Drew Mason, our Partner at St. Joseph's Partners, provides us with an update on the financial situation of the major U.S. financial institutions and the impact of the financial crisis on the economy and the financial system.
00:00:00.000In every paradigm shift, the entities and the investments that had been so successful in the past and that base their future on the past are the ones that have the most to lose.
00:00:21.360Hello, my friends. I wanted to give you another update with regard to our financial situation.
00:00:26.300We are in, actually, for a monumental paradigm shift.
00:00:31.440And with us to discuss this again is Drew Mason.
00:00:33.640You'll remember before when that first of the major U.S. banks crashed.
00:02:28.940Praise be Jesus. Thank you for having me, John Henry.
00:02:31.400Let's begin as we always do, with the sign of the cross.
00:02:33.900In the name of the Father, and of the Son, and of the Holy Ghost. Amen.
00:02:39.260So, Drew, lots has been happening. Please fill us in.
00:02:41.640Thank you, John Henry. So, when we last taped three weeks ago, it was the day the news was coming out
00:02:48.020that Silicon Valley Bancorp was closed and there was speculation about what would happen.
00:02:55.120And what we counseled was that we should all hope for the best, but prepare for the worst.
00:03:01.360All these claims that everything was going to be fine rang hollow with what had happened in the past
00:03:06.780and how similar claims had fallen flat.
00:03:09.780So, there's been so much news flow over the last few weeks, it's hard to summarize all of it.
00:03:16.040But I think for viewers, I would try and narrow it down to three specific points to underscore what has happened.
00:03:23.900The first is, now that we have a little bit more visibility into SVB,
00:03:28.220we understand what happened was the banks were given this loophole in how they accounted for their bond holding.
00:03:36.760Specifically, when financial institutions own securities, generally, they're obligated to do what's called mark them to market.
00:03:45.960So, if it's worth $10 today, they report it as worth $10.
00:03:49.000If it's worth $5, they report it as worth $5.
00:03:51.160Banks, however, were told that they could just carry on their books, their bond investments at the price of their original investment.
00:04:01.480They didn't have to mark on the market.
00:04:03.580So, these banks literally had over a half trillion dollars of bonds.
00:04:09.200And as the Fed raised rates, the value of these bonds came materially lower.
00:04:15.500So, the argument was, well, we're just going to hold them until maturity.
00:04:18.700But the problem, when the rubber meets the road, is if depositors come and say, give me my money,
00:04:24.120the banks can't sell those assets where they're carrying them on their books.
00:04:30.760They don't have enough money to meet the deposits.
00:04:33.660So, what happened was, the government came in and, with record speed,
00:04:38.220expanded the Fed balance sheet back towards the all-time highs and injected $160 billion into the system.
00:04:45.620They won't tell us which banks took that money, but there was $160 billion claimed so that there would be solvency in the near term for the banking system.
00:04:54.220So, that is hugely significant for investors to just really get their heads around the precariousness of what's at stake here,
00:05:06.660The second thing I would highlight that has happened since we last taped was J.P.
00:05:12.440Morgan, one of the world's largest financial firms, admitted that they had entered into contracts with the London Metals Exchange to own commodities.
00:05:23.720So, think of paper gold, such as many investors have.
00:05:27.820They entered into these commodities contracts that were supposed to be backed by the actual commodities.
00:05:33.260That's the whole integrity of the exchange, supposed to be the integrity of the financial system with all the regulation and oversight.
00:05:40.140And what was discovered was that instead of having nickel, they had actually been given bags of worthless pebbles, and that's all they had.
00:05:48.480So, again, we just say to investors, if the largest and most powerful financial firms are being fooled like that in the markets, doesn't it make sense?
00:05:58.340Isn't it prudent to have some concern about having all of one's wealth tied up and just trusting the integrity of the system while we're seeing these warnings?
00:06:07.480And then the third major point I would highlight has been a culmination of announcements where we are now seeing country after country moving away from its exposure and its dependence on the U.S. dollar.
00:06:22.740Just this week, we saw Japan announce they're going to begin buying oil from Russia in non-dollar contracts.
00:06:28.480We saw India, and these are our major partners, India, saying they're going to now trade non-dollars.
00:06:34.820So 80% of the world's population is now committed to moving away from the dollar.
00:06:39.860And so as Americans, we have to realize we have such exposure to the dollar.
00:06:45.780And in every paradigm shift, and that is what is going on, because for all of our lifetimes, the dollar has been the sole reserve currency.
00:06:51.900This is, we believe, a major paradigm shift, unlike what we've seen happen in 50 years.
00:06:58.740In every paradigm shift, the entities and the investments that had been so successful in the past and that base their future on the past are the ones that have the most to lose.
00:07:13.600And that's what we see, again, most financial institutions and most investors doing today.
00:07:18.460It is simply impossible to protect oneself from systematic risk within the financial system.
00:07:27.380If you're trying to protect against these stresses in the financial system, you have to do it outside of the system.
00:07:33.660And that is what gold has done for families for centuries and even millennia.
00:07:39.760No matter what is happening at the local or the government or the financial level, gold has transcended the issues of the day and preserved wealth.
00:07:47.980So we think that the urgency is as high as it's ever been in our lifetimes for people to allocate towards gold for its safety.
00:07:57.820And if people are worried, if they feel stressed when they're watching the news and when they're understanding what's happening,
00:08:04.620it's probably a sign to them that they simply don't have a sufficient allocation to position themselves for what their gut, what their hearts and what history are telling them is what lies ahead.
00:08:15.560If you can unpack some of this for us.
00:08:18.460So you mentioned about the metals exchange with the banks and getting bags of pebbles instead.
00:09:12.160I think everyone here knows and is nauseous about all the regulations that are in place on all of us and on all these corporate entities.
00:09:20.840But despite all that regulation, no one was actually checking the commodities.
00:09:27.440No one was checking the integrity of the system.
00:09:29.840And that was what happened when J.P. Morgan was caught that way.
00:09:33.160Now, again, we hope that was the only issue that will ever surface again.
00:09:38.540However, if you have a major financial institution admitting this, how much less do individual investors know?
00:09:46.620How much more important is it, again, to have some wealth outside of that system where a primary benefit of physical gold is that it's in your possession?
00:09:59.240You don't depend on anybody else to deliver it to you.
00:10:01.920You don't have to wait for the stock market to open if you want to sell it or liquidate it.
00:10:06.900And that, we think, is a key lesson from what came out about the London Metals Exchange issue.
00:10:12.460So, one of the things that's interesting there, I mean, you deal, your company deals in gold, not only in physical gold, but also in gold investments.
00:10:22.540And yet, you're telling people it's time to invest in physical gold.
00:10:36.300Take delivery of the metals or however you wish to safeguard them, but get the physical metal that is entirely yours, that is not leveraged, it's not hypothecated, you know exactly what you have.
00:10:54.820And that, again and again through time, has made all the difference in the world of families.
00:11:00.360I don't know if I've shared this before on a show, John Henry, but I'd say the neatest part about our job being in the gold industry are the people we meet, the families we meet.
00:11:11.300And so, we have clients who are Jewish and they tell us if we didn't have physical gold, our family would have ceased to exist.
00:11:19.880We used it to get out of Russia, to get out of Germany, to get to America.
00:11:24.020And then when they came to America, they weren't poor because they still had a pocket full of gold and they used that to buy a home, start their business.
00:11:31.580Same stories we have from our Asian clients coming, especially from what's now known as Vietnam, where they saw communism coming in.
00:11:39.320They buried some gold in their backyard.
00:11:41.040When the communists took over, they let things settle down and they went down to the port.
00:12:11.520Were investors, were families prepared?
00:12:13.320Had they been good stewards, had they diversified their wealth away from real estate, as our Jewish friends tell us, was so important for them to do, into something that they could, that was liquid, they could take with them, they could give them everything they needed, and it would preserve wealth.
00:12:28.020So, gold is an asset that should be the cornerstone of your safe investment.
00:12:33.680So, you may choose to have, you know, almost all of your wealth in aggressive investments, where you can make a fortune if it works out well.
00:12:40.040But you understand, you have to understand, in those types of investments, you could lose everything, too.
00:12:45.460Whereas, for some portion of your wealth, you should have a safe money allocation.
00:12:51.000Historically, in our lifetimes, that's just been dollars in the bank, right?
00:12:53.960The dollar has been the sole reserve currency.
00:12:55.800However, the dollar, although it's been spectacular at convenience for transactions, it gets an F, gets a letter grade F for protecting and preserving wealth.
00:13:06.820The dollar has lost over 95% of its value since the Fed was created, whereas gold, as the safe money allocation within your portfolio to complement your dollars, gold has done just what investors would want.
00:13:21.360It has preserved their wealth, no matter what the stress.
00:13:24.160Okay. So, unpack first also, if you will, what does it mean that the American dollar is not going to be the dollar for trade?
00:13:34.300It's used around the world, you know, for trading in oil and stuff like that.
00:13:38.300But what does it mean and what ramifications will it have if the U.S. dollar is no longer used in that way?
00:13:43.780So, there have been, I believe, six occasions now in history where one country rose to such dominance globally that it was given the title of sole reserve currency, so that when two nations traded, they wouldn't trade directly in their own currencies.
00:14:01.260They would trade in the sole reserve currency.
00:14:04.100The initial case of that was the Portuguese Escudo back in Columbus's days.
00:14:08.240The most recent example of that was Great Britain and the sterling from Great Britain.
00:14:14.280That changed as Great Britain lost its manufacturing prowess in the 1800s.
00:14:20.440It lost that sole reserve currency also.
00:14:23.560In all those cases, from the Escudo to the sterling, when those countries lost that status, the purchasing power of those currencies was impaired severely.
00:14:34.080So, what happened after World War II, there was what was called the Bretton Woods Agreement.
00:14:39.540Much of the world was in shambles after the war.
00:14:42.980And as global leaders came to America's statesmen negotiated that all global trade would be done in the U.S. dollar.
00:14:52.140So, if you were Russian and you were buying oil from Saudi Arabia, Russia would have to first convert into U.S. dollars and then sell those U.S. dollars to Saudi in exchange for having oil sent to them.
00:15:03.280So, it's what they call an exorbitant privilege that all other nations should have to do this.
00:15:08.940Well, again, we have these case studies in the past.
00:15:12.080And as countries have lost their dominance, they've lost manufacturing leadership, those windows have closed of sole reserve currency status.
00:15:22.160And what that allows a country to do, so, for example, in that Russia, Saudi Arabia example, Russia has to go out and buy dollars in the marketplace.
00:15:32.380So, if the market is strong for dollars, Russians have to really pay up to get them.
00:15:39.180In contrast, as the United States is a sole reserve currency, if we want to buy oil or whatever we want to buy, we don't have to go out and use our assets to buy the currency.
00:15:55.260So, this has been an extraordinary advantage for America.
00:15:59.580And it's something that Americans have benefited from for really their whole lifetime.
00:16:06.960So, what has been happening, and it has accelerated since the U.S. government has chosen to weaponize, is the expression, the dollar.
00:16:16.320I mean, the idea is always that a sole reserve currency would never be used for political purposes.
00:16:21.820If the nation's people were going to trust a currency, it was obligatory that you would honor their investments.
00:16:29.460Since the U.S. stopped doing that, we've really seen an acceleration of countries moving away from the sole reserve acceptance of the dollar.
00:16:37.020So, that now, again, over three quarters of the world's population is trading, at least to some degree, in other currencies.
00:16:45.620So, what that will mean is, at some point, you're probably going to have some countries say, we don't want your dollars.
00:16:53.420We don't respect the value of the dollar because of the way you're treating it.
00:16:57.780So, if you want our asset, you have to pay up with another currency or an asset.
00:17:02.040All of a sudden, the printing press has ended, and then it's a very different situation.
00:17:07.880So, the implication to us as individuals, as families, as investors, is that we're talking about the dollar potentially losing an enormous part of its purchasing power.
00:17:20.520This has been happening since the Fed was created, from the time the Constitution, when the founders of this country said the only legal money would be gold and silver, up until when the gold was confiscated, the dollar worked perfectly in preserving wealth.
00:17:39.280Since that time, actually since the Fed was created, the dollar has lost so much of its value.
00:17:44.720However, it still has the value we know today.
00:17:48.040As the sole reserve currency status wanes, history says to expect that it may have cost you $10 today to buy, may cost you $20, may cost you $30, may cost you $50 to buy in the future.
00:18:01.880So, the significance is, as Americans, we have so much exposure to dollar in terms of cash, CVs, money markets, bonds, treasury bills.
00:18:12.620We have all that risk in an asset who's in the twilight of its existence.
00:18:19.740One of the things that I got your help with as well, and I thought that was fascinating, is when people choose to invest in precious metals, it's not only just go out and get the biggest chunk of gold you can.
00:18:35.920And you actually laid that out for me.
00:18:38.720If you could do that for everybody, I think that was fascinating, because I think for people who, we don't have a lot of money to invest, but we want to have some savings in gold or silver to protect our families.
00:18:51.080How do we do that for the average family that really isn't all that wealthy, but just wants to protect themselves?
00:18:55.760Okay, so the biggest concept I would want to leave with viewers to walk away with is the question, what is gold?
00:19:08.240And the answer is simply, gold is money.
00:19:12.540It's a money that no government can destroy by printing or by policy hours.
00:19:18.100So, when you get gold, it can come in multiple forms.
00:19:22.060The cheapest way to buy it per ounce is a 400-ounce bar called a standard bar, because it requires a lease manufacturing, a lease handling.
00:19:31.660The cheapest way to buy gold in a form that no one would melt, they took it from you because they would still have conviction it was real, would be 32.15 ounces, the kilo bar.
00:19:43.800However, a kilo bar in today's prices is over $50,000.
00:19:47.740So, if you want to exchange that for something, you have a narrow set of assets that you can trade for.
00:19:56.300So, for that reason, governments, including the U.S. that it's founding, chose to make gold and silver coins so that it would have intrinsic value for the owner, but it would be small enough that it would be easily exchangeable for many more items.
00:20:13.040So, at the end of the day, we're agnostic as to what people want to buy.
00:20:18.360If they say, we want the cheapest bar, we can have it.
00:20:20.600If they say, we want a currency that people will recognize, we'll direct them in that manner.
00:20:26.180So, a coin may cost 3% more than, say, a bar approximately, but the advantages of it that some choose to take are threefold.
00:20:34.920First, the coins are more easily recognized as being real gold, meaning, for example, when the Canadian mint makes a coin, they tell you what the width, the circumference, the height, the diameter are.
00:20:51.100And you simply can't get any other element in those dimensions because gold is its own unique element on the periodic chart.
00:20:59.140So, when you have a coin, you have this ease of determining that it's real gold immediately.
00:21:05.660Secondly, if you have a one-ounce coin versus, say, the 32-ounce kilobar, you can do 32 times as many transactions with someone.
00:21:13.160And then, thirdly, is just the liquidity.
00:21:16.780So, a coin now is worth, one-ounce coin, $2,000.
00:30:10.840We should be praying for the kingdom, for the Lord, and trying to make him our sole king.
00:30:17.360The second of those commandments is not taking the name of Jesus in vain.
00:30:22.700And we were recalling what we understand happened years ago, centuries ago, millennia ago, when the Lord, God the Father, said he was going to reveal the name of the Savior.
00:30:37.460And the angels were just waiting for years with bated breath.
00:30:43.160They knew this was such a powerful name.
00:30:46.100And when God the Father revealed the name, Jesus, that they just fell down, they were in awe.
00:30:53.960They never would have thought for a moment that years later, believers would lose the appreciation for the power of that name.
00:31:01.780How many times does scripture say it simply, our help is in the name of the Lord?
00:31:06.120So this second commandment to turn from cursing the name, because society tells us that's the only name it doesn't want to hear.
00:31:13.200But instead of cursing it, to speak it, to actually go out and to speak it with reverence and to let the power of that name begin to fill in our society.
00:31:23.360And then having, and then the third commandment is the Sabbath.
00:31:28.460So choosing not to work for your business and your home, to just study on the, study Sabbath, study scripture, relax, enjoy your family, not to work on the Sabbath.
00:31:43.700There's more written about that one commandment than all the other commandments combined.
00:31:49.880Don't work and don't have anyone else work on the Sabbath.
00:31:52.400And I think we also, as it relates to that, want to be conscious.
00:31:56.680We've lost an appreciation that although we're to go to church on Sundays because he commanded us to celebrate the Eucharist, that we are not to receive the Eucharist unless we're in a state of grace.
00:32:08.900And one of the great saints of the 20th century, Conchita Cabrera from Mexico, went so far as to say, when we receive Jesus in communion, if we're not in a state of grace, it's more painful for him than Good Friday.
00:32:24.480When you hear that, you think that's got to be impossible.
00:32:27.240But as you reflect on it, I think this future doctor of the church was probably very inspired with those words.
00:32:33.180So those were the things we heard first about repenting.
00:32:36.560The second point was to pray and fast, which this group already, I think, largely does.
00:32:42.160Jesus asked us to pray, can you not watch one hour with me?
00:32:45.460We're encouraging you, commit an hour a day.
00:32:48.280We encourage you to do it during the fourth watch, 3 to 6 a.m.
00:32:51.680So many people have called in and told us for years they were waking early and they didn't know why that was happening.
00:32:57.460They actually thought there was something wrong with them.
00:32:58.960That is probably the Holy Spirit coming to you in that hour, telling you he wants to talk with you.
00:33:04.400That's the hour, the period, the fourth watch, when scripture tells us the spirit most wants to talk.
00:33:11.160That's what we see Jesus doing, going out during that fourth watch.
00:33:14.820And it's 3 to 6 a.m., just so everybody knows.
00:33:20.680It was in the fourth watch when he came and manifested himself treading upon the waves as he came to the apostles in the boat, walking on the sea.
00:33:28.960And then the third, so that's praying and fasting.
00:33:32.820And again, we say we're obligated to fast Wednesdays and Fridays.
00:33:36.620That's what the Christians wrote in the first century and how they lived.
00:33:56.240The Bible doesn't say Wednesdays and Fridays, two days a week, but we can triangulate on that.
00:34:00.940And the Didache explicitly says Wednesdays and Fridays.
00:34:04.060So prayer and fasting is the second of three points to take back our church.
00:34:08.180And the third point, John Henry, is we believe now is the time to imitate our Savior and to throw our bishops and our cardinals out of the church, like he threw out the corrupt Pharisees, clergy in his time.
00:34:28.180And, you know, we don't say that lightly, but Jesus was clear.
00:34:32.220If the fruits are not good, it needs to be uprooted and thrown out.
00:34:37.180So we are endeavoring to dispose of, destroy the U.S. CCB.
00:34:45.180Ever since the U.S. Council of Catholic Bishops was founded, every quantifiable statistic in the church has imploded.
00:34:52.700It's been an absolute disaster, no matter how you measure it.
00:34:55.720Vocations, participation by families, attendance and faith of the youth.
00:35:01.580Everything has imploded under their auspices.
00:35:05.080And this shouldn't be a surprise to us because Jesus told us there were going to be wolves in sheep's clothing.
00:35:13.520St. Paul said to us he was so concerned that as soon as he left, that was what was going to happen.
00:35:17.960Wolves in sheep's clothing were going to raise their heads.
00:35:20.720And we see this with the great saints telling us this was the case, whether it's St. John christened them.
00:35:26.160Fulton Sheen told us not to expect anything from the bishops in terms of renewal.
00:35:30.280And Mother Angelica, she said she would burn her network to the ground before she gave it to their control.
00:35:45.120We've been ambushed by our clergy, by our church leaders, and now we have this state that almost looks like rubble compared to where we were years ago.
00:37:20.220There are ways to keep it open without supporting the bishops.
00:37:23.280We think we absolutely are called to do that, John Henry, at this moment in time.
00:37:30.060And we think, John Henry, that, you know, the news sounds so horrific about what's out there, whether at the country level or the church level.
00:37:38.620But we want to conclude from our Esther fast with an incredible note of optimism.
00:37:44.540So, again, I know we're going to be skewered for saying something like this, right?
00:37:49.220We don't know for sure if this is authentic we're hearing from the Lord or not.
00:37:52.980But as we were wrapping up and we were praying, this picture just floated into our minds.
00:38:00.100And we were standing on top of a mountain, and there was a huge runway ahead of us, big enough for a 747 to land.
00:38:08.840And it was twilight, so the intense direct sun was gone.
00:38:13.240But the ambient light was enough that you could still see colors.
00:38:17.020And the sky was that beautiful silvery blue, light blue, Madonna blue.
00:38:23.040And the distance we could see the lights, because it was dark enough, of the plane headlights lining up to come in and land on the strip.
00:38:32.800There were three or four of them, you know, way out in the distance in a line coming in.
00:38:36.720And then the next thing we knew, the sky was filled with planes, with their headlights, filled.
00:38:43.660It must have been like on D-Day when the Allies came to rescue Europe from the Nazis.
00:39:49.620If you designate on your check that your donation is to go to your church's heating or whatever, they've got to respect that.
00:39:59.260So you are able to support your parish while at the same time restricting your funds from going to the diocese.
00:40:06.460So there are powerful ways to do that.
00:40:08.260And I think Father Altman has been saying that for years, that the way we need to change things is exactly that, to do what is in our remit.
00:40:22.940And I know that the USCCB especially, most actually the Western churches, have been taking government money and using sort of church funds from the parishioners to supplement.
00:40:34.820And that's why the USCCB, for instance, is so heavily into this sort of work with immigrants and all this stuff that they're doing that's being criticized very heavily by people on the right.
00:40:47.080But it's because they're getting billions of dollars out of doing it.
00:40:52.600Well, I think we're going to have to pick your brain some more, Drew, on because we get the prayer, the fasting, but how to exactly confront the bishops, how to, as you said, throw them out of the church, which in a lot of cases is very well deserved.
00:41:10.940So you mentioned there, Father Altman, John Henry, evil has unintentionally done us a great service.
00:41:18.300Don't worry about, well, who are the leaders going to be?
00:41:20.000And evil has highlighted for us the pool of great priests that we want to have as leaders.
00:41:27.960All the priests who have been canceled, that's who we should be looking to as our future leaders.
00:41:32.400Now, to be clear for viewers who may not be aware, a canceled priest is not someone who has been guilty of any misconduct.
00:41:40.420Canceled priests are priests who speak out conservatively, who speak out in alignment with the gospel, and then their bishops shut them down.
00:41:50.000So we have this stable full of great leaders who God is raising up who will lead the church.
00:41:58.080Now, in terms of the individual details, John Henry, I think I would suggest to viewers that it's a little bit like the most famous painting, the only painting I'm aware of, that heaven ever designed and commissioned and delivered.
00:42:18.420And if you look closely at Guadalupe, you can see there's the slightest bend in her knee where it's like she's taking a baby step.
00:42:27.980And I think that's what the Lord wants us to do and what she is calling us to do is to just take a baby step forward in faith.
00:42:36.940Forget about needing some spiritual director to tell you everything in your life that is such a faith killer.
00:42:44.760Again, you have to discern it to make sure it's not something that is against the commandments, against scripture, against teaching.
00:42:51.340But then listen for the Holy Spirit to lead you, to guide you in little ways, and then take a baby step forward in faith, and we'll see how this unfolds.
00:43:05.660And whenever God's people did that in scripture, victory was theirs.
00:43:10.420So I think, John Henry, we're kind of in this situation today that we read about in scripture, and we say, how could the people have forgotten how important it was to repent?
00:43:20.880How could they have fallen into those sins again?
00:43:25.940We've fallen into everything that figures in the Old Testament fell into when God let them have themselves, you know, let them to themselves.
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00:44:55.980Thanks for watching, and may God bless you.