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 how do I put myself on the sideline so that when all this goes down I'm sitting safely on a stack of money liquid money outside the banking Sy which is gold outside the banking system outside the financial system eating popcorn watching this thing go down I feel bad for all the people who haven't gotten in position I don't think it's too late but I think it's it's late in the [Music] game hi and welcome to this video I am honored to have Russ gray with me once again Russ how are you doing great Mike

great happy to be here excited to talk with you excellent you know uh we were just talking before prepping with for this video and uh the subject of uh the Federal Reserve and these this the emergency uh lending that facility that they came out with last year they've raised rates on that to sort of shut off some Arbitrage and you had some great comments and some great comments on value and we are also up at record highs in real estate in some areas again so uh give me some of your take on this well you know I think you and I are

both like news junkies I think that anybody who really cares about what's going on is looking for what I call clues in the news and so we're out there all the time scanning the headlines trying to figure out what is here and it's funny I have a Sherlock Holmes hat and a little pipe and and every once in while I'll do a segment I call it clues in the news you know and and uh remember when I was a kid I used to watch this old show Columbo and p played by Peter Faulk and he was this bumbling you know

detective and he was so unassuming that the people he was trying to gather information on would uh you know just trust him and talk to him and then the guys that were and they also assumed that he was just an idiot they just assumed he was an idiot and so they underestimated him and they weren't really paying attention to his movements and he was gathering you know the information to get in position to get his you know uh evidence to to charge the people or whatever and then of course the producers of the show need to

put drama in it they they're misdirecting you so the person who's innocent uh the people who are innocent are all kind of like playing clue when you're a kid it's like who did it and you're and and you're giving little Clues like maybe they're guilty I don't know and then the person who's innocent is kind of hiding off to the corner so if you kind of look at what's going on in the world right now and you're watching the news you have to ask yourself based on what the FED is doing

and what the FED is saying you know people like you people like Jim Rickards there's all kinds of smart people out there that are watching and going oh the FED just doesn't get it the FED just doesn't get it you know they're they don't understand the Peters Shi they don't understand this they don't understand that they're making this mistake and you got to ask yourself are these people truly that incompetent are they really incompetent I mean when you look at the FED do you see

incompetence well uh personally uh you know I've I've stated that uh these are a bunch of very very smart people uh if if they are this dumb they don't belong in their job uh if they aren't this dumb then they're complicit in all of these evil things that they're doing and they belong in jail that's exactly my point right anybody who's paying attention pretty soon figures out these people probably aren't stupid and everything that we are all out there saying publicly they know well

in fact I got a chance to see alen Greenspan speak at the New Orleans investment conference a few years ago and he goes you know all the things you guys talk about they all know that they all know that and so then I'm like okay well if they know that and they're doing it anyway they must be doing it on purpose and so then you you start to watch the mov I don't longer listen to what they say I try to look at what they do and of course we just watch them raise interest rates and I don't think

anybody with who understands the basics of finance and the way the markets work thinks that you can jack interest rates up that high in terms of a percentage of change because people think oh it's only 5% it's not that big of a deal or five and a quarter but when you're starting at a basis of 25 basis points well you go 10 actually 10 basis points was the low okay well just do the math from 0.25 to 5.25 uhhuh right that that that's like 20x and so you know you go back to Paul vulker who raised interest rates from 8%

to you know 18 that was like two and a half X so this is way more severe in terms of the shock to the financial system and so like what does that look like well it blew up bank balance sheets I'm sure you were talking about it I know I was in the beginning of 2023 the Silicon Valley Bank Signature Bank all the way taking a credit Swiss that's a big bank and all these Banks balance sheets imploded and out of that to your opening comment was born the bank term funding program which is basically the life support system to

get the banks back on their feet and if you've been following like I have you know that it has been record drawdowns on that system uh almost ever since it was uh conceived and now it's scheduled to terminate in a couple months here I think in the middle of March and uh there's some news I think you had shared an article uh on that that kind of triggered that conversation do do you have that headline oh sure um let me see the headline I'm just going to read it I don't have it set up to share fed raises

rate on Emergency Loan program to stop Arbitrage uh Bank term funding program will expire on March 11th as planned Banks see higher rates to borrow effective immedi immediately and so um there there was an Arbitrage to be and a lot of banks took advantage of that Arbitrage now you had some comments on that that I found very interesting Well yeah if you think about it the FED knowing fully what they were doing jacked interest rates up knowing fully that they would blow up balance sheets throughout the financial system so could

be a controlled demolition of the financial system we can talk about what the motives might have been because you know I think some of them are known if paying attention in fact I give you one example Donald Trump just came out recently and said hey if you you know I'm elected president there's not going to be a central bank digital currency and I think that could be one of the agendas you collapse the financial system and you replace the currency with your cbdc and there's a whole lot of

reasons why people who love their freedom and privacy aren't about that but to get there you got to blow up the financial system well the banks are their buddies so it's like okay well if I'm going to blow up the financial system I'm going to blow up the banks I'm going to create a special uh Lifeline to the banks called this Bank term funding program and I'm G to let them earn free money and that's what the Arbitrage is free money is I can borrow from this Bank term funding program at a certain

rate and I can turn right around and invest it in a similar safe investment with the fed and end up with a positive spread so I yeah if you knew you could borrow money say at 3% and earn 5% how much 3% money do you want to borrow and infite amount all of it I want to borrow all of it and so you see banks that are busy uh their balance sheets have imploded and they're creating big loan loss reserves because they know the economy is weak they know the consumer is tapped they know bankruptcy's

corporate and individual are increasing they know all that they see it before anybody because the payments start getting missed they see it all they know and so they Bank of America a couple months ago announced record earnings at the same time they increase their loan loss reserves well where did those record earnings come from those record earnings came from free Arbitrage right and so now they're living off their p&l they they get all these profits and they're cutting they're closing branches

they're cutting staff you see a lot of layoffs happening because they're making more money just doing this Arbitrage and they're bolstering their balance sheets at the same time they're preparing for more defaults and so when you know how to look at what's going on in the financial system it gives you Clues kind of about what's happening and apparently we'll see maybe the FED thinks okay guys we've we've propped you up enough you're back on your feet we're going to turn

off that program and maybe because it's an election year and it's going to get scrutinized I don't know I'm not that smart uh waiting to see it's very exciting time probably the most exciting time of my adult life in terms of what's going on in the financial system and what's going on in the political system and what's going on in geopol politics and the ability for people like us to have these kind of conversations and share them with all the people that are listening unprecedented in human history

so exciting to be a part of it and just trying to interpret what's going on and figure out how can I get out of the center you know we the last time I was on the show we talked about my experience in 2008 I was in the mortgage business uh brokering loans High leveraged real estate investing for Equity not cash flow and running my entire life and my entire business with no cash reserves everything was credit when the credit markets imploded it was single point failure everything died I was at the

epicenter and I thought to myself after that happened how do I put myself on the sidelines so that when all this goes down I'm sitting safely on a stack of money liquid money outside the banking Sy which is gold outside the banking system outside the financial system eating popcorn watching this thing go down and I think for anybody that's been following you over the years and have taken your advice they're in that position which makes this an even more exciting time I feel bad for all the

people who haven't gotten in position I don't think it's too late but I think it's it's late in the game and it's time if you haven't to in my opinion I'm again I don't give Financial advice I'm not that smart I could just tell you knowing what I know now after what I've been through uh I think the safest place to be is safely off to the side of this financial system waiting to see how either this controlled de uh demolition Andor great reset into cbdc or whatever or whether

it is just you know a clown show and these guys are just don't know what they're doing and they're going to drive off the cliff either way either whether it's on purpose or by accident destination's the same and all the clues are there maybe they'll figure it out and I hope they do I hope they do for all the people who aren't prepared but I think the responsibility we have the things we actually have control over is we can be prepared and be strong in our communities so that if things break and

really get bad we're in a position to strength like you are I mean where you live I mean you're in a great position you can help a lot of people if and when that day comes yeah you know um up on my farm we're trying to make sure that there's no single points of failure we've got redundant internet and we've got uh we're all on SOL we're completely off the grid and we've got our own water and and food and everything else so it's um uh that you know we're beefing up for

that because I've never seen a time in history where there's so many different threats so many things coming at us at once and uh this uh the potential of some sort of uh currency system catastrophe as uh ludvic Von mizes called it um is so great right now and you're you're pointing out that you know maybe this is on purpose it's very interesting well I mean I I think it has to be and I think I think the the misdirection to me is the stock market uh anybody that follows what happened when the FED really became

active in the markets and the birth of the activist Fed was Allan Greenspan when he was nominated and uh that that really in in the 1987 stock market crash and I to follow it very closely because I was a registered representative selling securities at the time 27 years old didn't really know what I was doing thought I was doing the right thing for people my father was a high-tech entrepreneur took his company public uh happened to go public June of 1987 and he was in 120-day lockout period and so

he had all this founder stock uh and then the stock market crashed on October 19th 1987 his Equity got wiped out he was margined they sold his stock and he lost everything almost in a matter of days and then he got stuck with a big tax bill that cost him his real estate and ultimately the loss because he conflated his selfworth with his net worth hi I just wanted to take a moment and thank you for subscribing and mention that if you'd like to help our Channel please consider my company goldsilver.com the next time you buy

precious medals we're one of the most trusted names in the industry our prices are sharp delivery is fast and we have an insiders program where you find out exactly what I'm doing with my own Investments thanks for making goldsilver.com your dealer and now back to the video ultimately the loss because he conflated his selfworth with his net worth um it it took away his Mojo it kind of it he was never the same man again and it was tragic because he'd work so hard he was in the semiconductor

business he had created jobs and Technology had raised more capital for a startup Semiconductor Company than anybody else in the history of Silicon Valley up to that time and then he just lost it all and it was because he did not understand the game he was in when he stepped into the casinos of Wall Street and right now you you're being told this the economy is good because the stock market is at all-time highs yeah I I I you know I don't I don't believe that's true people who are

looking at the wrong gauges you know they're they're looking at the red pill or the the the blue pill to use the Matrix analogy and not the red pill and and I think that people right now who are speculating on stock price in this market or even real estate prices in this market um are are are treading dangerously and there's a difference between speculation and investing kisaki's been singing out of that song book for 20 years and I just still don't think enough people get the message yeah

you know um I've I believe that we are in for Global financial crisis 2024 that uh we are going to have something enormous coming at us and if they are able to hold this thing together through the elections that just means we're going to be in for a worse Global financial crisis 2025 uh that it it that something Absolut all the evidence points to something absolutely happening uh this year most likely or next if they're able to hold this thing together but it's going to be something absolutely

enormous I think probably bigger than the 2008 crisis and uh what you're talking about the scenarios you're talking about fit this perfectly yeah well again I think anybody paying attention can see it I often try to explain to people because um people who are concerned about the um foundational the infrastructure they understand the system Peter shiff you know we joke all the time Peter's predicted 19 of the last two recessions and people give them a hard time about that and kosaki you know that kind of

the people that the realists who understand the mechanics of the system just realize the old adage that something that is unsustainable won't sustain if it can't go on it won't yes but you don't know how long it'll go on before you don't know when you don't know when so the trend the the trends are hard to resist you can't it's you know the old adage investing is the trend is your friend right you're not going to beat the trend the trend is going to be the trend the dollar has a

almost perfect track record since its Inception of losing value consistently decade over decade it's it's a it's a perfect track record in Fiat currencies I don't need to tell you or your audience have a perfect track record of failing yes at some point in time that is an undeniable irresistible Trend I mean maybe this is the one time in human history it won't happen I don't know but if you just play in the probabilities you need to be prepared for that the problem is a trend goes along for a

while and then one day it becomes an event and the mistake people make is they try to they try to time or predict the event and then the people who hear that and then when they miss the date oh that they must be wrong about the trend no trend is trend is real the timing we just don't know the timing so you have to be in a position so that better early than late right once it happens once you've gone over you know if it's a river going down the the deal and you haven't prepared then when that ship or

that boat finally goes over the waterfall which is the event it's too late you you can't get back up so that that's really what you're all about forever these things always take Everybody by surprise as well if you remember long-term Capital Management nobody knew about that except for long-term Capital Management the Federal Reserve and the just a few others Securities and Exchange Commission and so on and so you know over over a weekend uh they are uh having meetings that just do not end they're they're up

24 hours a day trying to hold together the Global Financial system the monetary system with their bare hands and they figured something out but we were within days of uh the entire Financial system freezing up and then the same thing same story with 2008 do you remember uh waking up in one morning and Leman was gone I was in the bo business back then I mean every day we were getting texts and and emails from uh notifications that companies that we had done business with big companies sponsored big

conventions and spent all this money and they were bringing in you know Troy Aman and these big stars and it was just just spending money hand over fist and then like the next day they're out of business yeah right right it it just it always takes Everybody by surprise it's nothing that you can time or predict you have to be prepared for it to happen tomorrow uh because someday that's exactly what will happen well and I think that's that's really um the business you've been in

for the longest time is warning people about what's going on explaining the fundamental flaw of the system which is money is borrowed into existence you have to pay back that debt with interest the money to pay the interest doesn't exists so the only way to have that money is to borrow more money and it's no different than if you don't have any real income and you're borrowing money you have to continue to borrow money to make your payments well we all know how that ends and when you see the hockey

stick on the graphs anybody can go to the Federal Reserve you know St Louis fed website and pull up the hockey sticks on government debt government Debt Service you can see this thing is exponential the danger of exponentiality is that um that last move is brutal uh I've heard it said and I think Chris Martinson got it from somebody else but you've probably heard the water dropper thing you know you put a dropper in right in in a stadium and it's a magic dropper and two drops four drops it

doubles every time or animated that with Chris Martinson narrating it uh I inter back in 2010 I think and then uh we did an anime it's in one of the episodes of hidden secrets of money perfect well people should go back and watch that because that last drop goes from half full where you don't think you're in trouble to overflowing in one yeah in one sec huh one one second or one minute I can't remember in one move I mean in whatever whatever the cycle are whatever the cycle is the next move and so that's

the danger of exponentiality you know it's just like in in building a a business if you understand hey if I can get a 100 customers to refer 10 each I can go from 100 to a thousand if I can get a thousand customers for 10 each I can go from a thousand to 10,000 if I can get those people to go 10 each I can go from a thousand to you know a 100,000 or a million I mean just it doesn't take many iterations till the numbers are just ridiculous so why every Ponzi scheme always fails this is a pon scheme

and it's going to fail yeah yeah right and so you want to be eating popcorn and watching this with a and open a beer or pour a glass of wine maybe and sit on the sidelines and not be part of the entertainment for the people that are eating popcorn because yeah I I think there's two safe havens that that in in my opinion again I don't get financial advice I'm not that smart but that you know what I think uh just from observing people that survive 2008 and did really well and um just kind of looking at

history I think there's two things number one real money if you're in real money which is gold and silver you're outside the banking system you don't have any counterparty risk you're the financial system if falls apart doesn't matter to you most of the pricing in those things has nothing to do with credit so if the credit Market's implode it actually helps you if you go back and look historically when the credit Market broke in 2008 gold went up and and I think the same thing started to happen

happen here gold has been up as a credit markets have been more fragile so that's kind of typical the same you do with the interest rates because you think oh the interest rates are up therefore gold should be down because it doesn't give a yield that's not it interest rates are up because a credit Market's breaking and gold is responding to trouble in the credit Market people don't understand that like don't get it but that's what's going on so having real money and real

savings the second one is investing for income this is what Ken mroy did you know you you came and spoke at our collective in Circle event uh in Bahamas which was a ton of fun and George gamon Jason Hartman Robert Helms Ken maoy and myself have this Mastermind group and we talk about this kind of stuff all the time but Kenny is a cash flow investor so going through he invests in apartments and so when you're inv started with nothing and now he flies around in a private jet so I got a chance to fly yeah yeah very fun and

he's just the most unassuming guy he's bright though he's bright right but he invests for income and the thing is in in a scenario and I showed you a chart and we can talk about that if you want to but um and I did it with both real estate I can talk real estate bonds and stock prices all kind of in the same chart because the principle go ahead and show us that that CH okay can you can you pull that up there Mr Producer here we go okay so I I know people like oh my God math but math is

important I have a saying do the math and the math will tell you what to do and the math is the path in this case the math is the way to interpret what's going on so when you hear the stock market at an all-time high maybe a share price at $100 a share over here and the price to earnings ratio is 40 uh 40 which means that uh it's the share price is selling for 40 times earnings so to find out what the earnings are you divide the uh share price by the PE Ratio and get the earnings and since the

share price is what everybody's bid the PE Ratio moves up and down but the earnings pretty much stay stable companies earnings don't vacillate a lot well-run companies produce predictable results they hope they're trending up and if they can grow steadily that's great but if you were to look at it the way a real estate investor does is if I buy an apartment building for $100 not that you could and it generated $2.50 of net operating income uh you know rent coming in less expenses paid out not

counting your mortgage you'd have a capitalization rate or cap at 2 and a half% there's not a real estate AR around that's really going to want to buy an in a real estate a piece of property for 2 and a half% especially with inflation and so if you buy a $100 stock that's at trading at a 40p it means you're buying $250 cents for your $100 that's a two and a half% cap rate and so people who are doing that there are millions of them they're not investing for income they're investing

hoping somebody will come along and pay a higher price and they have no control over that so that's speculation now people can make a lot of money gambling people can make a lot of money in speculation but you have to understand there's huge risk and what's the risk the risk is that the interest rates go up and when interest rates go up then people demand a higher capitalization rate on their Investments and so this is true in bonds too if you buy $100 Bond and it has a 2 and a half% coupon it's

giving you $2.50 of yield if interest rates go up to 5% nobody is going to pay you $100 for $2.50 they're only going to pay you 50 well from an equity standpoint your $100 Bond portfolio just went down to 50 and go back to our earlier conversation we've got the banks out there holding these Bonds on their balance sheet and the FED is jacking them interest rate destroying their equity and so what they had to do is hand them an easy path to income to get them over the hump and that's what's

been going going on um because otherwise the FED would have to buy all those bonds like they did in the great financial crisis and print a bunch of money and then that would freak everybody out about the dollar at a time when interest is all I mean uh inflation is already high so how do we shrink our balance sheet and yet let some air out and they had to do it with interest rates so but but the point that I want to make here is if you're investing in stock market when the stock markets at an all-time high hoping that the PE

Ratio is going to go even high higher uh that's not the thing to look at what you have to look at is ask yourself does this company have a chance for his earnings to grow as fast as you need them to grow our company's expanding their earnings 20% a year lot of Mart because we're in a soft economy okay or they are through cost cutting which isn't sustainable you can't cut your way to Prosperity you have to grow your way to prosperity it's true in your life you know if you have a fixed income in your

job and you're cutting expenses to have more savings you can only cut so far before you don't have a home and you don't have food same thing in business if you don't grow your revenue and all you're doing is cutting expenses pretty soon you just cut your expenses all the way till you're not in business anymore so more revenue is always the answer but the point here is in the same environment where a share price based on what's going on with interest rates and then the resulting willingness of

investors to purchase that income uh potentially the error could go in your stock market portfolio from $100 share all the way down to $25 a share in a 10% environment right so you lose 75% of your equity in that environment so if you're investing over here for asset prices Buy Low sell High which is what 99% of stock market investors are doing and you get your 401k balance sheet and you think oh I'm so excited because I have all this fake equity on my balance sheet I'm rich therefore I'll go into debt what you my

opinion again I don't give Financial advice the people I've seen be successful uccessful going through horrendous crashes are people who are focused on this and notice that this can be very stable and if you want to have a stable resilient portfolio it's based on this this is going to go up and down depending on what goes on over here and you have no control over these things this if you're running the property you have control over if you're running the business you have control over if you

don't how to look at a company and look at their you know like Warren Buffett looks at the the business the business model the management team the competition this is where Warren Buffett invests in the stock market this is where Ken mroy invests in real estate people who are over here investing in real estate and stocks playing the equity game uh are in danger depending on what happens with interest rates so I'm not saying you can't make a lot of money you can you know if you've ever

seen like a pyramid scheme or going into a Cino and you see somebody win big you know it's like I want to get on that action you just have to understand the risk that you're taking so anyway I I hope that makes sense I I taught that in a class the other night and I think some people found it very useful so I wanted to share it awesome uh okay well I think uh we should wrap this up now is there anything else you wanted to say at the end no just appreciate the work you do I appreciate you having me come in from

time to time it's fun having these chats it's like it's fun talking to somebody that's like-minded doesn't think I'm a lunatic because of all the things I'm concerned about we're like-minded but you take a different angle at this that's the reason I always enjoy uh talking with you because I learn things from you there's a lot of people that I have interviewed where I don't actually learn anything from them and I always learn something from you so I want to

thank you for being here and I want to remind everybody to like subscribe and hit that uh notification Bell and we'll see you next time Russ thanks thank you