 an ounce.  

[00:32:57.340]

So you have their gross profit margins falling. Means they're making less money on every ounce of gold. Think about it like a pie, right? When you're spending $1,500 an ounce for gold, there's a portion of that that's basically there's the cost of producing that ounce of gold and then there's the profit for the producer, right? Because as a consumer, you're paying for all of that.  

[00:33:24.450]

You're paying for the cost and you're paying for the profit. So when you think about it, if you're going to buy something, it's sort of a better deal for you if you can buy something where the producer's profit is low, right, you're getting a better deal. You're getting a better deal if you can buy something at a time where basically there's more of the pie for you and less the pie for the producer. So the way you do that is when the gross profit margins are low. And right now we see gross profit margins are actually falling, which means essentially that consumers today, people that buy gold, are getting a larger slice of that pie than the gold miners.  

[00:33:58.550]

That's usually a pretty good time that you would want to buy. The other thing about that, that is important to know about gold in particular, I think a lot of commodities. This is really important thing to understand is that when profits fall, especially gross profits fall, margins fall, it has a longer term impact on supply. When profits are thin, gross profit margins are falling. Producers aren't really doing backflips about the market.  

[00:34:25.410]

They're not going to like, oh man, we're making so much money. Well, you're not making as much money because your gross profits are actually falling. Your costs are going up, but your commodity price isn't really going anywhere, so you're not making as much money. So they're not going to be especially excited about going out and doing new mines. They're not going to be excited about going out and creating a new mine, developing a new mine, spending all that.  

[00:34:44.270]

But it's like, why did we spend all this money on developing a new mine when we're just not going to get that much money for it? Our profit is too low. They get all excited about developing new minds when their profit is really high. When gross profit margins go up, they go, oh my God, we got to develop more mines, right? The thing is, developing mines takes a long time.  

[00:35:02.020]

It takes a long, long time, years in some cases, to develop a mine. And so actually, the smart ones will actually go out and do the mind development at a time when gross profits are actually low, because nobody's really interested in doing that. That means when a couple of years go by and gross profit margins have corrected, now gross profit margins are high because these things are all very cyclical. Now suddenly, hey, I got a new mine going, and you hit it at exactly the right time. So this is something that does have a longer term impact on supply.  

[00:35:29.920]

When they're not investing in new supply, when they're not investing in new mines. What that basically means is that a couple of years from now, the mines that they're mining today are going to be exhausted and they're not going to have any new supply to replace that. So now you've got in the future, less supply, right, which means what? Prices are going to go up. So when gross profit margins are low, it usually means it's going to be in the future, probably less supply is going to be a little bit of a squeeze on supply because there's not as much incentive for them to go out and develop these mines and do the exploration and basically create future supply.  

[00:36:01.670]

So that ends up creating an effect on that future supply, makes you supply lower and creates a situation where we can see gold prices go a lot higher. That's kind of where we are today. Now, all that said, I'm not here to talk about gold or you should buy gold or anything like that. In fact, I would think gold is not actually a screaming buy right now. I think it's okay.  

[00:36:21.290]

It's not below the cost of production. I think that's an important way to look at it. Gold to me would be a screaming buy if it were trading below $1,300 an ounce. If you look at these all in sustained cost, you look at Barrett Gold, for example, and they say, we're producing gold at $1,269 an ounce. Well, if I can buy gold for 1250, that means that Barrack is losing money.  

[00:36:42.270]

That's the case. You want to buy that all day long. That makes a lot of sense. That would make gold is screaming by. And I think it makes sense to consider that way of thinking about it for really any commodity, I think, and even different businesses in general that produce things.  

[00:36:55.480]

When prices in certain commodities get so low that a company begins losing money, their gross profit is low, they lose money on every sale. That's actually a pretty good opportunity as an investor to consider at least buying. There are a lot of other things to factor in. But looking at something in absolute terms, being below commodity price, being below the cost of production, makes a lot of sense. You could look at that as well.  

[00:37:19.610]

Even with things like real estate, real estate in different places around the world sometimes gets so cheap that literally, you've got a house that's selling for less than the cost of construction. You know, that's a great deal. If you can buy a, you know, whatever, four bedroom home for $200,000, and it turns out it would cost you $300,000 to build that house from scratch, and you can buy it for $200,000, that's a great deal, right? So when you buy something for less than it's essentially replacement cost less than its production cost, that's usually an indication that it's at least worth paying attention, doing a lot more research. It also kind of makes sense to consider buying things when margins are low, when those gross profit margins are low, because what you're essentially doing is freezing all of that in time.  

[00:38:01.120]

You're freezing all that in time. You're freezing in time and time now where margins are low, because these things are cyclical. They go down, and then they go back up. And when margins are low now, usually that means margins go up again in the future. It's very cyclical.  

[00:38:13.850]

It gives you an opportunity to make a lot more money. So I would encourage you to again, this is not certainly no recommendation, I think, to buy gold right now. I think, again, it's not a screaming deal. It's not below the cost of production. Margins are low, but they have been lower in the past.  

[00:38:27.170]

So these aren't like rock bottom, low gross profit margins. There is a lot of upside. I think, to be honest, one of the big factors that drives gold prices. There are a lot of factors that drive gold prices in the short term. It's always about supply and demand, and a lot of things about supply that a lot of people don't realize about gold.  

[00:38:42.510]

You may be surprised to learn, for example, that one of the major, a major factor in gold demand is actually from, from farmers in rural India. This is a traditional thing among farmers in rural India. They take their profits from the, from the agricultural harvest, and they buy gold because it's something they understand. They don't have access to most banking services and things like that. So they buy gold because it's a trustworthy store of value.  

[00:39:08.910]

There could be a bad monsoon, wipes out a lot of gold demand and all these sorts of things. That bizarre nuances. It's also central banks. If central banks dip in and they want to buy lots of gold, that's obviously going to have a major impact on price. If central banks are selling gold, that's going to have a major impact on price.  

[00:39:26.100]

And those things can vary significantly month to month, year to year. I think there is a lot of upside, frankly, in central bank demand. I think we're seeing conflict is usually very good for gold, global conflict. And you've got now all these sanctions and things like that. And so it makes sense for countries to consider central banks and their official reserve positions owning gold.  

[00:39:47.380]

And I think there's potentially a lot of upside there, but there's also downside, I think, in the gold price. And it's important to recognize if Vladimir Putin has a heart attack tomorrow morning, the war ends. That's probably not going to be great for the price of gold. I think a lot of traders will just reactively sell gold and we'll probably see the price go down and a lot of things like that. So there's upside, there's downside, there's all sorts of different factors.  

[00:40:11.550]

Margins are low, they have been lower. The price is reasonable, but it's not below the cost of production. So it's not a screaming buy to me if the goal is I want to buy for X and sell for higher than X at some point down the road. And all this is really to say it's not really about gold, but just a way that I would encourage you to think about things, especially when we're talking about commodities, especially good inflation hedges. Proof of time I think is a very powerful concept.  

[00:40:39.000]

And the idea being is there an asset that is durable, that is transferable, that's efficiently? securable something that I can actually transfer this time that went into something, whether or not it has intrinsic value this time and that time will freeze in time. All the labor and all the effort that went into that, that's something that actually that's the stuff of very good inflation. Hedges and Gold is just one example of that. And there's a lot of people say, oh, this is impossible to value gold because you can't do discounted future cash flow methods and you can't do all these complex mathematical models.  

[00:41:15.520]

Well, actually you can value gold. You can value gold because we know exactly what the production costs are, we know exactly what gross profit margins are, and so that makes it a lot easier. There are metrics to value that. And I think it's important if you look at these things in terms of being a long term inflation hedge, why it's a long term inflation hedge. If you think about that concept of freezing in time, like all the labor costs and so forth, if labor costs go up in the future and you've frozen in time labor costs from the past, well then naturally that frozen time cost is going to appreciate in value to be commensurate with the labor because the labor is going to be the same.  

[00:41:50.450]

So those labor costs are going to go up, so the value of the gold that you hold is going to go up. And those are sorts of things, I think, that make very good inflation hedges when you can freeze labor in time, you can actually freeze time itself. It makes a lot of sense. And if you could look at it through a lens of production costs, look at it through a lens of gross profit margins and so forth. You can see, oh, I can freeze this labor in time.  

[00:42:14.520]

I can freeze time itself. And I can do it at a point where I get the biggest slice of the pie. The producers are even losing money on it, and all the financial benefit from this commodity, it actually ends up in my pocket. As the investor, as the consumer, that makes a lot of sense. And I think it makes a lot of sense to view many other assets and commodities through that lens.  

[00:42:34.380]

You can look at real estate through that lens, you can even look at business through that lens. Cost production, gross margins, freezing in time, certain elements. And that's I think we can come up with some very, very good ideas for an inflation hedge. So speaking of time, I think that's probably it. I'm out of it for this week, so I want to thank you for giving me some of yours, and we'll speak to you again soon.   Close Podcast Transcription

As a member of the Boards of Directors of several companies, I regularly attend board meetings to help oversee and guide businesses.

One company in our portfolio is run by some very sharp and talented young guys who have created one of the first metaverse advertising companies. It’s growing rapidly, and they’re even expanding into video games now.

In a recent board meeting, the management team was telling me about their ‘KPIs’ for this year; KPI stands for ‘key performance indicator’, which is essentially a key metric that a company monitors to get an overall sense of the business.

Apple, for example, probably monitors iPhone sales very closely as a major KPI.

These guys at the metaverse business had a long list of KPIs. And as they were explaining the metrics to me, at a certain point I had to stop them.

I told them that, first of all, you can only focus on so many things at once. You cannot prioritize everything. You have a certain amount of time, money, people, and energy, and leaders need to make deliberate decisions about how to allocate those resources.

And second, you have to focus on things that you control.

I told the guys that they cannot control the number of daily active users in the metaverse, or in the video games where they’re advertising.

But they can absolutely control the number of advertisers they work with, the properties in their inventory, etc.

I’m telling you this story because I think it’s a sensible way to think about a Plan B.

Right now, it feels like the world is chain-smoking crisis after crisis.

Consider inflation, for example, which has remained stubbornly high. I can’t do anything to bring down price levels; there are only a handful of policymakers who have that ability, and they clearly don’t get it.

What I can do, however, is focus on the things that I can control in my own life.

And I can absolutely control, for example, the impact that inflation has on me, because of the decisions that I make with my savings and income.

I can’t control the solvency of Social Security either. But I can make sure that I have plenty of money stuffed away for my own retirement, regardless of what happens to the Social Security trust funds.

But today I really wanted to discuss how the future is far from certain.

We discuss regularly in these letters that the US, and the West in general, have set themselves on a very destructive trajectory. Too much debt, too much spending, too much money printing, too much conflict, etc.

And based on this current, destructive trajectory, if we fast forward 10-20 years, it doesn’t look good.

I also write a LOT about various historical examples of once great empires that fell from glory for many of the same reasons.

But again, the future is not certain. If there’s anything we’ve learned over the past few years, it’s that ANYTHING can happen. The world can change overnight.

And today I wanted to tell you a different story… not one of decline, but really more of a turn-around story.

It’s the story of a country that was on the brink of disaster… heavily indebted up to its eyeballs and about to be invaded. And they also happened to have a head of state with hardcore dementia who reportedly went around shaking hands with trees.

But they fixed it.

They managed to right the ship, turn everything around, and usher in a period of unprecedented peace and prosperity.

So it is possible. But in case this turnaround doesn’t happen… well, that’s why we have a Plan B.

This is the topic of our podcast today; you can listen in here.

Click here to listen in to this week’s episode.

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Today we're going to go back in time to April 215 two, to a place called Ludlow Castle, located in the West Midlands region of England. It's about today, an hour and a half drive or so from Birmingham, and we find on that day in Ludlow Castle, lying on his deathbed, a young 15 year old kid. His name was Arthur. Now, Arthur just happened to be the Prince of Wales, which meant that he was the the heir apparent to his father, king Henry V of England. Henry the 7th is a pretty famous guy in English history.  

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He was the one who won the War of the Roses at a time in the late 14 hundreds when Arthur was just an infant. Now, as a teenager, Arthur was by all accounts said to have been tall, bright, handsome, fit, intelligent, all these things. But he had fallen victim to a very strange pandemic that had been making its way across England at the time. They called it the sweating sickness. They didn't have very good names for these things they called the sweating sickness.  

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Modern virologists think that this sweating sickness may have been some kind of hantavirus, possibly tuberculosis, possibly even the bubonic plague again. But young Arthur, he came down with this and it wasn't looking good. Also at his side, also ill, very ill, who had caught the same sweating sickness was his wife that he had just married seven months prior. Now, this is a pretty big deal because Arthur and his wife, this has been a very significant political marriage. Arthur, again, was a son of Henry the 7th and his wife.  

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Arthur's wife was Catherine of Aragon. She was the daughter of the famous Catholic Monarchs, ferdinand and Isabella of Spain, who had financed Christopher Columbus's voyage in 1492. So you can see the power in that marriage, why they arranged that. So Catherine of Aragon, the sons of the, the daughter of the Catholic Monarchs, marrying the son of the King of England. Pretty big deal.  

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And here's Arthur and Catherine, both of them sick with this terrible plague. Fortunately, Catherine recovered, but Arthur died that day, April 2, 15 two. Now, that put Arthur's younger brother, who became the the new heir apparent to become the King of England, who was next in line for the throne. And that younger brother, his younger brother was named Henry, known to history as Henry the 8th. Now, Henry the 8th, obviously, just like his father, pretty famous guy for winning the War of the Roses.  

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Henry the 8th is even more famous. Probably one of the most famous kings ever in English history. He was famous for a lot of things and a lot of that that fame really stemmed from a central issue of him having so many wives, primarily because he didn't want to run into the same problem that had plagued his ancestors, his father. Having people having to go to war over succession issues. We could see this so many times in English history.  

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Not just English history and French history, really, the history of so many monarchies, where there's some kind of succession issue and all these different claimants to the throne, have wars and civil war kind of outbreak. He didn't want to go through that. He said, no, I need to have a clear succession line. I need to have a son. And so he ended up having lots and lots of wives because it was very difficult for the people that he married to conceive.  

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So this guy was like one of these Hollywood celebrities that are famous for getting married a million times. Elizabeth Taylor, Larry King, all these people, they were married eight times. Henry the 8th had six wives. Not at the same time. He wasn't a polygamist.  

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He married one at a time, although he was actually also had quite a lot of mistresses. But the first of Henry the eighth's wives just happened to be his dead brother's widow. He married Catherine of Aragon. This was his poor Arthur, who died at the tender age of 15. He had just married Catherine seven months prior.  

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Henry the 8th married Catherine. To be fair to Henry, it wasn't his idea. Again, his father had this big idea, we have to have this political marriage, this political dynasty. We need to somehow unify us in Spain. And so you got to marry Catherine at Erica hendrix the 8th felt actually pretty bad about that.  

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He did not like the idea of marrying his dead brother's widow, and yet he did. They were married for quite some time, as a matter of fact. But years went by, and the marriage between Henry the 8th and Catherine of Aragon produced zero children, and Henry became really anxious about that. He became really anxious about having a male heir. They had no surviving children, and he felt that that was a curse of sorts.  

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Henry the 8th felt that God was punishing him for marrying his brother's widow. It was a gut wrenching issue for him. He felt bad about marrying his dead brother's widow. He felt really anxious about not having any surviving children. And by the mid 1520s, he starts talking out loud, starts floating the idea with his counselors.  

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And different politicians at the time, different nobles, started floating the idea and said, well, maybe I should just get an annulment. I got to have some options here. Like, either maybe she goes away, we retire her to a nunnery, and I can get remarried, or I can get an annulment, or maybe we can get a divorce, or who knows? Maybe she slips on a banana peel, all sorts of things. They started floating these ideas, and it was interesting because at the time, everybody had an opinion about what Henry the 8th should do, how he should deal with this situation.  

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His court weighed in. Foreign rulers weighed in. I mean, you can imagine that in Spain, the monarch in Spain at the time had a pretty big opinion about this. Church officials had opinion, the Pope had an opinion, even Martin Luther had an opinion. Martin Luther of course famous for essentially launching the Reformation, this big movement.  

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Martin Luther was in hiding at the time. He was hiding from the church. Even this guy made his opinion known and said well he had actually encouraged Martin Luther said well the Bible actually says that you could have a second wife, so why don't you just go ahead and do that? And everybody was like what? So everybody weighs in with an opinion about what Henry the Eight should do.  

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And this was a really important time. Again, this is the beginning of this major movement in history known as the Reformation that really Martin Luther kind of gets the credit for. There were giants who came before him, but Martin Luther is generally the guy who gets the credit for this whole movement. In 1517 and this was again a really pivotal time in history. The Catholic church had dominated every aspect of social and political life, even economic life really to a degree at that point and had been entrenched in that position for more than 1000 years really ever since the fall of Rome in the fifth century.  

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Through the 1005 hundreds, the Church was the dominant force across Europe. It was the one unifying thing. You had your kingdom in England and France and various kingdoms in Germany, the Holy Roman Empire and all these things in Spain, but the Church was the dominant force across Europe. They were the power. The Church was what filled the power vacuum after the fall of Rome.  

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You can imagine 1000 years before you've got the Roman Empire that's sort of keeping everybody in check and is the major power. The 1000 years after that it was the Church and the Church, even though they had this grip on power, by the one 5000 hundred s things were starting to change. People didn't have the same level of trust, they didn't have the same level of faith. And Martin Luther again was one of the key people that came in and just blew a giant hole in the Church's grip on power. One of the big things at the time was that people really started to feel a pull away from the church's centralized authority.  

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They didn't want a middleman anymore. And if you think about it the way the church was back then, the priest, they would deliver their sermons in Latin. Nobody is just an average peasant, some commoner, they didn't speak Latin. Nobody knew what these guys were saying. And you had these people that would they'd hold up this book that only they could read it's printed in Latin and they said here's what you're going to tell you exactly what you have to believe and you have to believe this, otherwise is you're going to go to hell forever and ever.  

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Until the end of time. And after a while, people kind of got sick of that, and they said, you know what? I want to have my own belief system. I want to have my own direct spiritual relationship and all these things. And this is really a movement of decentralization.  

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And I think regardless of where you personally stand on religion, if you're faith, if you're atheist, whatever it is, I think we can all appreciate this sense of wanting to decentralize, this movement of decentralization. Ultimately, that's what the Reformation really was. On top of that, there was obviously a lot of criticism for the Church and a lot of practices. Martin Luther was very clear on all the things. I mean, the way what he wrote in 1517 was essentially almost like a declaration of independence.  

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It was saying, here's all the things we don't like about what you're doing. You're doing this, you're doing this, you're doing this, and you're selling indulgences. You're on the take. There were a lot of very corrupt practices, all these things that he didn't like. And there were people that just they wanted to just simplify everything.  

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They wanted to decentralize and simplify and take out the middlemen. And he did a lot of things in that movement. He translated the Bible and began into the vernacular language, into German, and people were able to read it themselves and begin circulating it because they had this new technology called the printing press, which is still fairly new, fairly nascent technology. And it was the thing that really helped this movement get so much circulation, and it caught on very, very quickly. In fact, in a very short period of time, there were countless of these Protestant denominations that sprung up all over the place, all over Europe.  

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And trust me, we can do a whole podcast about some really weird, creepy, bizarre Protestant denominations that you want to talk about. This really weird stuff that came down, like sex cults and the whole nine yards. Really weird stuff. But more and more people started to break away from the Catholic Church, from the Roman Catholic Church. And it was under these circumstances, you got to appreciate the backdrop of what's going on in Europe at the time that this movement is just getting started.  

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People are really starting to push away, break away from the Catholic Church. And it's under these circumstances that Hendry Gate says, you know what? I'm going to go for an annulment. I'm going to go to the Pope. We're going to try and get this guy to grant me an annulment.  

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And they try. They go to the Pope. They actually went multiple times. They tried in several ways to get the Pope to grant this. They even at one point tried to fool the Pope.  

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They thought they would be clever. It was actually kind of hilarious. It didn't work out for them, but they put together a contract and brought it to the pope said, Here, please sign this. And it's like they got a bunch of lawyers to just come up with this just crazy language, trying to fool the Pope. They didn't think he would read it, they didn't think he would notice what it actually said.  

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So they tried to fool the Pope with this bizarrely worded contract. The Pope wasn't fooled and he said, no, I'm not signing this. And so they were sort of left without any options. And Henry was desperate. He said, I got to have an air, I'm getting older, I got to have an air.  

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Like, we can't go back to the War of the Roses. He knew the very recent history of his own family, of his own father, really said, we're not going to go back to that. So he ultimately broke away from the Catholic Church himself and he established a new church called the Church of England, of which, of course, he became the King. Henry VIII became head of his own church, which is a great gig, I guess, if you can get it, and used his own authority to basically dissolve the marriage with Catherine. They had been married for 24 years and he dissolved the marriage.  

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It really it really weighed on him. Henry kind of, I think, gets a little bit of a bummer. People think he was just, you know, angry womanizer, and in fact, he wasn't. The historical account shows that he was actually quite kind, quite tender with his wives. He did have mistresses, so you've got to balance all of that.  

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But he ended up having five more wives, a total of six wives, with whom he did have three legitimate children and then some illegitimate children, which were with his mistresses and so forth. Henry the 8th died January 28, 1547. He was 55 years old, so still a relatively young guy. And this essentially began a very tumultuous back and forth, almost. It's just accordion seesaw change in religion in England.  

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And it wasn't just in England, it was again all over the continent, all over Europe. You had this literally wars breaking out, rebellions, riots, revolution. It was all over religion. You had the Catholics against the non Catholics and sometimes the non Catholics even against each other. And it's just a really tumultuous time.  

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This was the dominant issue of the day across Europe in the 1005 hundreds and into the 16 hundreds. And you have fanatics on all sides. You've got some really hardcore fanatical Catholics, you had hardcore fanatical Protestants, you had different groups of Protestants, you had the Puritans that had really radical views, wanted to take people all the way to totally different direction. And so, again in England, you have this back and forth from Henry the 8th. You get Edward VI, who was a Protestant and may in fact actually been poisoned by you might as well just call them terrorists, literally Catholic terrorist, who may in fact ended up poisoning Edward II.  

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Then he's followed by Queen Mary, who was a Catholic, hardcore Catholic, was known as Bloody Mary by her opponents, at least by her Protestant opponents. She was known for imprisoning and even executing a lot of Protestants. Mary was followed by Queen Elizabeth the first, very famous monarch ruled for a very long time. Elizabeth was a Protestant. She was pretty cool.  

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She was fairly easy going. In fact, there are a number of people trying to figure out is she actually Protestant. She might be Catholics. She wore crucifix and all these things, so it wasn't really quite clear, but she was pretty chill about it. But there were still a number of plots.  

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There were Catholic groups trying to retake the throne. She was followed by James I. James I was the guy that gave his name to the King James version of the Bible. That's this guy, early 16 hundreds. You might know of King James as well.  

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He's the guy who was almost assassinated again by Catholic terrorists in the Gunpowder Plot. This is the remember remember the 5 November, that whole thing. These guys tried to blow up the whole government, including James the first, and they were sort of motivated by their Catholic faith to do that. They wanted to take out all these Protestants. And so you can see this was sort of the trend.  

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There was this back and forth, back and forth. And then you've got the guy that follows James is Charles I. Charles the first was a guy that was supposedly he was outwardly Protestant, but he married a Catholic lady, so he was basically hated by everybody. The Protestants didn't like him because he married a Catholic. The Catholics didn't like him because he claimed he was Protestant, but nobody really knew for sure.  

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This guy was hated by everybody. And on top of that, he was completely incompetent. And this whole reign of incompetence, trying to constantly bypass Parliament and the religious issues and all these things, essentially led to a series of civil wars in England starting in 1642. Lasted almost a decade. And what they ended up after that was Charles lost his head, literally.  

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He was beheaded. They turned the government basically, for a while, had a period without a king, and they had a criminal dictator, as far as I'm concerned, a guy named Oliver Cromwell who waged genocide against Irish Catholics. Cromwell, in English history, is so despised, there's actually people today who consider him to be a great man and great leader. Obviously, there are a whole lot of people that still despise him at the time. That Cromwell was so despised, even when he died, that after he died, not long after he died, his body was actually dug up and beheaded.  

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They literally beheaded the corpse of Oliver Cromwell. That's how much they hated this guy and ended up restoring the monarchy again under Charles II. Charles II, another guy who was claimed is oh, yeah, I'm protestant. But then it came out that he had secretly promised Louis the 14th of France that he would become Catholic at some point. I mean, it was just this ridiculous the details are so absurd, but you can kind of get the understanding this back and forth, back and forth, and the whole time is just this hysteria.  

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The Anti Catholic hysteria. The Catholic hysteria. All this back and forth and the fighting and the violence, the beheadings and the instability and all this stuff. To us, it seems incomprehensible. How could they get so worked up over something so silly?  

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But they did. They really, really did. This was a huge, huge deal for them. The crazy thing is, it wasn't even like in the Crusades, for example, where at least in theory, you've got different religions. You've got the Christians against the Muslims, even though they believe in the same God, and there are lots and lots of overlaps between those two religions.  

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This is actually even just two different religions within just denominations of Christianity, and they're just at each other's throats. And the Civil War and the violence and killings, and it just goes on and on and on. After Charles II, his brother James II comes to power. James is actually a Catholic. Now you got a new Catholic king, everybody's freaking out, going, oh, my God.  

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And then he has a son, his son, he's raising his son to be Catholic. And people said, no, this is nuts. And so you get the idea here. There's this constant back and forth between the Catholics and the Protestants. Again, to be fair, there are a lot of people just didn't care.  

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There were plenty of people that said they don't care. Like, we can do business, we can hang out, we can have a pint at the pub, it doesn't matter. I don't care what religion you are, what denomination you are. But there were enough ideological fanatics on both sides to start the war, start the revolution, start the violence. And that is actually a key lesson from history that in many respects, it only takes a small number of kooks, a small number of fanatics to really, really move the needle.  

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We do actually see this again in our own time. We see that most people, frankly, are pretty normal, pretty chill, pretty easy going. All it takes is a few well placed, loudmouth, outrageously loud ideological fanatics. You got the Twitter mob and these people that go on TV, on the network news anchors and the executives there that go on TV, and they shriek and howl about things you've got in this key institution. Very well placed people in media, education, health care, even big business that are able to really move the needle and do these very destructive things that we've seen over the last couple of years.  

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Honestly, it's not that many of them. If you sort of go and grab all these ideological fanatics together, it's not that big of a number compared to the rest of the population. That's generally pretty easy going, fairly rational, not outrageous. People aren't that polarized. It's just a small, very small number of people that happen to be very, very well placed.  

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We see this over and over again throughout history, and this is sort of the same thing during this we have right now, is this sort of ideological battle. In our modern times, this was a major ideological battle that lasted probably more than a century in the 1005 hundreds and the 1006 hundreds. And again, this was about this very specific these details about how we're going to practice our religion. And again, it seems silly to us, but honestly, future historians and people in the future are going to look back at our time and go, I can't believe they used to argue about Latino versus Latinx. It's going to seem silly to people in the future.  

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People that say, I can't believe they got so bent out of shape over stuff like that. Why was everybody so fussed about this? Just in the same way they go that we can say, why were they so fussed about whether or not somebody was Lutheran or a Catholic? What difference does it make? But in many respects, I think we're we can feel really the answer to that question is nobody likes to have things forced on them.  

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Nobody likes to have things thrust upon them. So you will do this. People don't like having choice taken away from them. And that's one of the things I think made the conflict so palpable. Even within England, when Henry the 8th broke away and they established the Church of England, there are a lot of people who were sympathizers with really proponents of the Reformation movement.  

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They liked the idea of decentralization. And for them, this was actually where a lot of the Puritan movement came from because they felt like, well, hey, hold on, what is this Church of England thing? It's basically the Catholic Church by another name. Instead of the Pope, we have the King, and instead of this bishop, we've got that bishop. It's still too centralized.  

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We want to have a decentralized movement. So there was even a lot of rebellion within the Protestant movements themselves. And so you can just see it's just conflict, conflict, conflict, conflict. So if we go back again to this era now, we've got just to sort of finish the history of this, we go back to King James the Second. He's Catholic, he's got a Catholic son and heir.  

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Everybody's freaking out about this. There's just hysteria all over the place. People go, Here we go again. It's going to be another riot. It's going to be another civil war.  

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We've up this. We ended up I don't know how we ended up with this Catholic guy, and now he's going to have his Catholic son and a Catholic heir. We're going to have this whole dynasty of catholics. It's going to be a civil war all over again. We got to put a stop to this.  

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And so in 1688, parliament actually asked they went to william of orange and his wife mary. Mary was actually a daughter of king James and said, listen, we want you guys to be king and queen. We want you to come over here. We want you to become king and queen, co rulers of england, so long as you agreed to submit yourself to authority. Parliament, you can be king and queen.  

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But parliament is really going to be in charge, and this is going to be a constitutional monarchy. And they said, yeah, sounds good to me. And so in 1688, they have this famously called the glorious revolution, the bloodless revolution, and James is out, william and mary are in. They become a king and queen of england. And everybody feels like, okay, we avoided a total disaster there.  

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And just to be sure, parliament passed something called the act of settlement, which basically said, there will be no catholic kings and queens. There will be no catholic kings and queens, in fact. And they actually established a very clear rule that the next in line for the throne was the closest relative who was not catholic. So they were very, very clear. We don't want any catholics.  

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We don't want anything to do. This is a protestant nation. We're Church of England. We're all in on the church of england, and this catholic stuff just needs to go away. And so William and mary died.  

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They had no heirs. There was a little bit of a succession crisis again, but it ended up with queen anne. This was another issue. Queen anne, this is now in the early 17 hundreds, queen anne had 17 pregnancies, and yet out of all 17 pregnancies, she had zero surviving children, so she died without an heir. And here we go again.  

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It's another succession crisis. This is the this is actually where I wanted to talk about today. All this stuff is just the backdrop to help you appreciate, because whenever I start these and I think about a historical story, I always have to think about, where do I start? And this is one of these things where I keep having to go farther and farther back in time. So remember, we started this whole thing with poor Arthur lying on his deathbed, and now here we've we are now in the 17 hundreds.  

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So we go from the 1005 hundreds, early 1005 hundreds to the early 17 hundreds. Queen Anne 17 pregnancies dies without an air. Now we have another succession crisis. So remember, now we have this thing called the active of settlement. So they start looking around, saying, okay, parliament's kind of sniffing out who's the closest relatives and doesn't have any there's no more siblings we can reach out to.  

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She doesn't have any kids. Everybody's either dead or they're catholic, or they're not related, or this is some issue. Again, they're looking all over Europe. They're looking all over Europe. And there were dozens of people who were potential candidates to become king or queen of England, but they were all disqualified because they were Catholic.  

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They were Catholic. And so they had to go all the way. All the way. And this is really what I wanted to get to, actually, really, the whole point of this isn't really about the struggle of Catholics and Protestants, but I just wanted you to appreciate the backdrop of all this. And parliament had to go all the way to find who was going to be the next king of England.  

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They had to go all the way to Germany, to a place called Hanover, the electorate of Hanover, which was technically part of the holy Roman Empire at the time. And there was a German nobleman there, his name was George Ludwig. And George Ludwig, he was technically in line for the throne. Technically, he was 57th in line for the throne. He was the great grandson of King James I, james I, who had ruled 100 years prior.  

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So he was the great grandson. So you think about James I had sons and daughters who would have had sons and daughters who would have married and, you know, into different nobility across Europe. And at some point, some nobility ended up in Germany. And so here we have this guy, great grandson of the former king of England from 100 years prior. He's 57th in line for the throne.  

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56 people. 56 people were ahead of him, but they were all Catholic. They were all Catholic. So you can imagine just what are the odds, what are the odds of that happening, that this guy who's 57th in line for the throne, ends up becoming king? And they basically, parliament looked at this and said, well, jeez, this is bizarre.  

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George Ludwig. He's not English. He didn't speak English, he'd never been to England. He was completely unqualified. He had nothing about this guy, nothing about George made any sense at all.  

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But parliament looked at this and they said, and people in England even looked at this and they said, my God, there's after so many crises, so much turmoil, so much social conflict, the civil wars, all this hysteria, the succession crises, we got to put an end to this. We got to have some stability. We got to avoid conflict. George, they looked at George and said, nobody likes this guy. Nobody even wants this guy to be king, but he's the safe choice.  

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He's the safe choice. Everybody kind of assumed he's just going to sit in the corner, he's not going to do anything. Nothing bad is going to happen. And even though absolutely nobody likes him, nobody cares about this guy. He's not popular at all.  

[00:25:30.010]

He's very unpopular, in fact, but he's safe. He's the safe choice. After this period of turmoil, they wanted to. Go with the safe choice. Maybe that sounds familiar, maybe that story sounds a little bit familiar about people after a period of turmoil and they decide to go with a safe choice.  

[00:25:45.970]

And there we have now the reign of the safe choice, the reign of George the first of England. And yet, despite their hopes, the guy who is the safe choice, actually, there are a lot of problems during his reign and you end up with actually one of the worst economic crises in English history had the South Sea bubble that just devastated their economy, wiped out entire fortunes. I mean, even various smart people. Isaac Newton lost a ton of money in the South Sea bubble. The and the subsequent bailout of the South Sea bubble, this is this is a this is a bubble from huge, just massive financial speculation and it required this big bailout.  

[00:26:22.640]

The bailout created an enormous national debt in England and Britain at the time as well. Like Britain, George the first monarchs at the time really did have quite a lot more power than today. I mean, today the King, or formerly Queen of England, now the king. They're just sort of figureheads what they say is they say the king reigns, but he does not rule. Well, back then, they actually had a lot of power still to rule, to pick ministers, they had administered foreign policy, the military, all these things.  

[00:26:54.370]

And so, sure enough, George the first not only did he manage to preside over the South Sea bubble, not necessarily his fault, but there are actually a lot of people that implicated him in the South Sea bubble. Historical record is a little bit mixed on that, but he definitely embroiled Britain into pointless alliances that ended up leading to war, actually worsened relationships with their main threats, worsened relationships with France and Spain. This is something that was a direct result of some of the things that he did. So the guy that was supposed to be the safe choice, the guy who was supposed to do nothing, the guy that was supposed to create a little bit of unity and just bring people together so everybody could just take a deep breath after all those years of turmoil and conflict, he ended up causing some serious problems. There major economic problems, diplomatic problems, military problems.  

[00:27:39.250]

So, again, that story may sound familiar, but so does this one, right? George I was followed by his son, George II. George II was another German guy, actually born and raised as well in Hanover. In fact, George II was 31 years old when his father became king. He knew nothing of England and history.  

[00:27:59.160]

There are really actually hilarious accounts of George II, some for modern day historians, but also even contemporary historians, as people wrote about him at the time, which I'll get to in a minute, just to let you understand how truly despised George II was. But he was viewed really as just a completely weak buffoon who couldn't manage to make a decision. And really his only motivation was obsessed with popular opinion. Was he popular? What did the people think about him?  

[00:28:28.770]

You know, what was you know, was something going to be viewed as as good or bad by the people? Just couldn't make a rational decision based on what he felt was right. It was all about what was popular. And on top of that, just did some honestly hilarious, really. He was a theatrical guy.  

[00:28:46.460]

He would do things again, you could see, just to boost his popularity. He went, this is a guy that had never been to England in his life, and he shows up to England and he goes in front of these crowds and he gives his speeches and he says, I'm 100% English. There's not a single drop of my blood that is not English. And the sort of thing that he would do just to try and boost his population, people said, this guy is completely full of it. What is this?  

[00:29:07.740]

And one actually almost ridiculous example, george II, who might have been very well meaning at the time, but he was actually known as he was the last king of England to actually personally lead troops in battle. Nobody could actually believe it. There was a battle during the War of Austrian Succession, and it was taking place in the Holy Roman Empire, and the battle is called the Battle of Denjin. And the guy happened to be in town. He was attending, I think somebody else's coronation might have been a funeral, something like that.  

[00:29:39.710]

The guy just happened to be in town. He said, oh, it's going to be battle. Okay? Yeah, I'll show up. I'll show up.  

[00:29:43.550]

That'll be a good photo op, basically. And so he shows up, goes to the head of the column, and these are eyewitness accounts. This is not hyperbole. This is an eyewitness account literally from Frederick the Great, who at the time said that I think it was Frederick the Great, actually. And he actually describes George Aiken, gets off his horse, goes to the front of the English troops, pulls out his saber and takes this wide stance with his left foot in front, his right hand up in the air, striking a pose like an Olympic fencer.  

[00:30:18.870]

Everybody's looking at this guy going, is this guy serious? This is the time like, people have rudimentary fire, recruit firearms and all these things. This guy's out twirling his sabre with his other hand up in the air. Oh, God, he's going to stab everybody to death. He's going to just poke everybody on the other side of the paddle.  

[00:30:38.870]

It was ridiculous. And they actually would have lost that battle had it not been for just sheer dumb luck and French incompetence. The French were not actually following their own orders. And anyways, the battle was was pure luck for the English and the ally side. They actually won that war.  

[00:30:56.840]

And so George got a lot of credibility. He made sure that everybody wrote about this. Handel actually composed a whole musical composition, sort of honoring George II and leading the troops into battle. The whole thing was quite ridiculous. But you can see this guy had just really a need to be loved, need to have his popularity.  

[00:31:17.520]

Soar and some just other very interesting things that George's second had a bizarre family life. He had a son named Frederick. Frederick was a hardcore, heavily indebted, boozer, womanizer, gambler, liar. He was a weird guy. Frederick shared a mistress with his best friend.  

[00:31:40.510]

It's just strange things going on. There were illegitimate children. Neither one of them claimed the children. So, I mean, talking that's a stand up guy. And Frederick was always an embarrassment.  

[00:31:50.010]

Everything he did, it was just always some scandal, always some kind of embarrassment to his father's court. Frederick actually ended up dying before his father. So Frederick died before George II. But Frederick had a son himself. So the line of succession, there was no crisis this time.  

[00:32:06.230]

Frederick died, and Frederick's son became next in line for the throne. And Frederick's son happened to be named George as well. And so George III became the next king. But just to give you an idea, again, I told you, to sum up the opinion, this was what a contemporary writer at the time really a satirist wrote when this was when Frederick died. Frederick died a little bit before his father and wrote a little satirical poem.  

[00:32:31.730]

And he said, here lies poor Fred, who was alive and is dead. Had it been his father, I had much rather had it been his sister, nobody would have missed her. Had it been his brother, still better than another, had it been the whole generation, so much better for the nation. But since it is Fred who was alive and is dead, there is no more to be said. Now, that gives you a pretty clear idea of how not only Frederick was viewed, but also his father.  

[00:32:58.430]

Nobody cared. Nobody liked this guy. Even though he was just obsessed with this popularity and all that. Nobody liked this guy. Nobody cared.  

[00:33:05.520]

They didn't like George the second. They didn't like his son Frederick. So now both these guys passed. Now we've got George III. George III.  

[00:33:12.650]

Wow. He was actually born and raised in Eagle. He actually spoke English as his native language. But George III, again, to be fair, he definitely especially in the US. George III was the king during the American Revolution.  

[00:33:25.400]

So especially in the US. He has a horrible reputation. People go back and forth on this. There was a recent book that was written about him that says, no, no, he was just misunderstood. But there are a lot of people, including contemporaries, that did not like George III.  

[00:33:39.270]

They thought he was a condescending asshole. They thought he was I mean, there were people that said that he was tyrannical, especially the colonial subjects in the US. And as a matter of fact, the Declaration of Independence lists a great number of grievances specifically against George III's tyranny. Now, again, today there are people saying, no, he wasn't tyrannical. But it's easy for historians today to say, no, he wasn't tyrannical, because you didn't live in the late 17 hundreds, you didn't live during the days, the Boston Tea Party and all that.  

[00:34:08.930]

So it's hard for us, for people today to say, no, he wasn't tyrannical. Well, Thomas Jefferson sure thought he was tyrannical and actually listed all these grievances. In fact, the Declaration of Independence. They say he George III. He obstructed the administration of justice.  

[00:34:22.140]

There were several lines in the Declaration of Independence criticizing George III for repeatedly bypassing the elected legislature, for protecting corrupt political insiders, for being prosecuted, for taking away their freedoms, for destroying international trade. They said, quote, he has erected a multitude of new offices and sent hither's swarms of officers to harass our people and eat out their substance. Maybe that sounds familiar, too. Maybe a guy that uses all this government power to do things, to bypass the legislature, to create a multitude of new offices, to send these government agencies to harass people simply because we don't like you, we don't like your business, we don't like your industry. So we're just going to create all these rules and regulations and use our offices and our agencies to go and harass private business.  

[00:35:08.520]

Maybe that sounds familiar, too. The other thing that might sound familiar is that George III quite famously had horrible, horrible, horrible dementia. And this was a mental condition that lasted really for decades, continued to deteriorate. Again, doesn't make him a bad person. People can't help mental health disorders anymore.  

[00:35:31.060]

They can help having type one diabetes or anything like that. They can't help their afflictions. But that does just because mental health is destigmatized doesn't mean that people who suffer from dementia should remain in power. Jeez, what a concept. And there are famous stories.  

[00:35:46.370]

It's hard to know some of these are true, but there are famous stories of George III literally shaking hands with a tree, thinking that the tree was the Kaiser of Germany.  

[00:35:59.010]

There's so many of these types of stories, and he had staffers so many stories. And this is in the documentation and correspondence that staffers were constantly covering from you. Oh. What His Royal Highness meant to say was so and so forth, because he would show up, george Third would show up, and they had to put this guy in a straitjacket, and then the staffer is recovering for him. So maybe that sounds familiar, too.  

[00:36:18.810]

What His Real Highness actually meant to we know he just said this yesterday, but what he actually meant to say was this. Maybe that sounds familiar, too. Now, if we step back and sort of summarize all this, it all fits together, right? We started this whole episode in 15 two with poor Arthur on his deathbed from the sweating sickness, right? Now we've made all the way through George III hundreds of years later.  

[00:36:44.420]

But the long line of this and if we were to summarize this, we started off basically with this years of just fanatical, fanatical ideological conflict, right? And and it started with really Henry the 8th and Henry the 8th again, we started with his younger, his older brother Arthur because Henry the 8th famously believed that it was because he married Arthur's, his dead brother's widow, Catherine of Aragon. That's why he couldn't produce a male heir. So who knows how this would have turned out if Henry VIII hadn't married Catherine of Aragon, maybe married somebody else and he would have had an heir. First shot at the title.  

[00:37:22.640]

He would have had an heir. And then who knows how things would have turned out. But they turned out the way they did because he married Catherine of Aragon. He felt that that relationship was cursed, couldn't produce a male heir and it just had to seek an out of that relationship and ended up creating his own church. And that creation of the church, along with a reformation and all these things that were swinging their way across Europe, created these just incredible ideological conflicts with people that's the constant, the violence and the beheadings and the civil.  

[00:37:51.370]

War and the instability and the chaos and the social conflict led them to eventually picking George the first because he was the safe choice. The safe choice. But the safe choice had zero popularity. There were numerous crises, ballooning national debt. His son completely incompetent the subsession with almost a theatrical ploys to boost public opinion.  

[00:38:14.340]

Couldn't make a decision. Was it was it just a total buffoon? His grandson, George the Third dementia tyrannical no adherence to the rule of law. I just think it's obvious, but I'll go ahead and point out it just it seems like the guy in charge right now, the guy in the White House is sort of a composite of all three of these Georges. He's sort of simultaneously talking about the guy who was the safe choice.  

[00:38:37.500]

Everybody thought like, oh, he's the safe choice. No popularity, yet still the guy who was supposed to be a safe choice. Numerous crises, the supply chain crisis, all these things. Ballooning national debt, just like George the first, just like George II, just this theatrical desire to boost public opinion. The most bizarre things has this weirdo son that's constantly a thorn in their side.  

[00:38:58.460]

Also George III with the let's be honest, the dementia, no adherence to the rule of law, all these sorts of things, he's sort of a composite of all three Georges at the same time. Now, I want to get to that where if you think about where England was sort of to the tail end of George III, now we're in the 18 hundreds, right? George the third. Now, they've lost the American colonies. Just a snapshot of this national humiliation.  

[00:39:32.050]

Having lost the American colonies and the War of 1812, as a matter of fact, but having lost I mean, what talk about a humiliation. We're talking about an Afghanistan level humiliation. The withdrawal of Afghanistan in 2021. Horrible, horrible, horrible humiliation. Similar.  

[00:39:49.280]

Now, people would have been just astonished, gobsmack, that how could you have possibly lost the American colonies? What were you thinking in the War of 1812? You got this outrageously high debt in England now, more than 200% of GDP. There was a huge drain on gold reserves. Treasury reserves, in fact, in a single year in the late 1790s, is absolutely within the reign of George III.  

[00:40:13.470]

In a single year, national gold reserves in England fell by 70%, to the point that they actually the Chancellor had to have to suspend the gold standard in the currency, which meant that they were on the verge of a major currency crisis. England's on the verge of a major financial crisis. They had terrible inflation. Inflation reached an all time high, literally the highest in all of English history, at 36% in the year 1800. So we have terrible inflation.  

[00:40:36.420]

We've got a drain of the gold reserves, verge of major currency crisis, massively high debt, 200% of GDP, national humiliation, rising taxes, which taxes had increased ten x since George I had taken over this inflation. And, oh, by the way, you've got France now in the early 18 hundreds. Napoleon, your mortal enemy, is about to invade. Is about to invade. I mean, they they were they were danger close to their literally not even being in England anymore, and everybody would be speaking French.  

[00:41:05.190]

Britain almost went away because Napoleon was on the verge of invading and the guy in charge is shaking hands with trees. So that was the situation in England in the early 18 hundreds. That must have seemed incredibly dark. Just imagine going through that, all of this stuff going on, and then these stories floating around of, the King is shaking hands with trees, right? So just imagine the darkness.  

[00:41:29.920]

And people just thought, oh, my God, could it possibly get worse? We're going, we're done. That's it, that's it, we're done. Napoleon is knocking on our door. We're done.  

[00:41:39.470]

And yet it got better. It got better. And that's really the point of the story today. It got better. It's it this could have easily just turned into something where Britain didn't even exist.  

[00:41:50.300]

Napoleon could have invaded, britain wouldn't even exist. And yet Britain would take a dose of medicine, they would go on to reestablish its power, and they would actually experience a period of unprecedented peace, prosperity and stability. And their history is actually known to history as the PAX Britannica, where it says a period of time in global history. There were relatively few wars, not to say it was no wars, but there were relatively few wars. There was no major global conflict.  

[00:42:17.540]

Private. You had the 30 Years War. You had the War of Spanish Succession, the War of Austrian Succession, the Seven Years War. The Seven Years War in particular. These were global conflicts that took place in multiple continents around the world.  

[00:42:29.650]

Very costly, very bloody. The weapons were getting more destructive. The death count, the body count was going up. I mean, you didn't have that really during the Pac spruta. You had instead a bonanza in global trade.  

[00:42:43.670]

Nobody rivaled Britain's Primacy. There was unprecedented economic growth and a meteoric rise in standard living. People's lives got better. GDP per capita increased so much, and it was 70% more than it was in France, more than it was in Germany, 30% more than it was in the United States. They had actually zero inflation technically during this period.  

[00:43:03.220]

In the 18 hundreds, britain actually had very minor deflation. They had prices on average were declining about a fraction of a percent per year. So we had very, very strong price stability. They had the dominant reserve currency that they had reclaimed that gold standard. So the British sovereigns and their currency became just very dominant, very stable.  

[00:43:25.260]

This was, again, just a period of incredible prosperity and stability. And they got there. If you think about if you think about Britain in the mid to late 18 hundreds versus in the early 18 hundreds again, guy shaking hands with trees, napoleon's on your doorstep, crazy inflation, currency crisis, all these things, and then you fast forward a couple of decades and it's unprecedented prosperity. People's lives are getting better. It's an incredible turnaround story, and it's worth talking about that.  

[00:43:52.990]

It's worth putting a spotlight on that. And we got to be honest, it definitely took some luck. It definitely took a lot of things. For example, thank goodness for Horatio Nelson, where this is a guy who went to battle against Napoleon's fleet in 1805, died in combat, died in service to his nation. He told all of his sailors that England expects that every man will do his duty in the Battle of Chafalgar.  

[00:44:20.590]

Basically saved. That was just an enormous, just from a military perspective, enormous turning point that made Napoleon really think twice about actually carrying out the rest of that invasion and so took a huge threat off the table. They still had land wars against Napoleon that would go on for years and years after that. But this sort of looming threat of the invasion of England, it really came down to one guy and really all the sailors who fought that day to take that risk off the table, they also happened to get very lucky with the Industrial Revolution. The Industrial Revolution had been already a thing in England.  

[00:45:00.100]

Remember James Watt? We did a whole podcast about that coming down. We had the steam engine, and that really gave way to so much growth and economic development at the same time, you have the advent of capitalism. Adam Smith, who also created that, and the same as James Watt, created the steam engine. Both of those happened in 1776, right?  

[00:45:18.460]

And one could actually make the argument that those might actually be some of the more important things that happened in 1776. Obviously. The American Revolution hugely important. But the invention of capitalism also really important. The invention of the steam engine that gave way to this abundance in energy and energy surplus, hugely important for the history of the global economy that would follow.  

[00:45:41.070]

England also benefited. Britain also benefited from its opponents being really vanquished and weakened. The French, the Ottoman Empire, et cetera. And so all these things sort of unfolded at the same time. And the English obviously benefited from that.  

[00:45:53.090]

Brits obviously benefited from that. And you obviously cannot skip over the stain of imperialism. That was clearly a significant growth factor of the British economy during that time as well. But there were a number of elements that they did had under their control that were really simple things. The simplest of all was that they just had a sensible government.  

[00:46:16.230]

They had a sensible government that adopted and embraced the basic principles of capitalism. They had an efficient and reasonable tax. Their tax policy was established. They didn't just do away with taxes, but they created their tax policy was intended to create incentives for investment and business formation. And it was funny because they did things they eliminated.  

[00:46:38.630]

They had taxes and tariffs and things on corn and grain. They said, no, we got to get rid of this stuff. We want to simplify, we want to make it as easy as possible. We want to incentivize certain things and even politicians from opposing parties, if you can possibly even imagine this. Benjamin Disraeli, for example, in William Gladstone, people were basically conservative and liberal, that even people from opposite parties agreed, opposite ends of the political spectrum said, you know what?  

[00:47:01.060]

We need to abolish the income tax. This is stupid. It's bad for the economy. We got to get rid of it. It just doesn't make any sense.  

[00:47:07.210]

They took a very light touch to regulation. They embraced free trade. They slashed government spending. In 1814, government spending in Britain was 30% of GDP. In 1840, it was 11% of GDP.  

[00:47:20.500]

So you can see a material crazy decline in government spending. They balanced their budgets. It's not rocket science. It's not rocket science. It's nothing terribly exotic here.  

[00:47:32.340]

They said. Oh, wow. Industrial Revolution. Great. Everybody's becoming more prosperous.  

[00:47:36.680]

Let's get out of the way, let's create some nice incentives, and sure, we can still take care of people. I think the British government gets also a lot of criticism. They said, oh, there are workers and this and that. Well, actually, no. There were a lot of laws that were passed to support workers and take care of workers.  

[00:47:54.590]

This wasn't some austere government. In fact, the liberal government was in charge and power for many, many years. So this wasn't some government of hardcore conservatives imposing austerity. You've got wig parties and liberal parties that were in power for many years. But the biggest thing is they just found the ability to compromise.  

[00:48:13.220]

They found the ability to make sound decisions and to think rationally about what's in the national interest. What do we really need to do to move the needle, to make things positive, to make people's lives better? What do we really need to do for that? And instead of just assuming that the government is the solution to everything, they realize the better we get out of the way, the better everybody else will be, because human beings are going to know what's in their self interest much more than the government does. This is clearly a thing that we cannot do today in the west in general, and obviously in the United States.  

[00:48:45.360]

It's one of these things that's sorely lacking, the ability to compromise, the ability to rely on doing air quotes, leaders to make pragmatic decisions. Instead, it's just this fighting. Everything is always you hear when politicians talk, they always say, we have to fight. We're fighting for this. Nobody ever says we're compromising on this.  

[00:49:05.330]

Nobody ever says we're having discussions about this. It's always fighting. It's always this constantly just melodramatic grandstanding on all sides, on all sides. And the whole thing stems from this bizarre ritual where people spend $10 million in campaign finance to win a political office that pays $174,000 a year. How does that make any sense at all?  

[00:49:27.030]

There's no way that makes any sense at all. And their only goal is to be reelected, to be reelected every election cycle after election cycle, to remain in power as long as possible. There's something very, very wrong with that picture. And that is hence the trend that we're on, because the people in charge who are making decisions are not making decisions with the national interest in mind. They're making decisions to be able to draw lines and blame opponents and all these things, but they just don't come together and do rational things to compromise and make sensible decisions.  

[00:50:02.200]

This is why we're on the trend that we're on, and we discuss this all the time, the trends that we're on, these big picture trends, again, you can't predict the future. Nobody can predict the future. But we can look at trends, and we can look at these trend lines, and we can see these forces decline. We talk about forces of decline, economic forces. The ballooning debts, the crazy debt ceiling fiasco right now.  

[00:50:23.750]

Trillion dollar, $2 trillion plus deficits, inflation, Social Security running out of money, and all the other things. The national humiliation from Afghanistan, that humiliating withdrawal from Afghanistan with people dangling from helicopters, passing babies over the razor wire. Just horrible, horrible, horrible stain on national reputation. All the censorship and the cancel culture and all these sorts of things and the quote, unquote leadership that continues to ferment those divisions and keep people divided and angry. And this is the thing, and I wrote about this, actually earlier this week, and I said, just look at that trend.  

[00:51:00.170]

And if you can kind of just plot the trend line and that's not really predicting the future. That's just saying, well, if we just keep doing what we're doing here, where does that lead to? And just imagine that ten years from now, the debt ceiling. Imagine this ten years from now. I mean, just based on the trend, what does the national debt look like ten years from now?  

[00:51:18.010]

I mean, we're talking about $50 trillion. We're talking about 200% of GDP, all these things. And, oh, by the way, Social Security is also going to run out of money within the next ten years. Don't take my word for it. Take the word of the Treasury Secretary of the United States, who literally writes in black and white, when Social Security is going to run out of money.  

[00:51:36.350]

It's going to happen within the next ten years. None of this stuff, it just doesn't look good, right? And that's not some statement of some bizarre conspiracy theory. This is literally just a very rational view of the facts and the trends and say, okay, here's where today. Here's the trend that we've been on for quite some time.  

[00:51:58.160]

How does this play over the next ten years? Well, here's kind of the direction that we're going. And you just follow that trend line, and on the current path, that's where we're headed. However, the future isn't set. And if there's anything that we've learned over the last few years is that anything and everything is on the table, the world could change in an instant, overnight.  

[00:52:17.780]

It happened with COVID It's happened actually in a couple of different ways over the past few years. The future is not set. Things could change without our slightest expectation, just like in Britain in the 18 hundreds, with a little bit of luck and a whole lot of responsibility and sensibility, there could be, in theory, a radical adjustment to that trajectory. Now, that doesn't mean that the problems go away. They're still going to be paying.  

[00:52:43.160]

Look, Social Security. Sorry, everybody. Social Security is going to run out of money. It's not a political issue. It's an arithmetic issue.  

[00:52:50.000]

Social Security is going to run out of money. There's going to have to be huge budget cuts. There's going to have to be, you know, probably some kind of rollback in military spending. There's going to have to be just different cuts. They're going to have to tell everybody, you know, with Social Security, for example, sorry, folks, we know we promised you you could retire it, whatever.  

[00:53:07.240]

62, 63. 65. Well, guess what? Now it's 71. Now it's 73.  

[00:53:12.860]

You know, tough luck. Sorry about that. But that's that's the situation. So these are. The sorts of things that are going to have to happen, but again, with some actual, real, sensible, responsible leadership adjustments to this trajectory.  

[00:53:26.920]

People actually doing what's right for the country, not for themselves. And talking about the politicians. Who are just, you know, out for their own gain, out for their own reelection, out for their own power. Instead of saying, no, we actually need to do responsible things. It is actually possible.  

[00:53:41.000]

It is possible that the west, the United States and the west as a whole actually grows its way out. That's what happened in Britain in the 18 hundreds. They had this massive debt. They had this massive debt, and yet by the end of the century, they'd actually managed to grow their way out. Their debt was 200 per cent of GDP.  

[00:53:57.520]

By the end of the century, they had really gotten that down to a very reasonable level. And they didn't inflate their way out, they didn't just do it by printing money and printing money and creating massive inflation. Remember, inflation was basically nothing during that PAX Britannica it was almost nothing. It was actually slightly negative, right? They had very slight deflation.  

[00:54:17.450]

So they actually grew their way out, and they grew their way out in a number of different ways. They embraced capitalism. They stopped trying to thwart businesses, they stopped trying to regulate every aspect of the economy and said, you know what, people, businesses, private industry, private sector, they're going to be able to figure this out better than we can. All these things are possible if the lawmakers, legislatures, the politics, actually embrace capitalism, they embrace free trade, they embrace peace, they embrace rule of law, they embrace, oh, I don't know, rational discourse, compromise, these sorts of things. It's not rocket science.  

[00:54:50.240]

This is basic stuff. And again, they don't even have to look. History is full of all the examples. Almost everything that could have possibly have ever happened has happened. And so you don't have to reinvent the wheel, you don't have to figure it out from scratch.  

[00:55:04.390]

What do we do? Well, Jeez, there's already been a historic example in somewhat recent history of a country that was massively undead and, you know, had a guy shaking hands with trees and all this stuff, and they found their way out. They found their way out of that and they, they, you know, they had it, they had an incredible period of peace and prosperity. So it is possible. And there's a playbook, there is a playbook you don't have to figure out, jeez, how do they do that?  

[00:55:28.060]

It's all written down. They kept very good records, every law, every literally every word that was uttered in public and, and, you know, in front of, in, in Parliament and the House of Commons is all, it's all written down. They have minutes, they have all the record of everything. It's all there. You don't have to figure it out, just follow the playbook.  

[00:55:46.070]

Just follow the playbook, right? And if you do that, then in theory there is a chance and the future could look like Britain in the 18 hundreds, as opposed to, you know what, Rome in the four hundreds or the Ottoman Empire in the early 19th. I mean, there's there's a lot of there are so many we talk about these a lot like these negative cases in history where there's some there's some once great empire that just sort of falls, goes away, collapses, becomes weak. This is a case in Britain where you've got these guys that are really on the brink and they found their way out of it and this is possible now. I'm not holding my breath.  

[00:56:20.450]

That's certainly not the path they're on now. They're on this really negative trajectory. And of course, this is why we have a Plan B. This is why we have a Plan B, because really, regardless of what happens, we know at a minimum there's going to be some pain. Social Security's reform is going to be painful, right?  

[00:56:36.480]

But if they don't get on a positive trajectory, they continue on this current negative path. We can tell, like, a lot of things are going to happen. We have a pretty good sense because, again, we just look to history. This is not the first time this has happened. We go, Jeez, what happened in history?  

[00:56:51.120]

The last time somebody had a crazy level of debt, crazy deficits, crazy this, crazy all these things, and we can go, Maybe we ought to diversify a little bit. Maybe we ought to make sure we don't have all our eggs in one basket. Maybe we ought to make sure that we take completely normal, rational, legal steps to reduce the amount of taxes that we owe. Or to maybe not keep everything in a single currency. Or not keep everything, all of our assets and livelihood in a country that has the most litigious country to have ever existed in the history of the world, all these sorts of things.  

[00:57:23.460]

And there's no downside for doing that, right? This is the whole concept of a Plan B. We can certainly hope for the best. And I'm here to say, like, there is a possibility that things work out great, but that's not the path they're on right now. And that's why it makes so much sense to have a Plan B.  

[00:57:39.810]

You've got to focus on the things that you control. You can't change the politicians, you can't change the voting habits of tens of millions of your fellow citizens. I mean, sometimes you look at some of the people that win these elections and you got to look at some of these districts and people that are in Congress and go, how do you how do you vote for that person? The person's a criminal. They're a crook.  

[00:57:59.710]

It's it's they don't even try and hide it. Who votes for this person? Not only do you vote for this person again and again and again and again. You can't change them. You can't change the minds of the voters.  

[00:58:12.990]

You got to focus on the things that you can control. Right now, as you read this article the other day about these scientists, I'm doing air quotes that are screaming about nuclear war. They've got the Doomsday clock saying we're 90 seconds till midnight. We're the closest we've ever been to nuclear war. Yeah, I get it.  

[00:58:32.450]

I agree with that. I don't think it's imminent, but I think, sure, it's definitely closer to nuclear war today than it was, you know, in the 1990s or, you know, et cetera. Like. Sure, I get it. I can't control that.  

[00:58:46.920]

I don't have the nuclear launch codes. You know, there's there's there's basically three people in the world who control whether or not we're going to go to nuclear war. I'm not one of them. Chances are probably neither of you, right? So that's not something that's either under my control.  

[00:58:59.840]

I'm not going to lie awake at night worrying about it. I'm going to focus on the things that I can control. I can control the impact that inflation has in my life. I can control the impact that tax policy has in my life, or the impact of Social Security's, almost certain insolvency and what that would have in my life. I can control my health and fitness, I can control how my children are educated.  

[00:59:20.680]

I can control what information slash propaganda I consume. I can control how much of my personal information I give up to Mark Zuckerberg so he can go and use it against me, whatever. I control so many things, things that I actually do have control over that can move the needle in my life. And again, there's no downside in any of that. There's no downside in taking charge of the things that are under your control to reduce some obvious risk and make your life better.  

[00:59:45.720]

If things do stay on this current path, the debts and the deficits and the inflation and the social contract, the social conflict and the loss of reserve currency status and all these things, you will be much better insulated from those consequences with the right kind. Plan B. But if the west and America specifically turns into Britain in the 18 hundreds, which actually is a possibility, you certainly will not be worse off for doing these things, taking back control over things in your life that will actually move the needle for you. You will not be worse off in any way. That's why it makes all the sense in the world.  

[01:00:19.490]

I want to thank you so much for joining me. I hope you enjoyed this and we will speak to you again next week.   Close Podcast Transcription

On January 24, 1971, a Swiss-German university professor managed to raise money from the European Commission to fund his new idea— he wanted to start a business conference that would become a major global brand.

He secured the funding and held the first conference the following month in the tiny Swiss town of Davos; it was a smashing success— more than 400 executives attended. The following year, the President of Luxembourg was a featured speaker.

And for decades since, attending the annual conference at Davos has become a rite of passage among the world’s business and political elite.

The professor turned conference organizer, of course, is Klaus Schwab. And the organization he started is now known as the World Economic Forum (which is meeting right now for its 2023 event).

The WEF has turned into an overzealous, supranational, undemocratic organization with a dangerous amount of power; Schwab openly brags about the influence he has with world leaders.

For example, in 2017 Klaus Schwab spoke about all the world leaders who had previously been involved with the World Economic Forum through its Young Global Leaders program.

He named Russian President Vladimir Putin, former German Chancellor Angela Merkel, and Canadian Prime Minister Justin Trudeau, as examples to explain, “what we are very proud of… is that we penetrate the cabinets” of governments around the world.

Schwab said that half of Trudeau’s cabinet were Young Global Leaders of the WEF.

And Trudeau is a great example of the type of world the WEF wants to create; one where the government can, for example, form “public-private partnerships” to freeze your bank accounts for protesting against being required to take a vaccine in order to earn a living.

And yes, representatives of the big banks and pharmaceutical companies are present in Davos this week.

The WEF’s goals aren’t a theory. Schwab wrote a book about it. You can read exactly what his worldview is, and see how it has made its way into legislation and national policy.

Just four months after Covid was declared a pandemic, Schwab published a book called Covid-19: The Great Reset, arguing that the pandemic presented a “unique window of opportunity” for global elites to reshape “the direction of national economies, the priorities of societies, the nature of business models and the management of a global commons.”

The WEF was instrumental in promoting Covid lockdowns, vaccine mandates, and censorship of “misinformation.”

In 2021 in a now deleted Tweet, the WEF wrote, “Lockdowns are quietly improving cities around the world.”

Months before the outbreak of Covid, it hosted a “Global Pandemic Exercise” to simulate “an outbreak of a novel zoonotic coronavirus.”

 

One recommendation the conference put out was for governments “to partner with traditional and social media companies” to “combat mis- and disinformation” to ensure “that false messages are suppressed.”

Naturally, an unelected group of global elites would have the final word on what constituted disinformation and needed to be suppressed.

The WEF also sees combating climate change as the perfect crisis to exploit to push through its anti-capitalist agenda.

For example, in a recent article, the WEF argued for “uneconomic growth” in order to prevent climate change. It linked GDP growth to the number of natural disasters that occur, and even the likelihood of war.

Their lesson: humanity is better off if people are poorer.

Well, most people. Certainly not the very important elites flying in on private jets to Davos, Switzerland this week for the WEF’s annual conference.

They pretend to extol the virtues of representative democracy. But you’ll find absolutely none of that in the room. Instead it is a bunch of people who think they know better, and everyone else should live according to their will and dictates.

For example, a close partner in Schwab’s “public-private partnerships” to promote “stakeholder capitalism” is Larry Fink, who is also in Davos this week, and sits on the WEF board of trustees.

Fink is the CEO of BlackRock, a firm which controls $10 trillion worth of global corporations.

Their vision is “woke” corporations working in tandem with governments to “force behaviors” for what they decide is the greater good.

What might that look like? Well, the WEF has seriously suggested we’ll have to get used to eating bugs and weeds.

And last year, the WEF published an article called, “Psychologists say a good life doesn’t have to be happy, or even meaningful.”

“Living through war or a natural disaster might make it hard to feel as though you’re living a particularly happy or purposeful life, but you can still come out of the experience with psychological richness.”

So don’t worry, the WEF says, if you experience hardships such as “infertility, chronic illness, [and] unemployment.”

A 2016 article published by the WEF declares “Welcome to 2030. I own nothing, have no privacy, and life has never been better.”

When it comes to personal choices, the author writes, “I just want the algorithm to do it for me. It knows my taste better than I do by now.”

These ideas are comically stupid, and the organization has lost credibility.

Most notably, Florida governor Ron DeSantis AND climate she-ro Greta Thunberg BOTH criticized the WEF as an irrelevant, destructive organization. Those two are about as far apart politically as it gets. And yet they agree that the WEF needs to shut up.

This is the topic of our podcast today.

We start off talking about (unsurprisingly) a historical example of a small group of non-government elites having major influence in government policy.

This is nothing new; in fact it’s quite common for arrogant, narcissistic ‘experts’ to force their ideas on to a society.

The WEF is only the latest modern incarnation. And even though it has lost much of its credibility, it’s important to remember there are always going to be ‘experts’ out there who want to tell you how to live your life.

This is ultimately what ‘freedom’ means. The word by itself almost sounds corny or cheesy. But ultimately we’re talking about your right to make your own decisions and control your own life.

If you don’t care about your freedom, you can’t expect anyone else to care about it. More appropriately, you can probably expect others (like the WEF) to try and take it away.

And that’s why it makes so much sense to have a simple, sensible Plan B. Because there are just too many of those lunatics out there.

Click here to listen in to this week’s episode.

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[00:00:01.210]

Today, we're going to go back in time to the year 1618, to a place called the Hotel Pisani in the city of Paris. Now, if you know Paris very well, you probably know the Louvre. You might know the plastic carousel. This is basically where the Hotel Pisani was located, very close to the Louvre, where the Louvre is today. So this is prime real estate.  

[00:00:19.580]

But the Hotel Pisani wasn't a hotel, at least in the way that we it wasn't a Four Seasons or a JW. Marriott or something thing like that. As we think of it. Back then, the French word hotel, or hotel as they would say in French, actually referred to just really big stately mansions, grand houses that were large enough to entertain a multitude of guests. That was actually fairly unusual because most French homes, a sort of typical mazone.  

[00:00:42.870]

It's like what we would consider a town home today, a very small patio home, almost a condo, a place that you couldn't have huge parties and lots and lots of lavish lots of guests. If you were able to do that, that was considered a really, really big home. That was considered a really big deal. And they called that hotel or hotel from the Latin word hospitalis, which meant pertaining to guests, just like the term hospitality. And so this is what a hotel was.  

[00:01:04.530]

A hotel was just the name of a really big home. And the Hotel Pisani was owned by a guy, a French nobleman, an aristocrat named extremely French, named the Marquis de Remboyer, and his wife, a lady named Catherine Devivon. Now, Catherine was a very interesting historical figure. She was 30 years old at the time, in 1688. So she grew up in the late 15 hundreds in Rome is actually where she was born and kind of raised as a kid as the daughter of France's ambassador to the Vatican City.  

[00:01:33.810]

So she was French, but she was the daughter of the French ambassador to the Vatican City. And if you think about being the ambassador to the Vatican City, french ambassador to the Vatican City, that's got to be one of the cushiest jobs of all time, because it's not like anybody's going to have some diplomatic crisis with the Vatican City. It's all pomp and prestige and parades and parties and all these nice things. And think about it. At the time, Italy was the most refined society in Europe.  

[00:02:00.030]

I mean, remember, Italy is really what led Europe out of the Dark Ages. Hundreds of years before that, in the 11th century, it was the Italian city states. It was Venice, and then Florence and Pisa and Siena and these places that led Europe out of the Dark Ages. They embraced intellectual freedom. They embraced economic freedom.  

[00:02:18.600]

They rejected the feudal system. They built strong economies with sound currencies. They patronized art and culture and music, literature. I mean, even to this day, if you study music, a lot of musical terminology is Italian. Opera is still sung in Italian.  

[00:02:36.200]

Most of the great artists that, you know, people study their Italian. I mean, the the literature, all these things. I mean, Italy, we know this today. People that study, you know, European art, history and so forth, I mean, Italy is a huge factor in that. Imagine what it would have been like 500 years ago, right?  

[00:02:51.670]

Imagine what it would have been like in the 1005 hundreds growing up, and all these people are still there. It's contemporary scene. It was a big deal. And so, because of all this Italian nobles, aristocrats, the well to do, the merchants, wealthy business people, they maintained very, very high standards, high standards of fashion, high standards of etiquette, high standards of intellectual energy. They were incredibly sophisticated.  

[00:03:18.020]

They had a keen interest in patronized art. They had a keen interest in science. They had a keen interest in literature. These people were extremely sophisticated. They had the ability to intelligently discuss anything, had real conversations.  

[00:03:30.090]

And this is the environment in Rome, where Catherine's, growing up in the late 15 hundreds as the daughter of the French ambassador to the Vatican City. Now she gets older. She gets married off to this French nobleman, the Marquis de Rambour, and she goes back, she gets shipped back off to France, and now she's in Paris, and as the wife of the Marquis, she's in these all these high society parties and things like that. But the French, by comparison, were very, very they were not Italians. They were crude.  

[00:03:58.560]

The French were boring. They were unsophisticated. Catherine, having grown up in Italy around this again, this tremendous intellectual energy and refined culture, I mean, it was really quite a peak. Must have been an incredible experience for a kid. And rather than just sort of roll her eyes and go, oh, my God, these people are so boring, this takes us back to 1618.  

[00:04:19.850]

She does something very entrepreneurial. She said, I'm going to do something about this. And so now she's 30 years old. At 1618. She goes to her husband, and she says, I want to completely redesign our house.  

[00:04:30.810]

And he says, okay, yeah, that's fine. So she did it with her own hand. She made a lot of drawings, and she set aside a room, a particular room that was extremely lavish and luxurious, and it was very famous. A lot of descriptions about the walls of blue velvet and panels bordered with silver and gold and all these things. I mean, really, really nice.  

[00:04:51.490]

You can imagine in your mind this just this very stately kind of French room with gold and velvet all over the walls. Very, very nice place. And then started hosting parties. And her parties were unlike the parties that she would usually go to with all these sort of boring aristocrats that couldn't talk about anything but the weather, basically just idle chit chat that was super boring. Instead, she invited this very wide range of people.  

[00:05:15.990]

And when I'm talking wide range, she would invite generals and she would invite bishops, and she would invite poets and scholars and writers and thinkers and scientists and everybody that she could find that seemed like, this is an intelligent person. This person brings something to the table from an intellectual basis, that's really what it was all about. It was who's got the brains to actually be interesting and can talk about something. And people would show up and they would read their works, perform their plays, or even, again, she had bishops and cardinals. People would show up and deliver sermons and things like that because all ideas were on the table.  

[00:05:48.470]

But Katherine became kind of an etiquette coach because, remember, she grew up in Rome. She grew up in this place that was the pinnacle of high society and civilization. So she helped. Her French guests said, no, no, this is how we should be with each other. Let's dress a little bit better, let's address each other with a little bit more courtesy and dignity, but let's debate each other's ideas, but do so politely and let's have good manners and meaningful conversation.  

[00:06:12.830]

This is a no chitchat room. And eventually, her guest did develop a much higher level. Sophistication and rule number one in Catherine De Vivon's sitting room was you have to check your ego at the door. Nobody's allowed to come in here and say, I'm the best, I'm the baddest, I'm the coolest. You're not allowed to do that.  

[00:06:30.250]

If you are that way, then you can't come in and everybody's got to treat each other basically as equals. And we all engage politely and with dignity and respect, but do so at a very high intellectual standard. And all this took place basically in this room that she designed, this sitting room that she designed in her home. Now, the French word for sitting room, especially back then, is called the salon. And so people would gather in Catherine's salon and that word stuck and the concept stuck.  

[00:07:00.720]

The concept actually grew over time. More and more, this concept of meeting in salons popped up all over Paris. And, you know, time went by, and I'm talking decades, not just months or years, but decades went by. An entire generation of people passed through Catherine de Vivon's salon and other salons that have been set up in Paris. And this idea of exchanging ideas and building up refining sophistication, I mean, people were literally being trained almost like an athletic competition to just be better socially and intellectually.  

[00:07:34.250]

It's an interesting concept. And at the time when Catherine started this in 1618, france was obviously a major kingdom, but it wasn't the dominant power. Decades later, France was clearly the dominant superpower in Europe. And now it's after the 30 Years War, which ended with the Peace of Westphalia in 1648. It's actually a series of treaties in 1648, coinciding with the rain at the start of the reign of Louis XIV, it really left no doubt at that point that France was the leading military power, political power, and economic power.  

[00:08:07.950]

And as time continues to pass, it becomes clear that, again, france is not just a military, political, and economic power, but also Europe's leading cultural power. And Louis XIV left no doubt about that. This is a guy at the height of his power. He was in his sort of from his mid 40s through his 60s, this guy. He was the absolute monarch.  

[00:08:30.910]

He spent whatever he wanted to spend on, anything he wanted to spend it on. It was luxury, luxury, luxury, splendor, splendor, splendor, fancy, fancy, fancy art, architecture, palaces, monuments, everything. And it was an absurd amount of royal spending. I mean, really an absurd amount of royal spending. But it was one of the things that really turned France into this cultural superpower.  

[00:08:53.840]

In addition to being the dominant military and political and economic superpowers, really became this cultural superpower. And that lasted even through his heir. Louis XIV reigned. He was one of the longest reigning monarchs in history. He outlived his son.  

[00:09:08.590]

He outlived his son's son, actually, the heir. The guy who became king after him became Louis the 15th was actually Louis the 14th great grandson. And so Louis the 15th also ruled for a very, very long time. So basically, over a period of well over a century, you basically only had these two guys governing Louis the 14th and then Louis the 15th. Louis the 15th continued that it was just spending, sometimes for the sake of spending on every possible thing under the sun.  

[00:09:36.380]

And France was really just an incredible place to be. People came from all over Europe, all over the world. There was an Italian playwright who traveled to France, to Paris in particular. Now we're in the 17 hundreds, a guy named Carlo Goldoni. He was the very famous Italian playwright back then.  

[00:09:53.300]

And Goldoni said in 1762, when he traveled to Paris, he said there was, quote, nothing comparable to it in the universe. France had the best paved streets, the best shops, the nicest palaces, the most ornate churches, the most delicious cuisine, and the tastiest cafes, the highest fashion, the highest standards of even hygiene. I mean, you got to remember the time period that we're in right now where just even normal hygiene, different cultures, have a lot different standards, and the French took their hygiene to an extremely high level with their bathing and their their perfumes and so forth. I mean, there's a reason why all these things are French. French cosmetics actually became a really, really big deal during this period, during the 17 hundreds in particular, that actually became such a rage that years later, there was one woman who was very famous for her cosmetics.  

[00:10:41.460]

She was known as the Madame de Monaco, and she was so famous for her cosmetics and her penchant to constantly be putting makeup on herself off that, even years later. She was actually one of the people that got sent to the guillotine during the french revolution. And even on the way to the guillotine, she was seen roughing her cheeks to make sure that she had her makeup on properly, even though she was about to get her head cut off. So that's what a big deal all this stuff was. If you go back to the, you know, the mid 17 hundreds, france was the place to be, especially from a cultural perspective.  

[00:11:12.210]

This was a full blown what's known as the age of enlightenment, and paris was the capital. And throughout all this, this concept of the salon, this became really an institution. The salon the salons were huge in shaping the intellectual culture. And we can see this even there's a lot of data about this, that, for example, the market for the market size for books, just the book trade, book fairs, people buying and selling books and book shops and all these things, it was four times french was paris in particular. It was a large in the world, four times the size of london.  

[00:11:45.110]

Right? And london was also, at the time, a very intellectual place. The book trade in paris was four times the size of that in london. So it was a pretty big deal. And you have, of course, some of the biggest names in the history of philosophy.  

[00:11:57.520]

In particular, you've got helvetius and montescue and diderot, and so many of these people who were collectively kind of known as the philosophs and the king among all the philosophs, I don't mean king louis xi. I mean the king of the philosophs. Really. The guy that sort of stood head and shoulders of all the rest was voltaire. Now, this voltaire was the nom de plume.  

[00:12:20.200]

A guy's name was francois marie RWE, but most people just knew him as voltaire. Even today, most people probably heard the name voltaire. But you got to appreciate that at the time, in the 17 hundreds, voltaire was the most famous person alive. He was the most famous person in the world. Everybody knew voltaire.  

[00:12:39.800]

You got to think about voltaire in the same way. If you you take, you know, more famous. You take michael jordan, barack obama, and the rock and put them all together, they're not as famous as voltaire was in the 17 hundreds. I mean, and this is a guy everybody knew voltaire. Most people loved him.  

[00:12:55.580]

Definitely. Some people hated him. Really, really hated him. And one of the things that was so interesting about him is that voltaire, I mean, he had a tremendous amount of intellectual courage. He wasn't afraid of anyone.  

[00:13:09.710]

He wasn't afraid of getting canceled. He did get canceled, actually, for a while, to the point that it wasn't just canceled like today. People get canceled on twitter. And don't get me wrong, that sucks to be canceled, be canceled by Google and canceled by YouTube. This is a guy that had to flee France, had to run for his life.  

[00:13:26.050]

He was exiled from Paris. He had to he had to go and live in London for a while. He moved to Berlin, Switzerland. He was finally able later on in life to go back to France because he was critical of institutions, critical of the church, critical of the of of the, of royalty and the aristocracy and of the government and so forth. And for a while they actually tried to exile this guy.  

[00:13:45.160]

So it was a really big deal. But he was not afraid. He spent his whole life he was this very rail thin, just skin and bones, but quite famously, everybody thought always he was going to die every day. But he lived to a very, very old age, and he's just again, skin and bones, but had such tremendous intellectual courage in the way that a lot of people you could think of as, for example, Martin Luther. Who?  

[00:14:08.540]

Was the guy that basically started the entire Reformation when took on the Catholic Church or later on Martin Luther King, people that really took on huge institutions that had tremendous amount of courage. But you combine that with the wit and humor of somebody like Mark Twain with a celebrity of Leonardo DiCaprio, basically, that's what you have with Voltaire. So this is a very, very interesting and unique human being. He loved he loved the individual, he hated the collective. He had a very strong distaste for government.  

[00:14:40.990]

He didn't like politicians. I mean, he's a very interesting guy, but because of his fame and notoriety, he could get an audience with anyone. He was close, very close. Very, very close. Pen pals, basically, with Frederick the Great of Prussia.  

[00:14:56.020]

He was a mentor to Catherine the Great of Russia. He had been personally decorated by King George the first of Britain. I mean, the list just goes on and on and on. This was a guy that just had all the accolades, the connections, the access, the influence, and he really helped open the door for the other philosophs, these people who again, they crowded the Salons with all their ideas and so forth, to have access to the halls of power. Now, the idea of the Salon had come a really long way since Katherine de Vivon in 1618.  

[00:15:26.320]

The Salons had grown dramatically and there was this big movement of intellectuals. Again, remember, this is the Age of Enlightenment. So you had people in science and philosophy and people debating everything politics, economics, ethics and morality. The fundamental premise, though, because now, in the early days, in the early 16 hundreds, it was a little bit more controversial to have an idea that was outside the mainstream. Voltaire was one of the people that really paved the way it said, no, I'm going to say whatever I want.  

[00:15:58.120]

I don't give a shit what anybody else thinks. If you don't agree with me, that's your problem, not my problem. And he really paved the way for a much greater level of intellectual freedom. And a lot of people wrote Voltaire's Coattails and said, okay, well, I'm going to start saying stuff too. And so these intellectuals are out there and they were either criticizing the government, said, no, I've got a better way.  

[00:16:20.570]

In the Age of Enlightenment, as it became to be known, that was sort of their fundamental premise. These people in the Salons, all these intellectuals, everybody's got an idea about what's the ideal society, what's the ideal life, how we should all live our lives, how we should structure our society, how we should structure our economy. And of course, this is the Age of Enlightenment. When you think about the Age of Light, of the fundamental premises that they're enlightened, when you think about it, that's why they literally call it the Age of Enlightenment, because these intellectuals, they're enlightened intellectuals. And, and so these are people, we are enlightened and we have these great ideas about how everybody should live.  

[00:16:56.290]

Now these, you know, quote unquote enlightened intellectuals. You know, again, it's you get to a point where this is a huge departure from the early days in the Salon of Catherine de Vivone in 1618. Now, by the mid to late 17 hundreds. Now this, there's, there's a healthy dose of arrogance that has been injected with these, these intellectuals, you know, that think that they've got it all figured out and they were, you know, fairly diverse, intellectually at least. But they did congregate in various schools of thought.  

[00:17:26.270]

You actually had, among these enlightened intellectuals, you actually had a large group of communists, people like Morelli and linguist, who advocated for total government control of the economy, strict quotas for a number of people to control who should be working and which industry and which thing, and how much people should be consuming. One of the things that they advocated for this is actually a real thing from these enlightened intellectuals. They said all children should be taken from their parents at the age of six and raised by the state. They decided that all products should be collected in public storehouses and distributed to citizens based on their needs. Everybody should work on a farm between the ages of 21 and 25 and all these things, this is the ideal society, this is how everybody should live their lives and so forth.  

[00:18:14.650]

And they're enlightened. And if you don't agree with them, then you're just not enlightened. You don't have the mind of an enlightened person. At the same time, there's another group of people who call themselves the Physiocrats. Physiocrats were sort of proto economists, right?  

[00:18:28.950]

Economics didn't really exist yet at that time. Most economists were just philosophers. They were people that thought about the economy, but they were really just philosophers. And these sort of proto economists who call themselves the Physiocrats physio from the from the word for the Greek word for nature and kratos for rule. Physiocrat.  

[00:18:46.870]

Physiocratos let nature rule. Right? In a way it's sort of a nod to the idea of sort of the motto of capitalism which is les fair which is another French term which is basically just leave us alone, let us do it. Les a fair. That concept of les fair actually goes back the physiocrats didn't invent that.  

[00:19:08.210]

That goes back to actually an encounter in the late 16 hundreds where the story is that I think in the 1660s there was a minister of government who went to a prominent French businessman and he basically said well, what can the government do for you? And the French businessman replied nucle, let us do it. Don't do anything. We'll handle it. Just do nothing will handle it.  

[00:19:31.860]

And that's sort of the motto of capitalism. And the Physiocrats kind of had that idea physiocratos let nature rule. They had a number of ideas basically to let just keep the government out of the economy. But they had this very peculiar idea that all government revenue should be derived from exactly one source and that one source was a very high tax on land. The physiocrats believed that land was sort of all wealth and all economic activity was derived from the land, whatever it is you were doing.  

[00:20:03.890]

If you were in agriculture then you were growing from the land. If you were manufacturing then you were getting your raw materials from the land. If you were trading something then you were getting your goods from somebody that manufactured something that was grown from the land. And so they said that everything starts from the land. Now to me that premise is patently false because if you're a lawyer or a doctor or somebody in some service industry it doesn't really start with the land.  

[00:20:28.760]

It's a service industry. So to me the entire premise is wrong. But that was their idea was that government revenue should come from this very high land tax and then nothing else and then stay out of it. But they were very adamant about this, that they were right. They had no data to back it up.  

[00:20:43.790]

They just assumed that they were right because they were enlightened and nobody else was. And this is actually quite interesting because at a certain point David Hume from the UK came down. Hume is again one of the most renowned philosophers in history. David Hume thought that he actually wrote about them that these physicists were, quote the most chimeral and arrogant set of men to be found. And so this really gives you a sense of the people that congregated in these salons.  

[00:21:10.090]

They really thought that they were hot shit. They had all the great ideas, they had all the keys to life. They knew exactly how everybody else should live and we should all just listen to them because they're enlightened. And how do we know they're enlightened? Because they say they are.  

[00:21:24.890]

And it wasn't just sitting in the salons at that point. By the mid 17 hundreds, these people did have substantial access to rulers and royals. There was a guy, one physiocratic guy named Kazneh. At one point, he had an audience with Louis XVI, the king of France. And the king of France said, what would you do if you were king?  

[00:21:44.230]

And Kaznay says nothing. And basically was an advocate for the government should get out of the way. Now, obviously, I quite like that idea that the government should do as little as possible and just stay out of the way. And it actually worked. And in Louis the 15th, he slashed taxes, he slashed tolls and tariffs, et cetera.  

[00:22:00.880]

They tried this with an experiment on grain, and this actually happened on September 17, 1754. Louis XV said, all right, we're not going to have any more tolls on the transit of weed. We're not going to have any more specific tariffs on whether they eventually got to this with exports and grain commerce and so forth following this meeting with this physiocrat. And so you have this essentially closed society of experts that gets together. They have these formal and informal meetings, and they're salons, and they're intellectuals who have a very high opinion of themselves.  

[00:22:35.120]

They get together and they're formal meetings and their salons that have access to the corridors of power that go to governments to say, here's this idea that you should try. And then the government goes and tries it and does it. This is nothing new, right? These people are not in government, and yet they have tremendous influence over government, but this is nothing new. We've seen many examples of this throughout history, people that existed outside of government.  

[00:22:56.490]

They met formally, informally, but they have tremendous access to the halls of power to advance a very specific agenda. We've seen this so many times among various clans of bankers, the Fughers, the Demetaches, et cetera, the Rothschilds, over and over and over again. The philosophy are just another example. These people that met in their salons had a very high opinion of themselves, said, we're the ones who are enlightened. We're coming up with ideas of how everybody else should live their lives.  

[00:23:21.740]

And ultimately, over time, it kind of became an echo chamber, right? It was just sort of the same guy, people with very similar ideas about how everybody else should live their lives. And of course, they're right, because they're enlightened, and you're just a peasant, so you should listen to us. Now, some of these ideas are actually quite good. They came up I mean, they have a lot of the ideas of Rousseau who were advocates for individual freedom and so forth.  

[00:23:46.590]

And some of these are obviously very good ideas. But even good ideas do not justify an autocracy of experts that are force feeding basically their PhD dissertations down everyone's throat. There are supposed to be systems in place and representative democracies and all these things that keep those things in check. And yet we still have, even to this day, despite how we praise our own democratic institutions and republican democracy, we actually still have several of these today. We've got think tanks and all these different societies, many of which have tremendous influence over government, their entire institutions, let's be honest, I hate to say mainstream media is a buzzword, but media does have this is a formal institution.  

[00:24:31.440]

These guys actually do meet, create, they copy each other's agendas. There's a reason why, when you look at the news, most top stories are almost always the same. They have an incredible amount of influence over government. But the one I want to talk about today, obviously, is the World Economic Forum, the WEF. I think these guys are really kind of towards the top of this food chain the WEF is meeting right now.  

[00:24:53.600]

They're having their annual conference in Davos, Switzerland. Very posh kind of place, but in a way sort of like the Salons of Catherine Devivon. It started basically as a conference. I mean, this goes back now decades to the 1970s, and it just started as a conference. This Swiss guy is kind of an economist and engineer, just, okay, we're going to start having a conference and start inviting people.  

[00:25:16.170]

And it took a while. It really took a while, but eventually it became a very prestigious thing attended by the big bosses and heads of state, et cetera. And it got to the point where by the early 2000s, being invited and going to Davos on your private jet was the ultimate symbol that you'd really made it. You were the boss of bosses, that you were on CNBC giving a speech at Davos or Gladhanding with some world leader flying in on your jet landing in Davos. That was the ultimate symbol of success.  

[00:25:53.070]

But over the last, let's say, ten to 15 years, it's really become quite a bit more. The World Economic Forum is quite a bit more. It's become an institution in and of itself. And I say this like, I'm not a conspiracy guy. This is not some conspiracy theory.  

[00:26:10.890]

I don't trade in that stuff. I trade in actual facts and reality and data. This is not some wild conspiracy theory. To talk about this, the guy that founded this, the guy that runs the WF, Klaus Schwab, brags about it. He brags about his influence with government.  

[00:26:24.480]

He brags about how half of Justin Trudeau's cabinet in Canada are alumni of the World Economic Forum Young Leaders program, and brags about how many world leaders came out of the Young Leaders Program, the World Economic Forum. He brags about how much access he has. He brags about how he can ring up anyone he wants an influence policy. This is all on YouTube again. This isn't some conspiracy.  

[00:26:48.830]

It's literally the guy who founded the program, who still runs. It is all over the internet himself in his own voice there saying like I've got this and I've got that, and I know this guy and I can do that guy, and this guy is our alumni and that guy's, our alumni and really their reach and their influence and their ideas and the WF as an institution really became obvious during COVID during the pandemic. This guy seized on this. These are the guys who the guy literally wrote a book called The Great Reset, and he spelled out his view. Again, not a conspiracy theory.  

[00:27:26.710]

He wrote it all in the book. Actually. I don't want to encourage anybody to buy his book, but in a way, if you can find it, it makes sense to at least browse and see. He spells out his view about how we should all live, how economies should function, how governments should function, who should be in charge. Obviously, this whole point, it's the expert ruling class, and we all listen to the experts and the expert ruling class because they're never wrong and they're the smart ones, they're the enlightened ones, and we're just dumb peasants, and so they should be able to tell us how to live our lives.  

[00:27:56.740]

And some of this is really extreme stuff, guys. I mean, he's talking about and again, not a conspiracy theory. This is Claus Schwab, in his own words, pushing for brain implants and transhumanism and individual carbon footprint trackers that everything we do gets uploaded to the cloud, where everybody can see, we can track. Every time you do anything, you take a flight, you get in your car, you do whatever. It's like, oh, well, you're adding that's your carbon footprint, your carbon footprint is increasing.  

[00:28:24.280]

And so this should be tracked and everybody should be able to see your individual carbon footprint to decide whether or not you're a good human being or a bad human being. This is all WEF stuff. And they actually put this stuff out there. They show up to their own conferences and say, well, this is what we're working on, this is what we think it should be. They say things like, you know, we wouldn't have any of these problems if the world's population was the size of where it was 500 years ago, which is, by the way, like 90% reduction in world population.  

[00:28:51.300]

That's what they say would solve the problems. This is what they actually say. They don't even try and hide it. This isn't some closed door session with filled with cigar smoke and evil villains twirling their mustaches. This is stuff they put in the light of day.  

[00:29:07.780]

They broadcast it live on the Internet to anybody that actually wants to see this. They publish this in writing and say, this is what we think makes sense. And again, ultimately, their view is an autocracy by the expert class, where Schwab himself is king of kings and we're just all dumb peasants and they're enlightened and if you don't see it, then obviously you just don't have the mind of an enlightened person. And again, they literally publish this stuff they wrote during the pandemic early on. You probably remember all the articles and videos and tweets about how great the Lockdowns were and you know, it's so beneficial for the environment and all these things and that we should all eat bugs and weeds and that we'll own nothing and be happy.  

[00:29:48.320]

And they have this just fanaticism for everything, environmental justice and social justice and all these things that they've essentially rebooted capitalism, right? They've taken this system that is responsible for creating more multiples more wealth and prosperity in the last, let's say 250 years than in the previous 5000 years combined. But they've figured out a better way. They can do it better, they've got a better idea of what it should be and they use this far reaching influence they have to actually drive that agenda. And they've been actually fairly successful.  

[00:30:23.470]

And it's not just governments because they have a ridiculous amount of access and influence in media, banking, business, entertainment. I mean it's got to the point as a business you can't just make a product, you can't just innovate and create a nice product and sell a great product to enthusiastic consumers anymore. Oh no. You have to take a stand on Twitter about legislation that you haven't even read and don't know anything about. You have to express fake outrage about things.  

[00:30:51.020]

You got to go and say, oh we're going to hire all pensexual eskimos for our board of directors and train employees. We're going to stand down. We're going to train employees to speak a bunch of woke newspeak. We got to teach them the newspeak language about what you can and cannot say. You can't say manhole cover anymore because that's insensitive.  

[00:31:10.370]

So we got to change all of our language of vocabulary. Businesses are actually adopting these things. They actually call it now stakeholder capitalism because it's not about, well we're not going to run the business for the sake of the owners anymore. Forget about the owners. Who cares about the owners of the business?  

[00:31:25.450]

We got to do it for the Twitter mob. That's who we got to run this business for. It's the same with entertainment. God help you if you turn on an NBA game without having just all this stuff thrust in your face. You turn on a Disney movie, you turn on whatever, it's just all these things thrust in your face.  

[00:31:39.860]

This is very, very far reaching influence to shape a lot of things in culture. And I kind of view this as sort of the anti philosophy. At least a lot of the Philosophs generally had reasonable ideas. Some of them were totally stupid. A lot of communists come out of the Philosoph movement, come out of these salons in France and the 1007 hundreds.  

[00:32:00.590]

But again, just because I think somebody's idea is reasonable doesn't mean that I think it should be force fed to an entire society. It's supposed to be a system through which great ideas trickle down and meritable ideas are actually met and adopted because they're actually debated vigorously and whether it's a representative system and people adopt. You don't just have one guy who's not been elected by a grand total of zero people, who goes, this is how the world should be, and just jams that down everybody's throat across the world. That's not a system. That's completely and totally ridiculous.  

[00:32:35.480]

Honestly, it's criminal. And you look at these things, the WF again, this is all just silly stuff. They're eating weeds and bugs, owning nothing, never going anywhere, tracking everybody's, individual carbon footprint being tracked, everybody getting brain implants, all this stuff. And they debate all this stuff, even it's like right now, one of the big things in this one is supposed to be whether or not people should be able to use gas stoves anymore. And so they because it's damaging the environment.  

[00:33:01.860]

And they all fly to Davos. There's over 1000 private jets. 1040. I saw it last council. They all fly to Davos in their private jets to decide whether or not everybody, all the peasants are allowed to use stoves, gas burning stoves and heavens anymore.  

[00:33:15.890]

All these things are just such stupid ideas. And it's so obviously, it's so hypocritical. There's so much corruption. And again, they just keep churning out horrible, stupid ideas. Again, this is why I consider them the anti philosophy, because they still have the same access and power.  

[00:33:33.010]

At least the philosophy had pretty reasonable ideas. On the balance, these guys, I mean, these are the ones that think that this progressive prosecutor movement is a great idea. Catch and release, decriminalization. You know, it's all these things that we've seen over and over again. They've done this and they've, they've gone.  

[00:33:49.370]

You know, this idea in San Francisco, oh, let's decriminalize shoplifting. Oh, what a surprise. Shoplifting went through the roof. Now people are closing their stores because shoplifting has been decriminalized. Who could have possibly seen that coming?  

[00:34:01.090]

Who could have possibly thought there would be negative consequences to decriminalizing shoplifting? In a place where the crime rates are already high? They come up with these. They love their lockdowns, they love health passports, stakeholder capitalism, all these anti competitive, anticapitalist policies and legislation. And some of the recent examples of all this, I got to actually talk about a couple of these.  

[00:34:23.860]

One was again, also very recently, this is the city of Washington DC. Which is one of the most dangerous cities in the world. You look at violent crime, murder rates, all the stuff. Washington DC. Ironically, obviously the capital of the United States of America, one of the most dangerous cities in the world, basically.  

[00:34:42.600]

The Council in Washington, DC. They get together and they decide they pass this overhaul to their criminal code. And it's all this ridiculous stuff sentence reduction, divert disposition, basically probation, taking major crimes and now shifting them to minor crimes and making them eligible for sentence reduction and making them eligible for probation. But just to give you an idea of some of the some of the really silly things that they put in this criminal code, they've got one provision, for example, where they redefine burglary. So you got third degree, second degree, and first degree burglary.  

[00:35:18.620]

So third degree is the lowest level of burglary. So they say, well, if somebody breaks into your home and start stealing a bunch of stuff, but you're asleep at night in your bed and you don't actually see them steal it, well, that's only third degree burglary. It's not second degree burglary unless you actually wake up in your home because somebody broke in. So if you're still asleep and you sleep through the whole incident, then it's only third degree burglary doesn't rise to the incident of second degree. And it's like, what does that have to do with anything?  

[00:35:47.120]

Whether somebody's asleep or not, somebody still broke into your home. Like, what does one thing have to do with the other? It is so outrageously stupid. But my favorite example of this is actually just from a couple of days ago. The Federal Trade Commission you've never heard of this in the United States is a very powerful US.  

[00:36:04.550]

Federal agency. Obviously, this is headed by somebody who has no executive experience whatsoever, nothing new. This has been an administration that basically they don't care if somebody knows what they're doing. They don't care about somebody's competence. They don't care about somebody's experience or whether or not they have the ability to actually run an agency.  

[00:36:21.840]

What do you think about running an agency? Jeez? Wouldn't you actually want somebody who has some experience running an agency? Is this really you want some, like, rookie to come in? The first time they've ever run anything is going to be this very powerful government agency?  

[00:36:34.180]

But no, of course not. No, we got to take somebody they basically just took some woke activist who in the WEF model, has all these ridiculous ideas and gave her an incredible amount of power to disrupt American business. That's what the FTC is able to do. And so a couple of days ago, on Wednesday, January 18, 2023, if you listen to this in the future, we'll see how this plays out. But the FTC proposed a rule to ban non compete clauses.  

[00:37:03.520]

Now, I got to explain to you how this works, because this actually tells you so much, I think, about the United States, how this actually works. What do you mean by rules, a rule? What does that mean? Well, the idea is that Congress passes legislation. All these Congressmen and Congress people get together and they pass legislation, and in the legislation, they authorize certain things.  

[00:37:24.610]

They say, okay, well, the Federal Trade Commission is allowed to do X, Y and Z. But what happens is that these executive agencies, they look at that, they take some obscure passage because you look at legislation that's like 600 pages, and they go and they find like ten words in that 600 pages, they do a very creative read of that language. And they go, oh, well, this this phrase right here authorizes me to do whatever crazy stuff. And we've seen that over and over again. The CDC did this.  

[00:37:54.920]

The CDC is, oh, this law that was passed 50 years ago, in the 1970s, because this couple of words in this language that says that I have the authority to take over the entire housing market. And you're like what? No, you don't. There's nothing in the law that says that you can take over the housing market. But this is what the CDC tried to do.  

[00:38:14.370]

If you remember this, in 2021, the head of the CDC said, oh, I'm common, I'm taking control of the entire US. Housing market. Then they had to go and get sued, and the Supreme Court had to come in and say, no, you can't do that. That's not what the law says. Supreme Court has said over and over again that Congress should speak clearly about what an executive agency has the authority to do.  

[00:38:34.440]

But of course, Congress generally fails to do that. They don't speak very clearly in their legislation, and the agencies take plenty of creative license. All these federal agencies, they go and they read some obscure passage of a law that was passed decades ago, and they said, oh, because of this phrase, I can do this, right? And so when they do that, they go, okay, this is my authority to do whatever. And then they go and they publish something and they say, we're going to create a rule.  

[00:38:58.770]

We're going to create a rule. And the rule, because it has this interpretation they have of the legislation, the rules they create basically have the same weight and effect as the law. It totally bypasses congress. And I like, Congress says, this is what you can do. These agencies just create their own rules, and the rules have the same weight and effect as the law.  

[00:39:17.910]

And again, CDC taking over the housing market, nationwide, vaccine mandates, all these things were basically the same process where some executive agency or even up to the President of the United States said, oh, this legislation was passed, therefore I can do this. No, actually you can't. But they often take lawsuits. People have to go and sue the government in order to get the Supreme Court to come and say, no, you can't do that. And so now what's happened is the FTC has said, oh, well, there's this law that was passed a long time ago, and because of this, like, little tiny phrase in this law, I have the authority to do this.  

[00:39:54.180]

And so this new rule that they're creating is saying, we think non competes are bad, and so we want to ban them. And it's actually crazy when you think about it. Non competes are actually a very normal thing in business. You got a company that hires an employee, then obviously they're going to invest quite a lot in the employee to train the employee, get the employee up to speed, give the employee access to all kinds of things in the business. And it's only fair that the company said, look, we're going to invest a lot in you.  

[00:40:21.660]

And so in exchange for that, if you want to quit, you can quit. But you can't take that investment that we're making in you and go and shop it to the highest bidder in the labor market. That's not really fair for us. And so let's both of us give up something. We will give up the investment in you, and you give up the ability to go out and shop yourself around to our competitors using what you learned from us.  

[00:40:43.460]

That's the whole point of a non compete. It's two willing counterparties. A willing employee signs it, a willing employer signs it. Both of them agree to give something up. That's how deals are made.  

[00:40:52.430]

And you've got two willing counterparties signing a non compete. But according to the FTC, this is hurting the economy. It's crazy because these are the same people who, months ago, last year, really, when gas prices really started going up, the FTC said, they came out and said, oh, the reason that gas prices are going up is because of greed, right? And they decided and this is you know, the President of the United States was doubling down on this, and he was giving these ridiculous speeches saying, oh, the reason the gas price is going up is because these big companies are buying up small mom and pop gas stations. There's no more mom and pop gas stations.  

[00:41:30.580]

That's why gaspers. Go, oh, okay. So the last line of defense in rising gas prices was Joe and Rita's corner gas station on the side of the highway. That's what was keeping inflation at bay. And now these guys are getting bought up and now that gas price is going it's completely ridiculous.  

[00:41:46.460]

They have no concept of how their own policies are completely destroying the economy and the energy market and so forth. They have absolutely no idea. And so now, once again, they decided, they actually put this in their rule and they've given speeches about it. They said the economy is weakening because of non compete clauses. Non compete clauses.  

[00:42:07.530]

Clearly, the US. Economy is not weakening. It has nothing to do with terrible bureaucracy, has nothing to do with energy killing legislation or all their anti competitive rulemaking, or their constant threats against critical industries, especially the energy industry. Massive deficit spending, all their monetary policy, the inflation they've created, the complete and total incompetence at governing has nothing to do with it. They've cracked the code.  

[00:42:29.790]

They've cracked the code. The reason why the US economy is slowing down is because of non compete clauses. They nailed it. They nailed it and now they're going to create a rule. They're going to create a rule even though they don't have the authority to do so.  

[00:42:45.200]

They believe they have the authority. They read this obscure passage in some legislation and said oh because of this we have the authority. So now we're going to basically just get rid of non competes which when you think about it, there's so many non competes that already exist. And so that what are you doing? You're just undoing contracts.  

[00:43:01.700]

You have a contract that exists and this single executive agency saying oh those contracts don't exist anymore. What happened to the rule of law? You can't do that. If the contract is going to be voided at least it has to go to court. I mean, who do these people think they are?  

[00:43:16.660]

But this is literally their thinking is that the economy is weak because of non competes. Therefore we're just going to do away with the entire rule of law in the United States and get rid of non competes. This is insanity but it's WEF thinking at its highest, right? This is the kind of stuff that comes out of these organizations, the influence they have in government. Again with this just forget about the rule of law, forget about economic growth, forget about any of these things.  

[00:43:46.790]

Like we're just going to do whatever we want. We're going to have this fanaticism. And again this is the kind of thing it's very pervasive at the WF and all that sort of related satellite institutions. This is an organization. Again it started as a conference.  

[00:44:01.590]

Now it's a virus. It's a virus of incompetence power control, corruption, narcissism and just pure fantasy. Fantasy. All these just academic fantasy. People come up with these crazy ideas and go oh I'm right.  

[00:44:16.290]

And again the idea that it's non competes that are hurting the US economy which is an idea that has no rational basis whatsoever, but they inject this virus into the world, into national governments and again these ideas fail over and over and over again. What a surprise. What a surprise. Oh what a surprise that you locked everybody down and now all of a sudden we've got this crazy inflation and economy is faltering. What a surprise.  

[00:44:44.800]

You decriminalize shoplifting. Who could have predicted what a bad idea that would have been? And now you got all these people at Davos in Switzerland at their annual meeting and they're all howling and whining and crying about the sorry state of the world which is pretty ironic but it's like well wait a minute. You're the people that came up with all these ideas and now everything is a crisis. It's actually hilarious.  

[00:45:07.180]

You see these guys on stage and they're crying about the climate crisis and the planet crisis but no, it's a justice crisis. But it's also a safety crisis. And I'm actually going to play you a little clip here just so you can see it for yourself. It's absolutely hilarious. I'm going to give you a little clip here right now.  

[00:45:24.970]

We couldn't meet at a more challenging time. We are confronted with so many crisis simultaneously. This is a planetary crisis. This is a safety crisis. But above all, it is also a justice crisis.  

[00:45:44.580]

And also our faith leaders, they know that this crisis is much more than physical. And sometimes we are faced with these kind of challenges. It is better to take today decisions that will eventually be not popular, but it will be essential to be able to shape the public opinion itself. And when you stop and think about it, it's pretty extraordinary that we select group of human beings because of whatever touched us at some point in our lives, are able to sit in a room and come together and actually talk about saving the planet. That last voice, of course, was John Kerry.  

[00:46:30.830]

You might have recognized that. John Kerry US Climate Envoy former Presidential Candidate back in I think it was about 2004, former US senator I think he expresses that sentiment better. We select people. We're all touched by something and now we're in this room saving the world. I mean, the arrogance and the narcissism to come together.  

[00:46:52.840]

I mean, we're special people or the special abilities saving the world. Who do you think you are?  

[00:47:02.870]

It really is comically arrogant. And it's the kind of thing before that you had the UN Secretary General talk about, oh, we got it. We're going to do things that are unpopular. So we just got to influence public opinion. So forget about the people.  

[00:47:15.210]

Forget about what the people want. We're going to do it anyways because we know better and they're just a bunch of stupid peasants. Then you had this lady that was dressed up like she was auditioning for Harry Potter movie and it's just crisis, crisis, this crisis. It's that crisis. I mean, they make it so hard to take them seriously.  

[00:47:33.540]

And I guess that's really the good news is that nobody is taking them seriously. Not anymore. They're talking, but nobody's listening because the World Economic Forum and all these similar good idea type agencies, they've just burned through their credibility. There's an old saying most people probably heard of. The idea is that you can fool some of the people all the time and all the people some of the time, but you can't fool all the people all the time.  

[00:47:57.740]

This is often misattributed to Abraham Lincoln. Ironically, it was actually first expressed in a similar way, not exactly word for word, but in a similar way by an early philosoph, one of the early philosophy. Before that, they got crazy egos and decided that they should be able to tell everybody how to live their lives. This is a guy in the late 1600s name was Jacques Abadi. It was later republished by Denise Diderot in 1754.  

[00:48:18.910]

But that's kind of the origin of it and I think it's true. I think really you can absolutely fool a lot of people for a long time, but you can't keep that up. You can't continue fooling even a majority of people indefinitely until the end of time. And we're already seeing this. We see this in a lot of the just the numbers that the historic levels of mistrust.  

[00:48:40.930]

Nobody trusts the media, nobody trusts the government, nobody trusts the banks, nobody trusts the big corporations and nobody trusts the WEF either. They're not fooling anyone. People are really starting to get it. They're really starting to get it. And we can see this.  

[00:48:52.730]

I mean, last summer in the city of San Francisco, they had a recall election because crime in San Francisco was skyrocketing. And one of the big contributors of that was this local prosecutor, one of these guys who was installed by one of the kingpins of the W. EF. George Soros, who installed this game, going around funding all these progressive prosecutors. Again, not a conspiracy theory.  

[00:49:15.240]

Soros is the guy, he fully admits to spending a ton of money to fund these progressive prosecutors who are the people that will refuse to prosecute a lot of crime because they think it's wrong and it's not in line with their woke doctrine. So here's this guy and crime is skyrocketing and he's not doing anything about it. And people got fed up. And this is in San Francisco. This is one of the wokeest places in the country and people threw this guy out on his ass and by a wide margin of victory they threw this guy out and they put in another prosecutor, somebody that was actually willing to prosecute crime, right?  

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So these are the sorts of things we're seeing this over and over and over again. People even in the wokeest places are waking up going, no. These results, nice idea, nice thought in theory, but the results don't match. And as much as I hate to say it with full pun intended, COVID was a real shot in the arm that at first they had a lot of people convinced that the world was coming to an end and we were all going to die and all this sort of stuff. And little by little people believe that.  

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And little by little even the most diehard people started to realize that they had the wool pulled over their eyes, that oh, wait a minute, a lot of things that the experts are saying isn't true. They keep moving the goalpost that, oh, two more weeks and one more this and two more that and where this? Oh, now it's three masks, two mass. And eventually everybody started realizing, wait a minute, this is just getting ridiculous. This is getting ridiculous.  

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And little by little the trust and confidence and a lot of this expert advice really started to fade. People aren't fooled anymore, and that's really good news, honestly. And I think that we're going to continue to see more and more of that. That loss of credibility is so obvious. And one of the things that I think is actually hilarious about the World Economic Forum, there's so many people calling them out now saying, like, would you guys just stop already?  

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Would you just shut up already? But two of the people that are saying this actually come from talking about opposite ends of the spectrum. On one hand, you've got Ron DeSantis, governor of Florida and probably presidential contender coming up, saying the WEF, they just need to shut up already. I mean, they think that there are lords and masters and that we're all just medieval serfs, and they just need to stop. And on the other end of the spectrum, if you got Greta Thunberg saying the WF is dangerous and destructive, they pretend that they care about the climate and then they go and they fly in on their private jets and they do all these terrible things for the climate.  

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And so they're worthless and they shouldn't be listened to. Rhonda Santos and Greta Thunberg apparently agree on at least exactly one thing, and that is the WEF is absolutely stupid and nobody should listen to them. So that pretty much tells you everything you need to know about the WEF and how much credibility they're losing from all ends of the political spectrum. Now, having said all that, I think it would be silly to suppose there aren't any kind of threats to the individual freedom. Of course there are.  

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There are always going to be people. There always have been and there always will be people who think just like John Kerry, we've all been touched by something. We're the select people always going to be people like that, who want to control how you live your life, how you earn a living, how you put food on the table for your kids, how you can educate your kids, even the basics of whether or not you're able to use a stove in your own house, and whether or not that's okay. And there are always going to be people like that who think it's their honorable burden to be able to tell everybody else what to do and that they and they alone can solve the problems, even though that they refuse to acknowledge that they had a hand in creating and they're just waiting for the opportunity to strike. And we saw this during COVID and all of a sudden you had this crazy emergency, and these crusaders came in and took control of everybody's lives.  

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And of course, there are things like that that happen. And that old daughter saying, you never want to waste a good crisis. One of the guys who said that was Rahm Emanuel, who ended up coming there, Chicago, and was at the time President Obama's chief of. Staff is you never want to waste a good crisis because it's a great opportunity to get your agenda passed and all these things. And of course, there are a lot of people just waiting for that opportunity.  

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And so, of course, it makes sense to take steps to safeguard your freedom. I believe that if you don't care about your freedom, nobody else will. Nobody else is going to take care of it for you, right? You can occasionally count on maybe somebody in the Supreme Court dismantling some idiotic government decree, some stupid rule that gets struck down by a court or something like that. But for the most part, you've got to take care of your freedom because nobody else is either.  

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And it's not just some silly idea freedom, this sort of intangible, lofty idea. It's a real thing we're talking about really. Instead of freedom, which almost sounds hokey, we're talking about just your ability to decide for yourself, to have control over the things that you do in your life. Really important, almost sacred things again, how you're able to educate your kids, how you're able to earn a living, what you're allowed to do and not do, and what you can and cannot put in your body, or what you have to do. These things.  

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If nobody cares, nobody else is going to care about that more than you. And there's not going to be most people not standing up for you and your personal freedom. And so it certainly makes sense to take certain steps to safeguard that because we've had way too many closed calls and really crossed the line too many times over the last several years. One of the things that I would say is that even when it seems the whole world is moving in a certain trend, whatever, it's actually not true. The whole world does not move together in a single direction, a single trend.  

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Every country is different. Cities are different states, provinces are different. People move differently at different speeds, different directions. And it's important to remember that. And this is sort of the reason why I advocate for geographical diversification.  

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It's this old concept of just not having all of your eggs in one basket. If you live in a place and everything in your life is in this one place, this one, literally, this one city in this one state, in this one country, it's where you bank. It's where you do business, it's where you generate your income. It's where everything in your entire life and livelihood, et cetera, is located. You've really put all your eggs in one basket?  

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Since different cities, states, provinces, countries don't all move in the same direction at the same pace at the same time, it's easy. It's a great idea to diversify geographically because you can go and do things in different places. And just little examples in my case, I've talked about this a lot, but this is the reason why, you know, for my first child. She was born last year. My wife and I decided we were going to have the baby in Mexico.  

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And the reason why we went to Cancun is because at the time, it was still kind of a lot of COVID hysteria all over the world. And we wanted to be at a place we wanted to give birth in a place where COVID didn't matter, where COVID wasn't going to factor in to our daily lives or the birth of our kid. And we went to Cancun and it was great. It was great. And that was an example of in a way, geographical diversification.  

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We went to a different place because not every place in the world had the same kind of hysteria and there was really very little hysteria where we were in Mexico. We saw this not too long ago, if you remember, the WEF Youth Leadership alumni alumnus Justin Trudeau, prime Minister of Canada started closing bank accounts for all these people that supported the protesters, the Freedom convoy. If you remember that, you start closing people's bank accounts if you dared be part of the convoy, if you dared give money to the convoy. They were closing people's bank accounts. Now isn't that a reason enough to say, well jeez, maybe we shouldn't have bank accounts and put all of our money, maybe we should have some emergency cash stashed away somewhere else in another place, maybe in another country, maybe outside the financial system.  

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I mean it's a huge argument, frankly, in favor of crypto, in favor of distributed ledger technology, just to be able to have some money in a place that these people can't control. It's a kind of geographical diversification, taking steps to reduce your taxes, completely legal steps to reduce your taxes. Why, if these people are so destructive, why would you voluntarily give them the maximum amount of money? It certainly makes a lot more sense to minimize that. I'll pay you what I'm supposed to pay you, but it's going to be the minimum amount that I'm supposed to pay you no more.  

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And hey, look, if you have a change of heart, you can always just send them a donation later. You can always cut them a check. The US treasury Department actually does accept donations. Ironically, if you want, the treasury department accepts donations and you can actually say, I want this specific donation to go to pay down the national debt. So if you think the debt is a problem, you can donate money to pay down the national debt and you can do that while minimizing your taxes.  

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And anything else you can choose to give specifically to the cause, to that specific cause of your choice and you're the one that's in control. So all these are just things like I said you can do to safeguard your freedom. There's so many different options. I mean really so many different options, so many different permutations. If you want to learn more about that.  

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We talk about this stuff all the time, so you can visit our [email protected]. But this is really, I think, the concept in general, the WEF and all these sort of related organizations, this is nothing new. We've seen this over and over again throughout history where you get these incredibly arrogant, incredibly narcissistic people who think they've got it all figured out and everybody else is just a stupid peasant. And they're the enlightened ones who know, and they should have the responsibility to tell us all how we should live. And they have a lot of access to government, and they can get a lot of their policies passed through.  

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Now, the WF is one of those. Today they've made a complete and total clown of themselves. Nobody takes them seriously anymore because a lot of people really are starting to wake up. But it certainly makes sense to take some of these threats seriously, because we've had too many closed calls over the years. And if you're not looking out for your freedom, you can't expect anybody else to either.  

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And we're talking about really the ability for you to make your own decisions, about how to live your own life, how to raise your kids, how to earn your own income, what to do, what you can and cannot put in your body. You should be in control over those decisions, certainly not some government. And even though the WEF has made a clown of itself, it certainly makes sense to at least use some tactics, like geographical or international diversification to enhance your ability to make your own decisions, to enhance your freedom. It really makes a lot of sense. There's very, very little downside to doing that.  

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So I think we'll go ahead and stop there. I want to really thank you again for your time and attention, and we'll speak again next week.   Close Podcast Transcription